Learning & Development, Talent

Poor Assessments Are Harming Your Business and Your Workers

Any L&D professional worth his or her salt will understand the benefits of proper assessments: They guarantee a level of competence among the workforce, and they also represent an investment in the human capital that makes the company run smoothly.


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However, for all the positive outcomes that a well-designed assessment can produce, the opposite is also true. From damaging the investment in learning to misleading decision-makers, and even triggering regulatory fines, bad assessments can have serious consequences.

Effective Business Decision-Making

A poorly designed assessment often yields two equally negative outcomes: “false positives,” which occur when employees lacking the requisite knowledge pass, and “false negatives,” which occur when adequately trained employees fail.

Both cases are bad for decision-making. False positives compromise the business’s ability to gauge its employees’ knowledge and skills accurately. Tests in which guesswork and luck are significant factors leave companies with underprepared employees. Untrustworthy assessments, such as those that allow employees to easily cheat, leave decision-makers with a misplaced confidence in their employees’ skills.

Misallocation of resources is one common outcome of false negatives. Ambiguously written questions, for instance, may result in widespread failure of an assessment, even if your team is knowledgeable on the subject. Not only does this leave capable employees feeling demoralized and frustrated, but also, they will often be referred back to the L&D team for further training, wasting time and resources while overlooking the real problem—the phrasing of the assessment questions.

Regulatory Fines

Regulatory compliance is necessary for many industries, as noncompliance comes with significant financial consequences. Since the 2008 financial crisis, for example, banks have paid $321 billion in fines for regulatory breaches, according to Boston Consulting Group.

Employees must have a genuine and up-to-date understanding of regulations to prevent these breaches, and good assessments are a clear way to ensure that they do. Regulatory fines can cause serious damage to the corporate bottom line, not to mention the reputational damage suffered through negative media coverage.

Regulators favor well-planned and well-administered assessments. The Federal Deposit Insurance Corporation says in its compliance manual that compliance officers “should periodically assess employees on their knowledge and comprehension of the subject matter.”

Across the Atlantic, the European Securities and Market Authority also require that “ongoing assessment will contain updated material and will test staff on their knowledge of, for example, regulatory changes, new products and services available on the market.”

The Problem of Forgetting

It’s widely known that individuals who are tested on their knowledge retain it better and for longer than those who aren’t tested because not only is their understanding of the concepts being tested but also their ability to recall them and apply them to the given situation quickly. A good assessment should bear this in mind, as information retrieval is a fundamental tool for any workforce.

Multiple-choice questions can be useful for retrieval practice as long as you ensure corrections are provided for incorrect answers to prevent the learner from recalling the wrong information.

Open-ended questions give better retrieval practice because they stimulate recall, requiring the learner to come up with the answers without a prompt. A combination of both types of question, administered by an automated system, is often the most efficient way to practice information retrieval.

Driving Reliability 

Assessments are about more than just passing or failing. They can be the difference between a good strategy and a misinformed one, a truly knowledgeable workforce and an underinformed one, and sometimes even the difference between paying a multimillion-dollar fine or avoiding it.

Every business relies on some form of assessment, but many companies are falling victim to the easily avoidable problems with poor assessments. A well-considered, well-run assessment is better for everyone—from employees and decision-makers to regulators and the company.

John KleemanJohn Kleeman is Executive Director and Founder of Questionmark. He is one of the pioneers of digital assessments and has 30 years of experience in the industry. He writes and speaks regularly on assessments, compliance, and data privacy; is involved in several assessment standards initiatives; and is on the board of directors of the Association of Test Publishers.

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