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Return On Investment Calculator

The ROI calculator presented here represents three main ideas:

  1. Trusted research in utility has demonstrated that it is possible to index levels of performance by an employee to value to the organization in monetary terms.
  2. Various assessment options each provide more information about the candidate to increase the reliability of the selection.
  3. The benefits to an organization of using assessments will exceed the costs of the assessments, bringing a good return on investment.

Please see a more detailed description of the calculator and the research behind it at the bottom of the page.

Enter the number of people you expect to hire for a given position in one year.
Select the number of applicants you plan to assess for each position to be filled.
Please choose an assessment method from the available options.
Enter the average annual employee salary for the position in question in your organization.

Annual benefit to the organization per person selected.
Annual benefit to the organization for all persons hired.

About the ROI Calculator

The HR Decisions ROI calculator presented here is based on the currently-accepted best method of determining the utility of personnel practices, or the extent to which rational personnel selection yields payoffs to the organization using them, in the metric of dollar gains to the organization. Research into the utility of personnel interventions has a long history, going back about 80 years. Today, we consider the Brogden-Cronbach-Gleser model (Brogden, 1946; Cronbach & Gleser, 1965) to be the most informative method of indexing the payoffs to the organization arising from rationale selection practices. Two additional factors should be pointed out here. First, the criterion-related validity values for the various assessment options in the calculator are largely those obtained in research conducted by HR Decisions Ltd., and published in the scientific literature. Second, the variation in the dollar-value to the organization of different levels of performance has been indexed by a method that connects this variation to employee salary. Based on all of these factors, the dollar values yielded by this calculator enable organizations to understand how much the organization can gain by the different levels of personnel assessment with their varying costs factored into the calculations.

This calculator produces two values of interest to the hiring organization:

  1. The dollar payoff to the organization for each applicant selected by the assessment method chosen in Step 3. This gives the hiring organization information about the value of the chosen assessment method on a per-hire basis.
  2. The annual total dollar payoff to the organization arising from selecting one year’s worth of employees by the chosen assessment method.

References

Brogden, H.E. (1946), An approach to the problem of differential prediction. Psychometrika, 11, 139-154.

Cronbach, L. J., & Gleser, G. (1965). Psychological Tests and Personnel Decisions (2nd ed.). Urbana, IL: University of Illinois Press.

About the Assessment Methods

MethodComponentsValidity
Management Assessment Profile Cognitive Ability Tests + Personality Inventory + Low Fidelity Simulations + High Fidelity Simulations
Applicant Values Profile Cognitive Ability Tests + Personality Inventory + Low Fidelity Simulations
Comprehensive Candidate Profile Cognitive Ability Tests + Personality Inventory
Work Skills Profile Cognitive Ability Tests
Structured Interviews Varies by organization
Unstructured Interviews Varies by organization
Random No selection method None

Our product line is designed to provide the optimal level of testing for the best return on investment. Entry level positions with a narrow description of responsibilities have less risk and less potential for overall benefits to the organization than more complex positions such as a top-level manager. We will help you determine the best assessment tools to use for specific placements.

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