One major consideration before investing in a new tool for your business is the return on investment (ROI). It can be easier to determine the ROI on tangible assets like upgrading equipment or a new automated marketing system.
But what about personality assessments?
When used correctly, personality assessments can help you improve workplace culture, leading to lower turnover rates and higher retention. It can also be instrumental in the hiring process and pairing the right person in the right position.
One option to consider is the WorkPlace Big Five Profileᵀᴹ. The Big Five (also known as the Five-Factor Model of personality) is backed by extensive research and offers a comprehensive understanding of employee motivations, work styles, and behaviors applicable across the employee lifecycle — but is it the right tool for your organization?
Let’s dive into the cost, fit, and ROI of the Big Five assessment, so you can evaluate whether it’s the best choice for your company.
ROI of the Big Five test: Quantitative benefits
While it can be challenging to quantify some of the benefits of personality assessments, it is still possible to track KPIs – including metrics you are likely already watching – to show measurable advantages.
Keep in mind that the specifics will vary depending on your company’s objectives, current benchmarks, and unique challenges.
Benefit #1: Enhance hiring accuracy
Bad hires will cost you in the long run. In fact, the cost of recruiting and hiring can be 2-3 times their annual salary.
The Big Five assessment gives you a clearer, more accurate understanding of someone’s personality, work styles, and more before you invest in hiring them. You can look beyond their resume and determine how well they’ll fit into the team, culture, and particular role.
To broadly calculate the impact of Big Five assessments on hiring optimization, you can use the following formula:
If you hire 150 employees per year at an average salary of $120,000, let’s say 69 of those employees will be bad fits (considering an average 46% mis-hire rate). But implementing personality assessments can lower your mis-hire rate substantially. For example, even a modest but meaningful correlation of .20 between personality and job performance can lead to an estimated reduction in your mis-hire rate by roughly 25%. This brings the number of bad hires down to 52.
Even assuming a more conservative hiring cost estimate of 30% of annual salary, that comes out to:
Benefit #2: Increase productivity
In-depth personality assessments also help you place employees in teams, environments, and roles where they’ll thrive. Research from Gallup indicates that the average cost of disengagement is 18% of an employee’s annual salary — so this ROI factor is more significant than many organizations realize.
Let’s say you have 2,000 employees with an average salary of $120,000, and your company’s internal benchmarks align with global averages.
Now, let’s look at the numbers if a personality assessment raises your employee engagement rates to 75%:
In this situation, personality assessments lead to overall savings of $18,144,000.
Benefit #3: Lower turnover rates
According to the Bureau of Labor Statistics, U.S. companies have an average turnover rate of 41%. This number likely includes many entry-level jobs, but even for C-level roles, estimates pin the average turnover rate at 5% with the stakes involved with these roles much higher in terms of potential impact and disruption to the business.
The average cost to replace an employee is 0.5 – 2x their annual salary, which means reducing turnover rates can have a significant impact on your bottom line. Using a median value of 23% (between 41% and 5%), that’s:
Let’s say that WorkPlace Big Five Profileᵀᴹ lowers your turnover rate by 20%:
That’s a total of $15,000,000 in savings by reducing turnover rates.
How to measure the impact on your organization
To gain a better understanding of how personality assessments can impact your organization, we recommend starting with a pilot program to determine your specific productivity gains, turnover savings, training efficiency increases, and other ROI factors before committing to an organization-wide rollout.
By clearly defining your expected ROI drivers and using concrete measurement tools to assess the results, you can determine whether personality testing is a sound investment for your organization.
Qualitative benefits of the Big Five Test
It’s difficult to objectively measure all the advantages to a personality assessment like WorkPlace Big Five Profileᵀᴹ. But there are significant benefits we’ve found that can impact your company culture, reputation, innovation, and even your bottom line.
- Improved team dynamics. Research shows that a well-balanced team is made up of a variety of perspectives, complementary traits, and personalities that can enhance collaboration and reduce conflict.
- Enhanced employee satisfaction. Only 65% of U.S. workers are satisfied with their jobs. A deep understanding of employee dynamics can help your organization develop an environment where employees feel valued, supported, and recognized for their contributions.
- Better leadership development. While hard skills are important for effective leaders, soft skills and character traits are just as vital. Personality assessments can help you identify and nurture potential leaders based on their traits and strengths.
- Deeper organizational insight. A deeper understanding of your workforce’s personality landscape facilitates strategic HR and recruiting decisions, unlocking opportunities for internal hires, and leading to a balanced workforce that aligns with organizational needs.
Benefits for your employees
In addition to the organizational benefits, Big Five assessments also provide individual employees with insights they can leverage for growth and development. This allows them to:
- Identify opportunities for self-improvement based on their natural strengths and weaknesses.
- Increase self-understanding and self-awareness.
- Gain a better understanding of natural tendencies, motivation, and values.
- Encourage insights into traits that can be used to advance their careers.
How much does the WorkPlace Big Five Profileᵀᴹ cost?
Big Five assessment prices can vary depending on the provider you choose, your business size, and your assessment goals. Some providers offer a per-head or bulk price, while others use a subscription model.
Additionally, providers often have different reporting tiers, so you can get more advanced insights and in-depth reports by investing in a more comprehensive service level or solution.
For a deep dive comparison of all the numbers, check out our guide on the pricing of personality assessment tools.
What about using a free Big Five assessment?
While there are free Big Five assessments available for personal use, we highly recommend using an organized workplace assessment service. This makes it easier to manage and distribute the assessments and gives you access to resources that can help you make sense of the results and maximize your investment.
Paradigm Personality Labs has streamlined the assessment completion process down to just 15 minutes, and they provide a centralized dashboard to view, organize, and analyze the results. You can also access customized reports based on your goals, so you can leverage the assessment insights to improve hiring, development, leadership, team dynamics, or any combination of these areas.
Who should use the Big Five assessment?
Simply put? Anyone who wants to find and nurture qualified talent, both pre-hire and post-hire.
It has been used to improve business outcomes in a wide range of industries, including banking, education, healthcare, IT services, non-profit, retail, software, and more.
The WorkPlace Big Five Profileᵀᴹ can also help you further develop and nurture skills and qualities within your organization, promoting better job satisfaction and retention. After all, let’s be honest — your employees aren’t looking for shallow indicators of a “happy workplace” like a new ping-pong table in the office. They want to feel a sense of belonging and pride in their work. Personality assessments can help you tailor roles and environments to create that alignment.
Finally, personality assessments are a great option for organizations looking to streamline their recruiting and HR processes. When you have insight into how people with different traits work – and work together – you can approach the hiring process with a clear understanding of exactly what you’re looking for in a new hire.
Invest in your people with the WorkPlace Big Five Profileᵀᴹ
The Big Five inventory is a powerful tool with wide applications. It is not a quick fix or an all-in-one solution. Instead, it should be just one of many tools in your kit.
At Paradigm Personality Labs, we equip you with the testing tools, as well as the resources to understand the personality insights and use them to build a collaborative, diverse, and human-centric workforce.
If you’re ready to build an engaging workplace where employees can thrive, the WorkPlace Big Five Profileᵀᴹ is for you. From improved hiring accuracy and retention to enhanced team dynamics and personal growth, the assessment can give you the insights you need to maximize performance throughout your organization.
Paradigm Personality Labs partners with you to help you understand your testing results and use them to make a real impact. We’ll help you bring out the best in each and every employee and create a culture that’s committed to growth, collaboration, and healthy team dynamics.
Ready to empower your workforce? Contact PPL today.
