How to Use Skills Tests to Reduce Turnover

How can you reduce employee turnover? Skills tests are an under-appreciated but efficient way to boost retention in your organisation.

The cost of employee turnover is high. By some estimates, turnover can cost as much as 1.5 to 2 times the employee’s salary; the higher the level of the employee the higher the cost. Keep in mind: this is just the direct monetary cost associated with having a vacant position and hiring a replacement. In addition to this, it’s hard to put a figure on the potential damage to company culture, morale, productivity, knowledge, and loss of customers that can result from turnover.

While some level of turnover is normal and to be expected in any company, keeping the number of lost employees as low as possible is important. This is especially true during the current talent shortage following the so-called Great Resignation and low levels of unemployment. According to one survey, nearly half of UK workers have thought about quitting their job, actively looked for and applied for another job, or spoken to their employer about resigning in the last three months. Talent is more mobile than ever and people aren’t afraid to quit their jobs to find better salaries, work-life balance, or career paths elsewhere.

So, what can organisations do to reduce employee turnover? You may be surprised to learn that using skills assessments can have a significant impact on retention. Here’s why.

How do we Define Employee Turnover?

Employee turnover refers to the percentage of employees who leave their jobs compared to the total number of employees, usually calculated on a year-on-year basis. Turnover covers all types of job leavers, including voluntary turnover and people who retire as well as those who are made redundant.

Another important metric to consider is employee retention. This is a metric that measures the number of employees who have worked for an employer for a year or more as a percentage of the overall workforce numbers. While employee retention and turnover are two metrics that are closely related, it’s important to remember that they’re not the exact inverse of each other.

What is a Normal Level of Employee Turnover?

Turnover is natural and to be expected in any organisation, but keeping your employee turnover rate low is key. According to Monster, the average employee turnover rate in the UK is 15% a year. This varies between different industries, with high employee turnover being common in hospitality and retail, while low turnover rates are more common in the education, legal, accountancy, and public sectors. Turnover rate also varies geographically, with high rates of employee turnover found in areas with low unemployment levels.

This variation makes it hard to determine a ‘normal’ or ‘ideal’ level of turnover for any industry. While the lower the turnover rate the better, the exact figures vary massively. For individual businesses looking to analyse employee turnover, the best technique is to use industry figures and competitors’ turnover rates for benchmarking.

What are skills tests and how can they reduce your employee turnover rate? 

Skills tests, also known as aptitude tests or ability tests, are standardised assessments that measure a candidate’s skills. These skills might be hard skills in a particular field, such as those assessed by a mathematics or typing assessment, or they might be soft skills tested by situational judgement tests or listening and communications assessments.

Skills tests are often used to objectively and consistently measure the suitability of applicants for a particular role. A pre-employment assessment allows in-house recruiters and hiring managers to make objective, bias-free assessments of applicants to inform their hiring decisions. Applicants might undertake one or multiple pre-employment tests as part of the hiring process.

Skills tests can reduce your turnover rate for a variety of reasons. Here are some of the main ones.

Pick the People With the Right Skills for the Job 

People lie on their CVs. They fib, mislead, or exaggerate in cover letters and interviews. It’s not uncommon; in one survey, 39% of Brits admitted to lying on their CVs to increase their chance of getting a job. The most common lies on CVs were found to be about proficiency in office software, followed by previous work experience, personality traits, and education.

And that’s just the CV. When it comes to interviews, one study run by University of Guelph found that 100% of the respondents were willing to stretch the truth in a job interview. 100%. No wonder hiring the right person can be such a challenge!

The problem, of course, is that applicants want to be hired, and they’re likely to bend the truth to tell recruiters what they want to hear. Especially in the case of people who have been unemployed for a while and desperately need a new job, exaggerating your skills and proficiencies in particular areas is almost inevitable in the hiring process.

The issue for employers and recruiters is that this can lead to hiring the wrong person, assuming that they have the necessary skills for the job. Until their first day in the workplace, it’s hard to tell whether somebody has the logistics skills or typing speed they claimed to have. Then, you’re stuck with an employee whose job performance and productivity are limited from day one.

This is where pre-employment skills testing comes in. Pre-employment assessments ensure that the new employees have the necessary skills that will allow them to do the job effectively. Depending on the role, these skills might be anything from financial accounting to aptitude with particular types of software such as Microsoft Excel. Instead of relying on the applicant’s claims in an interview or on their CV, pre-employment testing allows recruiters to gain an objective view of the applicant’s skills when making hiring decisions.

With a quick online test as part of the application process, recruiters can ensure that applicants are suitable for the job role. Using pre-employment assessments reduces the risk of the new employee leaving the job voluntarily or involuntarily due to not having essential job-specific skills.

Identify Skills Gaps and Training Opportunities

Despite the common misconception that skills tests are only useful for pre-employment testing, they can actually be very useful when used by current employees, too. Skills assessments can be used to identify skills gaps within the workforce and analyse training needs so you can upskill your workers. For example, employees working in call centre roles might take job-related skills tests such as phonetic alphabet exams or tests measuring their ability to understand and accurately input town names. If the pass level is unsatisfactory, you can implement a training programme to improve the team’s skills. Or, you can ask them to take practice tests until their skills improve — a quick and easy way to upskill employees!

Skills assessments can also check whether current employees are performing optimally and safely in their job role. A quick online test of employees’ health and safety knowledge, for example, can check whether all employees are familiar with health and safety practices and are using them in the workplace. Even if these individuals passed a pre-employment assessment of health and safety knowledge before they were hired, undergoing a further assessment at regular intervals during their employment is a great way to refresh their knowledge and ensure great job performance. If multiple employees struggle to pass the test, it might be time for a whole-team retraining in the topic to properly safeguard your people and proactively prevent health and safety issues.

How can providing on-the-job learning reduce employee turnover? Providing learning and development opportunities can have a major impact on retention rates. One study found that 94% of employees reported that they would remain in a job for longer if they felt that the organisation was investing in their career development. A different poll from Gallup discovered that 87% of millennials consider learning and development opportunities to be a very influential factor when choosing a job. It’s clear that employees want and expect to be provided with opportunities to upskill in their workplace. Failing to provide training for professional development is likely to lead to disengagement and high levels of employee turnover.

Promote the Right People

Promotions (or lack thereof) also play a key role in employee turnover. Not being promoted is one of the main factors that motivates people to leave jobs; research found that the numbers of promotions were down 48% during the Covid-19 pandemic and that a lack of career growth was one of the top reasons employees wanted to quit their jobs.

So, to increase retention of your top talent, it’s important to make sure that they are receiving the career development opportunities they need. How can you ensure you’re promoting the right people? Skills assessments are a great way to identify your most valuable and high-performing team members. Free from the bias and gut feelings that usually influence promotion decisions, skills tests provide an objective metric that can be considered when deciding whom to offer promotions and pay rises.

There’s some truth to that age-old saying, ‘people don’t leave bad jobs, they leave bad bosses.’ In fact, according to a recent poll, two in five UK employees have quit a job because of a bad manager. Having the wrong person in a key leadership role can damage the motivation and morale of everyone working around them, leading to lower levels of employee engagement and a higher risk of turnover.

Aptitude tests and personality profiling can be invaluable when choosing who to promote to leadership roles. For example, a situational judgement test can be used to assess an employee’s potential performance in their new role. By providing the employee with a range of possible situations they may encounter in the new role and giving them four possible answers to choose from, you can gain insights into their decision-making process, leadership skills, cognitive abilities, and personality traits. This information is invaluable when deciding who to put forward for a leadership role.

Another type of assessment that can analyse whether an employee will thrive in this step forward in their career path is a personality profile. Personality assessments provide insights into an individual’s behavioural style, personality traits, communication style, and leadership style, all of which are useful in promotion decisions. No personality type is more suited to leadership than others, but these psychometric tests are helpful in assessing whether a particular personality will thrive in the particular role. Much like skills tests, personality tests eliminate guesswork and bias from the talent management process, helping ensure that the most suitable people are promoted.

Conclusion

While pre-employment testing is used by many organisations to ensure they are hiring accurately and effectively, little recognition is given to skills tests beyond the recruitment process. However, it’s clear that these assessments can be invaluable far beyond pre-employment testing and can even aid learning and development as well as promotion decisions. When used in the right ways, skills tests can help reduce employee turnover to save money, boost productivity, and preserve workplace culture. Any organisation with a high staff turnover should consider using aptitude testing and personality profiling as part of their strategy for retention.

For a wide range of aptitude and personality tests that can enhance your hiring, upskill your workforce, and increase employee engagement, visit Skillsarena. Providing easy-to-use online skills assessments, it’s simple for your potential candidates and current employees to log on and do their assigned aptitude and personality tests. Current employees can even carry out practice tests to improve their skills. If you’re looking to improve your business’ turnover rate, enhancing your retention and recruitment strategies with skills assessments is the way to go.

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