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Predicting Employee Turnover and Performance: Pre-Employment Tests and Questions that Work

This study, conducted at four credit unions, evaluates predictors of high performance and low turnover among applicants for positions at credit unions.

Executive Summary

A hiring mistake is expensive, while a successful new hire is an asset to an organization. Yet the selection process is fraught with difficulties and is poorly understood. Recent research provides tools to substantially increase the likelihood of making successful new hires and avoiding undesirable ones. A credit union wants an employee to do two things: perform well, and stay. This study, which took place in four credit unions, demonstrates methods that can significantly improve performance and reduce turnover.

What is the research about?

Based on existing research, we selected ten predictors that appeared promising and which had a valid theoretical basis. Three of these predictors are readily available from the job application and seven are from well-validated paper and pencil tests that are available at low cost.

The study found that nine of the ten items predicted turnover and six predicted performance. There was substantial correlation between predictors of turnover and predictors of performance. Therefore using them as criteria for the selection of new employees would improve both performance and turnover. The type of turnover studied was voluntary, avoidable turnover.

What are the credit union implications?

Low cost, commercially available testing and a few key items on an application can screen applicants to substantially reduce voluntary avoidable turnover and significantly enhance performance on the job. This report provides more detail on how we obtained these results and how credit unions can apply them.