Measuring pre-employment assessment ROI for your business

Pre-employment assessment ROI is calculated by comparing the reduction in turnover costs and recruitment time against the initial investment in testing technology.

Key takeaways

• Implementing objective assessments significantly reduces the high cost of a bad hire by filtering for cultural and role fit early.
• Data-driven hiring processes shorten the time-to-hire, allowing internal recruitment teams to focus on high-value candidate engagement.
• Measuring long-term performance and retention provides the most accurate picture of the return on investment for personality and skills testing.

Recruiting the right people is often the most significant investment a business makes, yet many organisations still rely on gut feel and static resumes. When a new hire doesn't work out, the financial impact is staggering – often costing up to 1.5 times the employee's annual salary when you factor in lost productivity, recruitment fees, and training time.

For many HR leaders, the challenge isn't just finding talent; it's proving that the tools used to find that talent actually add to the bottom line. If you are looking to move from a subjective hiring process to one backed by data, understanding the return on investment (ROI) of pre-employment assessments is the first step toward securing executive buy-in.

The hidden costs of traditional hiring methods

Traditional hiring relies heavily on the interview, a method that – while essential – is notoriously prone to unconscious bias. We often gravitate toward people who remind us of ourselves, rather than the person who has the specific work personality required for the role. This subjectivity leads to inconsistent hiring quality and high turnover rates.

When we look at the recruitment lifecycle, the most expensive phase is the 're-do'. Every time a person leaves within their first six months, the business resets to zero. You lose the institutional knowledge they gained, the momentum of the team they were part of, and the actual cash spent on the initial search. These are the 'leaky bucket' costs that pre-employment assessments are designed to plug.

By introducing objective data early in the funnel, you can identify The Doer who will execute your plans with precision or The Coordinator who will keep your projects on track. This ensures that the people moving to the final interview stage are already verified for the traits that drive success in your specific environment.

Quantifying the impact on time-to-hire

Time is money, especially in a competitive labour market. Every day a critical role remains vacant, the business loses potential revenue or places undue stress on existing staff. Pre-employment assessments act as an automated filter, allowing your team to stop manually screening hundreds of resumes that may or may not be accurate.

Recruitment teams often spend 60% of their time in the initial screening phase. By using assessments to rank candidates based on their fit for the role's requirements, you can flip the script. Instead of looking for reasons to reject people, you spend your time engaging with the top 10% of candidates who have already demonstrated they have what it takes.

At Compono, we designed our Compono Hire platform to centralise this intelligence. It allows you to select the specific work personality you need and automatically score candidates in real time. This doesn't just save hours of manual work; it ensures the momentum of your hiring process remains high, preventing top-tier talent from being scooped up by faster-moving competitors.

Reducing turnover through better cultural and role fit

The most significant driver of pre-employment assessment ROI is the increase in employee retention. Most people don't fail in a job because they lacked the technical skills on their resume; they fail because their natural work preferences didn't align with the daily activities of the role or the team's culture.

Consider a scenario where you hire someone for a highly analytical risk-management role. If that person is naturally The Pioneer, they may quickly become frustrated by the methodical, detail-oriented nature of the work. Conversely, placing The Auditor in that same role creates a natural alignment that leads to higher job satisfaction and longer tenure.

When people are in roles that match their work personality, they are more engaged and productive. This alignment reduces the 'friction' of the daily grind. Proving the ROI here involves tracking the turnover rates of cohorts hired via assessments versus those hired through traditional methods over a 12–24 month period.

Improving team performance and dynamics

ROI isn't just about what you save; it's about what you gain in performance. High-performing teams are rarely made of identical personalities. Instead, they are a balanced mix of different strengths. A team full of visionaries might struggle with execution, while a team of executors might lack the innovation needed to stay ahead.

Using assessments allows you to see the 'gaps' in your current team. If your leadership team is currently missing The Evaluator, you might find that decisions are made too quickly without enough objective risk analysis. Hiring specifically for that missing piece provides an immediate boost to the team's collective intelligence.

This is where the concept of 'People Intelligence' becomes a competitive advantage. When you understand how your people tick, you can manage conflict better and assign tasks more effectively. You can learn more about this holistic approach in The Compono Culture, Engagement & Performance Model, which highlights how personality, engagement, and performance are inextricably linked.

How to build your ROI business case

To present a compelling case to your CFO, you need to gather specific data points from your current process. Start by calculating your average cost-per-hire and your current 90-day and 365-day turnover rates. Then, estimate the potential savings if those turnover rates were reduced by even 10–15% – a common result after implementing rigorous assessments.

Next, look at the productivity gains. New hires who are a strong 'fit' typically reach full productivity weeks faster than those who are a poor fit. Multiply that 'time-to-productivity' saving by the average daily salary of the roles you hire for. When you add these figures to the recruitment time saved, the ROI usually pays for the software within the first few hires.

Remember to include the qualitative benefits too. Improved employee morale, reduced manager stress, and a stronger employer brand are all outcomes of a fairer, more professional hiring process. While harder to put in a spreadsheet, these factors contribute to the long-term health and valuation of the business.

Key insights

• The primary financial return of assessments comes from avoiding the 1.5x salary cost associated with a bad hire.
• Automated assessment scoring reduces the administrative burden on HR teams, allowing for a more strategic focus on talent acquisition.
• Role-fit technology ensures employees are placed in positions where their natural work personality aligns with their daily tasks, driving long-term retention.
• A data-driven hiring process removes unconscious bias, leading to more diverse and higher-performing team structures.

Where to from here?

• Explore: Compono Platform

• Talk to an expert: Book in a 15-minute chat to get a walkthrough of Compono and see how we can help you measure and improve your hiring ROI.

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Frequently asked questions

How long does it take to see the ROI of pre-employment assessments?

You will typically see an immediate 'time-to-hire' saving in the first recruitment cycle. However, the full financial ROI from reduced turnover and improved performance is usually realised within 6–12 months as new cohorts of employees settle into their roles.

Are pre-employment assessments expensive for mid-sized businesses?

When compared to the cost of a single bad hire, the investment in a platform like Compono is highly cost-effective. Most businesses find that the software pays for itself by preventing just one or two hiring mistakes per year.

Do candidates find assessments off-putting in the recruitment process?

Modern, short-form assessments are generally viewed positively by candidates as they signal that the company values objective merit over subjective bias. Providing candidates with insights into their own work personality can also improve the overall candidate experience.

Can assessments really predict if someone will be a high performer?

While no tool is 100% predictive, research shows that personality and cognitive assessments are significantly more accurate at predicting job performance than interviews or resume reviews alone. They provide a vital data point that complements the human element of hiring.

How do I choose which traits to assess for a specific role?

The best approach is to map the key work activities required for the role to specific work personality types. For example, a role requiring high attention to detail would benefit from an Auditor, while a sales role might require a Campaigner. Compono helps automate this mapping to ensure consistency.