Talent Assessment Market Analysis

Talent
Assessment
2014/2015:

Market
Analysis,

Vendor
Classification,

and
Market
Opportunity

October
2014

CREATED
BY:

Charles
A.
Handler,
Ph.D.

President/Founder

Rocket-‐Hire
LLC

www.Rocket-‐Hire.com

T H O U G H T
L E A D E R S H I P
I N
T A L E N T
A S S E S S M E N T

©2014
Rocket-‐Hire,
LLC
•
www.rocket-‐hire.com
October
2014
|
2

A B O U T
T H E
A U T H O R

Dr.
Charles
Handler
is
a
thought
leader,
analyst,
and
practitioner
in

the
Talent
Assessment
and
human
capital
space.

Dr.
Handler
is
the

only
analyst
in
the
Talent
Assessment
space
with
technical
training
in

psychometrics
and
experiencing
in
the
development
and
implementation

of
global
Talent
Assessment
systems.

Through
his
prolific
writing
for
media
outlets
such
as
ERE.net,
his
work

as
a
pre-‐hire
assessment
analyst
for
Bersin
by
Deloitte,
and
worldwide

public
speaking,
Dr.
Handler
is
a
highly
visible
futurist
and
evangelist
for

the
Talent
Assessment
space.
Throughout
his
career,
Dr.
Handler
has

been
on
the
forefront
of
innovation
in
Talent
Assessment;
applying
his

sound
foundation
in
psychometrics
to
helping
drive
innovation
in

assessments
through
the
use
of
gaming,
social
media,

big
data,
and
other
advanced
technologies.

Since
2001
Dr.
Handler
has
served
as
the
president
and
founder
of

Rocket-‐Hire,
a
vendor
neutral
consultancy
dedicated
to
creating
and

driving
innovation
in
Talent
Assessment.

Through
his
work
with

Rocket-‐Hire,
Dr.
Handler
has
served
as
a
strategic
advisor
with
virtually

every
large
assessment
provider
as
well
as
a
large
number
of
start-‐ups

entering
the
space.

Dr.
Handler
has
also
worked
extensively
with
end

users
of
Talent
Assessment
systems
such
as
Intuit,
Wells
Fargo,
KPMG,

Scotia
Bank,
Hilton
Worldwide,
and
Humana,
helping
them
to
create
and

implement
their
assessment
strategies.

Dr.
Handler
holds
a
M.S.
and
Ph.D.
in
Industrial/Organizational

Psychology
from
Louisiana
State
University.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
3

Executive
Summary
..........................................................................................

4

Overview
of
Report
Sections
............................................................................

5

Part
I:
Talent
Assessment
Market
—
Size
and
Growth
......................................
9

Figure
1-‐
Talent
Assessment
Within
HCM
........................................
10

Table
1-‐
Recent
M&A
in
Talent
Assessment

....................................
13

Part
II:
Talent
Assessment
Market
—
Vendor
Classification
Scheme
..............
16

Figure
2-‐
Four
Quadrants
for
Classifying
Vendors
...........................
19

Part
III:
Market
Opportunity

..........................................................................

23

Conclusion
........................................................................................................
28

Sources
............................................................................................................

31

TABLE
OF
CONTENTS

©2014
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•
October
2014
|
4

Executive
Summary

Why
is
This
Briefing
Important?:

Talent
Assessment
is
a
Different
Animal

Talent
Assessment
is
a
rapidly
growing
and
often
misunderstood
segment
of
the
HR

Technology/Human
Capital
Management
(HCM)1

market
that
has
tremendous
potential
for

continued
growth.

Talent
Assessments
differ
from
many
other
areas
within
HCM
because
they
are
highly

specialized
scientific
tools
that
are
created
and
curated
by
experts.

Their
development
and

refinement
is
an
ongoing
process
that
is
data
intensive.
Developing
a
solid
product
offering
in

this
space
requires
a
good
deal
of
time
and
customer
data.

While
the
complexities
of
Talent
Assessment
have
caused
it
to
be
misunderstood
by
those
not

trained
in
its
technical
aspects,
the
value
of
Talent
Assessments
to
end
users
is
well

documented.
There
is
an
increasing
amount
of
evidence
that
companies
with
solid,
well-‐
executed
Talent
Assessment
programs
outperform
those
who
don’t2
.

Unfortunately,
most
end-‐users
lack
the
understanding
and
experience
required
to
reap
the

value-‐add
of
Talent
Assessments.

In
our
experience,
most
Talent
Assessment

programs
are
clumsily
executed
bolt-‐ons
that
seem
more
like
afterthoughts

than
true
strategic
initiatives.

However,
this
is
slowly
changing
as
the
adoption
of

integrated
talent
management3

continues
to
grow.

The
HCM
industry
is
marked
by
consolidation
and
ongoing
integration4
,
as
providers
acquire

new
technologies
that
will
provide
the
componentry
needed
to
support
integrated
talent

management.
Talent
Assessment
is
an
area
that
is
not
highly
built
out
within
most
larger
HCM

suites,
but
of
late
there
has
been
a
great
deal
of
interest
in
assessments
by
providers
who
are

building
out
new
product
suites.

Due
to
its
highly
specialized
nature,
the
fastest
way
for
HCM
vendors
to
add
assessment

functionality
is
via
partnering
with
or
acquiring
Talent
Assessment
providers
who
have
content,

customers,
and
data.

This
is
consistent
with
the
overall
pattern
of
consolidation
that
marks
the

industry.

Mature
Talent
Assessment
products
have
very
large
margins,
making
acquisition
a

preferable
option
for
larger
providers
with
mature
distribution
channels
because
it
allows
them

to
own
the
entire
revenue
stream.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
5

O v e r v ie w
o f
R e p o r t
S e c t io n s

Having
established
the
importance
of
Talent
Assessment
as
a
key
practice
within
HCM,
this

briefing
highlights
the
value
and
expected
growth
of
Talent
Assessment
via
the
following:

Section
I:
Market
Size
and
Growth

Section
I
of
this
report
provides
a
market
overview
supporting
a
position
that
the
Talent

Assessment
market
will
undergo
strong
growth
in
2015.

However,
we
believe
that
the

most
significant
increases
in
market
size
will
occur
closer
to
2020-‐
as
critical
new

technologies
mature.
Section
I
of
this
briefing
provides
the
following
details
around
the

Talent
Assessment
market:

§ Estimated
Market
Size
(2014-‐2015)

• $3
billion
–
across
both
Talent
Acquisition
and
Talent
Management

• $1.25
billion
–
within
Talent
Acquisition
alone

§ Estimated
Market
Growth
(Talent
Acquisition
and
Talent
Management
combined)

• 5-‐10%
in
2014/15

• 15-‐20%
by
2020
–
with
growth
to
approximately
$5
billion

§ Key
Drivers
of
Growth

• Market
consolidation
and
increased
distribution
channels

• Integrated
talent
management
(e.g.,
linking
pre-‐
and
post-‐hire
data)

• Social
sourcing
as
an
emerging
and
much-‐needed
area

• Increasing
focus
on
analytics
to
drive
ROI

• Globalization

• Niche
vendor
specialization

Section
II:
Market
Classification

While
it
is
hard
to
ignore
the
impact
the
evolution
of
HCM
is
having
on
Talent
Assessment,
it
is

important
to
understand
that
Talent
Assessment
is
its
own
industry
that
has
been
steadily

growing
for
almost
50
years.

There
are
literally
hundreds
of
vendors
operating
in
this
space,

many
of
whom
have
been
highly
profitable
for
decades.

©2014
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LLC
•
October
2014
|
6

Understanding
the
Talent
Assessment
marketplace
is
difficult
because
it
is
extremely

fragmented.

There
are
many
types
of
Talent
Assessment
tools
and
there
is
great
variation

amongst
vendors
when
it
comes
to
methodologies,
product
quality,
and
product
maturity.

In
order
to
better
understand
the
differences
between
these
vendors,
Section
II
of
this
report

provides
a
two-‐part
classification
scheme.

It
is
important
to
note
that
we
have
chosen
not
to

use
assessment
type
(i.e.,
personality
testing,
assessment
centers,
etc.)
to
classify
vendors.

This

is
because
the
majority
of
vendors
offer
a
variety
of
tools,
many
of
which
are
highly
similar.

We

believe
what
truly
differentiates
vendors
is
their
methodology
and
use
of
technology.

Our

classification
scheme
includes
the
following
key
elements:

1.
Quadrants

We
provide
a
scheme
centering
on
the
manner
in
which
vendors
manage
the
tradeoff
between

speed
of
implementation
(e.g.,
“fluidity”)
and
predictive
accuracy
(e.g.,
“power”).

These
two

parameters
are
used
to
define
four
quadrants
that
support
a
visualization
of
the
current
and

future
state
of
the
Talent
Assessment
market
(see Figure 2, page 19).

This
scheme
clearly

identifies
the
potential
impact
of
advances
in
technology
and
assessment
science
on
the
ability

to
quickly
deploy
highly
accurate
assessments.

2.
Categorization
Scheme

We
suggest
that
vendors
can
be
placed
into
three
basic
categories
based
on
their
core

methodologies
and
approaches.
These
include:

A. Consulting
Firms
—
Low
Fluidity,
High
Power
—
Represent
the
most
traditional

manner
in
which
Talent
Assessments
have
been
deployed.

These
are
high-‐touch

firms
that
rely
on
professional
services
to
support
and
implement
Talent

Assessments.
Firm
types
within
this
category
include:

• General
HR
consulting
firms

• Talent
Assessment
consulting
firms

• Developers
of
custom
assessment
content

B. Product
Firms
—
Fluidity
and
Power
both
range
from
high
to
low
—
Represent
the

largest
area
within
the
current
market.

These
firms
use
a
variety
of
approaches,
all

of
which
center
on
reducing
the
professional
services
required
to
implement
and

support
assessments.
These
firms
represent
the
highest
degree
of
variation
in

methodology
and
product
quality,
making
differentiation
difficult.
Firm
types
within

this
category
include:

• Test
publishers

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•
October
2014
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7

• Solution
providers

• Providers
of
specialized
assessments

C. Technology
Firms
—
High
Fluidity,
High
Power
—
Represent
market
opportunity
via

the
ability
to
support
rapid
precision
at
scale.

These
are
firms
that
are
creating

change
and
disruption
within
the
space
via
a
blend
of
technology
and
psychology.

Firm
types
within
this
category
include:

• Measurement
innovators

• Integrated
HCM
platform
providers

• Predictive
social
sourcing
providers

Note:
This
report
does
not
name
specific
vendors
within
categories
or
quadrants.

This

information
is
available
via
separate
engagement
with
Rocket-‐Hire.

Section
III:
Market
Opportunities

Talent
Assessment
methods
have
been
relatively
resistant
to
technological
change,
but
new

technologies
are
slowly
entering
the
space
and
creating
growing
tension
between
the
old
and

new.

Technology
is
creating
great
opportunity
for
disruption
in
some
segments
of
the
Talent

Assessment
market
(e.g.,
sourcing
and
social
recruiting)
while
others,
such
as
executive

assessment
and
custom
built
assessments,
are
likely
to
change
much
more
slowly.

While

revenues
from
traditional
assessment
tools
will
remain
a
significant
factor
in
the

growth
of
the
market,
there
is
a
shift
coming
in
which
technology
will
drive

incremental
growth
via
its
ability
to
increase
precision.

We
identify
the
following
five

areas
as
representing
the
most
significant
opportunities
over
the
coming
five
years
(and

beyond).

§ Optimized
sourcing
–
The
sourcing
process
is
broken
and
the
friction
that
exists
is

detrimental
to
the
overall
goal
of
making
good
hires.

Socially
driven
sourcing
platforms

that
use
both
AI
and
psychometrics
represent
the
most
significant
growth
area
within

the
talent
acquisition
(and
Talent
Assessment
space).

§ Embedded
psychometric
measurement
–
HR
technology
providers
will
begin
to
figure

out
that
outsourcing
Talent
Assessment
to
a
third
party
vendor
is
both
expensive
and

unwieldy
and
will
increasingly
seek
to
own
their
own
assessment
content.

Larger
HCM

providers
will
continue
to
integrate
assessment
at
deeper
levels.

When
coupled
with

advanced
analytics,
embedded
Talent
Assessments
will
allow
new
levels
of
predictive

©2014
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•
October
2014
|
8

insight
that
can
be
translated
directly
into
the
metrics
needed
to
support
strategic
and

tactical
business
operations.

§ Interactivity
and
gamified
psychometric
assessments
–
Engagement
is
becoming
a

critical
driver
of
success
in
the
hiring
process
and
beyond.

§ Driving
Precision
at
Scale
–
There
is
significant
opportunity
for
transactional
Talent

Assessment
products
that
use
technology
to
drive
mass
customization.

SMBs
represent

a
large,
and
mostly
untapped,
potential
market
for
this
type
of
assessment.

§ Niche
Based
Simulations
–
There
is
tremendous
value
in
simulating
unique
work

environments
to
support
measurement
and
prediction.

Specialized
simulations
have

value
for
both
talent
acquisition
and
talent
management.

©2014
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LLC
•
October
2014
|
9

Part
I:

Talent
Assessment
Market
—
Size
and
Growth

While
Talent
Assessment
is
its
own
industry,
its
use
as
a
key
component
in
a
variety
of
HR

related
processes
ties
it
directly
to
the
HCM
market.

Understanding
the
market
size
and

expected
growth
of
the
Talent
Assessment
industry
first
requires
understanding
its
place
within

the
context
of
the
larger
market
into
which
it
is
nested
(i.e.,
the
HCM/HR
Technology
market).

Growth
of
the
Human
Capital
Management/HR
Technology
Market

Talent
Assessment
is
a
subset
of
the
Human
Capital
Management
(HCM)
space.

While
this

space
is
dominated
by
SaaS
based
providers,
most
Talent
Assessment
is
not
sold
as
software

largely
due
to
two
factors,
the
technical
(i.e.,
scientific)
complexity
of
implementing
it
and
the

lack
of
technology
development
capabilities
amongst
most
of
the
mature
vendors
in
the
space.

Talent
Assessment
continues
to
evolve
however,
and
it
is
increasingly
becoming
viewed
as
a

SaaS
offering-‐
joining
it
more
closely
to
the
overall
global
HCM
market.

The
global
HCM
market
continues
to
grow
as
it
supports
the
movement
of
HR
technology
from

an
administrative
role
to
a
strategic
one.

Estimates
of
the
market
size
for
global
HCM
vary

somewhat
but
all
identify
it
as
a
large
and
growing
industry.

For
instance:

§ Gartner
sizes
the
HCM
market
at
$8.3
billion
in
2014
and
$8.8
billion
in
20155
.

§ According
to
IDC
Research6
,
the
global
HCM
market
is
expected
to
grow
8
percent

annually,
hitting
$13.5
billion
in
2017.

§ According
to
Bersin
by
Deloitte
this
market
grew
by
17%
in
2013
and
is
now
over
$5

billion
in
size7
.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
10

Talent
Management,
Talent
Acquisition,
and
Talent
Assessment

Talent
Assessment
is
part
of
the
talent
management
and
talent
acquisition
areas
within
global

HCM
(see
Figure
1).

Figure
1:
Talent
Assessment’s
Position
Within
the
HCM
Market

Talent
Assessment
is
relevant
across
all
areas
of
talent
management,
serving
both
as
a

pre-‐hire
predictive
tool
(for
talent
acquisition)
and
a
post-‐hire
tool
to
support
employee

development
and
succession
planning
(for
talent
management).

Increased
movement
by
HCM
technology
providers
to
support
integrated
talent

management
is
setting
the
stage
for
the
value
of
Talent
Assessments
as
link
that

unifies
pre
and
post
hire
talent
processes.

The
talent
management
industry
has
also

grown
quite
rapidly
in
lockstep
with
the
overall
HCM
industry,
and
has
seen
significant

investment
and
growth
across
key
areas,
such
as
performance
management,
talent
acquisition,

and
learning.

©2014
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LLC
•
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2014
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11

Talent
Acquisition

Talent
Acquisition
is
a
subset
of
talent
management
that
is
seeing
a
disproportionate
increase

in
growth
and
investment
when
compared
to
other
areas
of
talent
management.

This
is

because
talent
acquisition
is
the
area
of
talent
management
that
is
best
suited
for
disruption
by

new
technologies.

For
instance,
social
and
mobile
technologies
are
having
a
profound
impact

on
recruiting
and
sourcing.

Advanced
souring
technologies
are
providing
a
gateway

to
the
rapid
development
of
social
based
recruiting
and
applicant
tracking

functionality,
providing
the
entire
recruiting
process
with
an
increasingly
sharp

set
of
new
teeth.

Beyond
these
advances,
Talent
Assessment
will
continue
to
play
a
key
role

in
all
phases
of
the
talent
acquisition
process
because
it
introduces
a
science-‐based
toolset
that

can
have
a
measurable
impact
on
quality
of
hire.

Talent
Assessment
Market
Size

While
there
is
significant
reason
to
believe
Talent
Assessment’s
value
as
a
key
component
of

HCM,
there
is
little
published
information
available
about
its
market
size.

The
reasons
for
this

include:

§ Few
Talent
Assessment
companies
are
public
–
in
fact,
the
majority
are
very
small

§ Vendors
who
sell
Talent
Assessments
often
sell
a
range
of
other
products
so
revenues

from
assessment
are
hard
to
isolate

§ The
Talent
Assessment
market
is
very
fragmented
–
there
is
huge
variation
in
product

type
and
quality
and
it
is
difficult
to
define,
break
down,
and
track
the
market

Published
estimates
of
market
size:

§ According
to
CEB
(in
2012)
-‐
Talent
Assessment
is
a
$4
billion
global
market
growing

annually
at
seven
to
ten
percent8
.

§ According
to
Bersin
by
Deloitte,
the
size
of
the
market
(in
2012)
was
approximately

$2
billion9
.

Rocket-‐Hire’s
estimates
of
market
size:

§ We
estimate
that
the
overall
global
market
for
Talent
Assessment
in
2014
and
2015

across
both
Talent
Acquisition
and
Talent
Management
is
likely
somewhere
around

$3
billion.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
12

§ When
focusing
on
Talent
Assessments
used
pre-‐hire,
we
feel
the
market
is
around

$1.25
billion
—
or
slightly
less
than
half
(around
40%)
of
the
overall
market
for
Talent

Assessments.

While
there
is
higher
volume
of
usage
for
pre-‐hire
assessments,
post
hire
assessments
have
a

higher
price
per
unit
and
are
often
easier
for
vendors
to
sell
because
they
tap
into
larger

budgets
(i.e.,
learning
and
development),
are
less
scrutinized
for
their
ability
to
deliver
ROI,
and

come
with
fewer
concerns
over
legal
compliance.

Breaking
Down
the
Pre-‐Hire
Talent
Assessment
Market

Given
the
fragmentation
of
the
pre-‐hire
assessment
market,
the
simplest
way
to
break
down

the
market
is
by
firm
size.

§ Large
firms
—
The
largest
7-‐10
firms
account
for
about
$450
million
(or
slightly
more
than

one-‐third
of
the
entire
market).

These
are
mostly
established
firms,
with
global
presence

and
mature
distribution.

Note
that
SHL,
by
far
the
largest
global
provider
of
Talent

Assessments,
had
revenues
over
$200
million
in
2012.

§ Medium
firms
—
There
are
15-‐20
firms
that
account
for
about
$500
million
(40%
of
the

total
market).

These
are
established
firms
that
are
often
global
and
use
leveraged

distribution
to
drive
profits
while
keeping
overhead
low.

This
also
includes
the

assessment
practices
of
larger
professional
services
firms
(i.e.,
AON-‐Hewitt,
Mercer,
PWC)

and
HR
consulting
organizations.

§ Small
firms
—
There
are
well
over
100
small
firms
that
account
for
about
$300
million
in

revenue
(or
about
25%
of
the
market).

This
segment
is
a
catch
all
that
includes
small

content
development,
smaller
consulting
firms,
specialty
vendors
(i.e.,
skills
tests,

simulations,
etc.),
and
start-‐ups
that
are
not
generating
any
revenues
at
present.

This

area
of
the
market
presents
significant
opportunity.

Many
smaller
firms
are
niche
players

that
either
have
innovative
blends
of
science
and
technology
that
will
be
disruptive
and

drive
rapid
adoption
or
have
solid
products
but
lack
good
distribution
channels.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
13

Expected
Market
Growth
for
Talent
Assessment

We
expect
to
see
significant
growth
in
this
market
over
the
coming
years
due
to
the
following

trends:

§ Market
consolidation
and
partnerships
open
distribution
channels
–
We
believe
that
this

will
be
the
#1
trend
that
will
drive
the
market
in
2015.
Larger
firms
with
complimentary

products
and
significant
distribution
are
able
to
offer
their
existing
client
base
Talent

Assessment
as
an
additional
value
added
product.

The
sales
cycle
for
Talent
Assessment

is
unusually
long
(and
growing
longer),
so
leveraging
existing
client
relationships
makes
a

great
deal
of
sense.
The
fastest
way
in
will
be
to
ride
the
coattails
of
vendors
who
already

have
a
trusted
relationship,
a
foot
in
the
door,
or
an
existing
master
services
agreement.

Given
the
technical
nature
of
Talent
Assessments
and
the
time
needed
to
build
a
mature

Talent
Assessment
product,
it
makes
more
sense
to
purchase
assets
than
it
does
to
build

new
ones.

This
position
is
supported
by
the
following
noteworthy
M&A
activity
in
the

space
over
the
past
five
years
(as
summarized
in
Table
1,
below).

Table
1:
Recent
M&A
in
Talent
Assessment

COMPANY
ACQUIRED
YEAR
DEAL
SIZE

Mercer
Censeo
2009
NA
–
$3-‐5
million
(est.)

Symphony
Technology

Group
(PE)

First
Advantage
(testing
assets
–

not
whole
company)

2010
$265
million

CEB
SHL
2012
$660
million

CEB
Valtera
2012
NA
–
$5-‐10
million
(est.)

IBM
Kenexa
2013
$1.3
billion

PeopleMatter
PeopleClues
2013
NA
–
$3-‐5
million
(est.)

Korn
Ferry
PDI
2013
$80
million
with
$15
million
earn
up

Infor
PeopleAnswers

2014
NA
–
$100-‐150
million
(est.)

Wiley
Profiles
International
2014
$51
million

Hay
Group
Talent
Q
2014
NA
–
$5-‐10
million
(est.)

§ Integrated
talent
management
provides
a
framework
for
uniting
pre-‐
and
post-‐hire

functions
—
The
maturation
of
HCM
products
is
providing
a
significant
platform
for
the

continued
uptake
of
Talent
Assessments.

An
increasing
number
of
HCM
suite

providers
are
finally
turning
their
attention
to
the
value-‐add
that
a
unified

assessment
process
has
across
entire
talent
lifecycle.
Expect
to
see
HCM

providers
begin
to
solidify
their
assessment
strategies
over
the
course
of

2015.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
14

§ Investment
in
start-‐ups
and
new
technologies
is
creating
a
disruptive
force
—Traditional

Talent
Assessment
vendors
have
a
poor
track
record
with
the
use
of
technology
and
have

struggled
mightily
with
innovation.

The
mature
vendors
in
the
space
have
felt
little

pressure
because
they
remain
highly
profitable
doing
things
the
same
way
they
have
been

done
for
decades.

The
real
innovation
in
this
space
is
coming
from
a
host
of
start
ups
and

early
stage
companies
that
are
blending
advanced
technologies
and
Talent
Assessment

content
to
create
new
tools
that
will
eventually
replace
more
traditional
Talent

Assessments.

§ Psychometrics
supercharges
social
recruiting
—
Sourcing
and
recruiting
will
be
the

highest
growth
area
within
HCM
over
the
coming
years.

There
is
tremendous
friction
in

the
sourcing
space
due
to
the
imprecision
of
current
methods
for
matching
people
with

job
opportunities
to
which
they
are
best
suited.

The
targeted
delivery
of
qualified

candidates
reduces
the
friction
in
the
entire
hiring
process
by
increasing
the
probability
of

successful
hires.

The
combination
of
psychometrics
and
AI
within
SoLoMo10

(social,
local,
mobile)
technologies
is
set
to
fundamentally
change
talent

acquisition
by
pushing
the
value
of
Talent
Assessments
further
up
the

funnel
where
their
cost
is
folded
into
sourcing
budgets.

§ Increasing
focus
on
analytics
plays
to
Talent
Assessment’s
strengths
—The
movement
to

create
new
tools
that
leverage
big
data
and
analytics
to
support
decision-‐making
are
a

dream
for
the
Talent
Assessment
industry.

Talent
Assessment
tools
are
designed
to

support
predictive
decision-‐making.
The
ability
to
show
the
value
of
Talent
Assessments

as
decision-‐making
tools
requires
a
commitment
to
providing
job
performance
data
from

those
who
have
been
assessed.

It
has
traditionally
been
hard
to
obtain
such
data,
making

it
very
hard
to
show
the
value
of
Talent
Assessments.

A
rapidly
increasing
number
of
end

users
of
assessments
are
creating
internal
HR
analytics
functions
whose
job
it
is
to
collect

and
curate
data.

At
the
same
time,
HR
technology
providers
are
adding
their
own

analytics
functionality
to
platforms
that
collect
both
pre
and
post
hire
data.

When

combined
with
advanced
analytics,
the
ownership
of
data
across
the
entire

employee
lifecycle
supports
an
entirely
new
level
of
sophistication
in

business
intelligence.

These
things
are
setting
the
stage
for
the
vendors
of
Talent

Assessments
to
demonstrate
the
value
add
their
tools
can
provide
and
fuel
the
continued

optimization
of
their
products.

§ Closing
gaps
in
preparedness
around
talent
requires
good
measurement
tools
—

Certainly
CEOs
realize
the
value
of
talent
to
achieving
their
mission.

But
the
general

consensus
is
that
they
are
unprepared
to
meet
the
talent
challenges
that
will
define
the

success
of
their
businesses.

Recent
surveys
of
business
leaders
by
PWC11

and
Deloitte12

both
identify
major
gaps
between
the
perceived
value
of
talent
and
the
readiness
of

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
15

organizations
to
manage
it.

Talent
Assessment
is
an
essential
tool
for
closing
these
gaps

and
as
such,
it
will
continue
to
gain
interest
from
business
leaders
over
the
coming
years.

§ Underserved
areas
still
exist
—
Expansion
into
areas
that
remain
underserved
by
Talent

Assessment
tools
has
the
potential
to
drive
significant
profits.

These
include
SMB
and

managerial
professional
jobs,
both
of
which
suffer
from
a
lack
of
innovative
tools
and

methodologies.

This
is
because
in
both
cases,
most
of
the
tests
used
are
off
the
shelf
and

are
not
dialed
in
to
specific,
localized
job
requirements.

Technology
is
allowing
providers

the
ability
to
create
more
targeted
tests
that
can
be
delivered
transactionally,
filling
a

huge
need
when
one
considers
the
massive
number
of
persons
employed
by
SMBs
and/or

are
in
professional
managerial
roles.

§ Niche
players
are
thriving
–
Talent
Assessment
remains
a
cottage
industry
populated
by

many
smaller
shops
that
have
distinct
specializations.

Many
vendors
in
the
space
serve

well-‐developed
niche
markets,
either
by
vertical
(i.e.,
healthcare)
or
by
technology
(i.e.,

simulations).

These
companies
will
experience
upticks
over
the
course
of
2015.

§ Talent
Assessment
is
a
global
business
–
While
the
most
profitable
Talent
Assessment

firms
are
based
in
the
US
or
UK,
Talent
Assessment
is
used
worldwide.

There
remains

tremendous
opportunity
for
increased
use
of
Talent
Assessments
in
emerging
markets.

While
US-‐based
firms
have
had
trouble
charging
Western
prices
for
assessments
in

developing
nations,
the
opportunity
for
scale
is
greater
than
in
the
West.

Expected
Market
Growth

Rocket-‐Hire
believes
that
the
overall
Talent
Assessment
market
will
experience
growth
of
only

5-‐10%
in
2015.

However,
we
expect
a
significant
uptick
in
the
range
of
15-‐20%
over
the
coming

five
years
as
new
technologies
find
their
way
into
the
space
and
distribution
channels
continue

to
open
up.

Based
on
the
very
real
and
present
trends
outlined
in
this
briefing,
we

expect
the
overall
Talent
Assessment
market
to
top
$5
billion
by
2020.

Our
estimates
are
also
based
on
the
fact
that
the
existing
market
for
assessments
is
not
even

close
to
meeting
the
total
addressable
market
for
these
tools.

At
present
assessment
is
likely

used
for
much
less
than
half
of
the
50
million
total
hires
made
in
the
US
yearly13
,
leaving

tremendous
space
for
additional
uptake.

When
one
considers
that
over
50%
of
all
workers
in

the
US
are
employed
by
SMBs,
simply
adding
wider
use
of
assessments
within
this
segment
will

provide
scale
that
will
lead
to
significant
increases
in
market
value.

Due
to
SMB
opportunities,
increased
investment
in
talent
acquisition
technology,
and
increased

focus
by
HCM
vendors,
we
believe
that
the
pre-‐hire
Talent
Assessment
market
will
experience

the
most
growth
(vs.
the
post-‐hire
market)
over
the
coming
5
years.

We
estimate
this
market

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
16

for
pre-‐hire
assessments
to
grow
to
well
over
$2.5
billion
by
2020
and
move
past
post-‐hire

Talent
Assessment
to
represent
over
50%
of
the
overall
market
for
Talent
Assessments
by
2020.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
17

Part
II:

Talent
Assessment
Market
—
Vendor
Classification
Scheme

A
Fragmented
Market

It
is
difficult
to
easily
understand
and
classify
the
Talent
Assessment
market
because
it
is
highly

fragmented.

The
main
reasons
for
this
fragmentation
include:

§ Broad
definition
–
There
is
absolutely
no
“market
standard”
for
what
a
Talent
Assessment

is
or
should
be.
Even
within
the
boundaries
of
accepted
conventions,
there
are
literally

hundreds
of
ways
that
one
can
measure
or
assess
talent.

In
many
cases,
methodologies

may
expand
outside
the
boundaries
of
what
has
traditionally
been
labeled
as
Talent

Assessment.

§ Variation
in
methodologies
–
“Talent
Assessment”
is
a
term
that
covers
a
wide
range
of

vendor
methodologies.

The
term
“methodology”
refers
to
the
manner
in
which
the

assessment
content
is
configured,
deployed,
and
evaluated.

Methodologies
are
most

commonly
not
bound
to
any
one
type
of
content.

For
instance,
personality
testing
can
be

implemented
using
a
number
of
different
methodologies.

The
methodology
used
by
a

vendor
is
a
major
determinant
in
their
ability
to
support
accurate
decision-‐making.

It
is

often
difficult
for
those
not
trained
in
the
technical
aspects
of
Talent
Assessment
to

differentiate
between
the
methodologies
available,
a
fact
that
makes
it
more
difficult
to

understand
the
market
as
a
whole.

§ More
new
vendors
–
The
market
continues
to
expand
at
a
relatively
rapid
pace.

There

are
significantly
more
firms
now
than
there
were
a
decade
ago.

Most
new
firms
are

focused
on
leveraging
technology
to
enhance
the
ability
to
quickly
create
highly
accurate

tests,
thereby
disrupting
the
market.

There
are
relatively
few
new
vendors
who
are

entering
the
market
with
a
business
model
that
relies
on
traditional
methodologies.

§ Talent
Assessment
is
getting
absorbed
into
other
offerings
–
While
there
are
many
new

firms
emerging,
established
firms
continue
to
be
absorbed
by
larger
companies
seeking

both
content
and
an
established
customer
base.

Consolidation
in
the
marketplace
and

the
injection
of
Talent
Assessment
into
ancillary
HR
technologies
(e.g.,
ATS,
360
degree

feedback,
sourcing)
make
it
more
difficult
to
directly
track
the
direct
role
of
Talent

Assessment
in
generating
revenue.

§ Talent
Assessment
cuts
across
both
talent
acquisition
and
talent
management
–
TA
and

TM
are
very
different
functions
and
the
manner
in
which
Talent
Assessment
is
sold
and

used
can
differ
dramatically
between
them.

Tracking
the
market
for
assessment
requires

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
18

understanding
the
differences
between
Talent
Assessment
across
both
TA
and
TM.

This
is

not
an
easy
task.

Talent
Assessment
Vendor
Classification

This
report
provides
a
two-‐part
classification
model
that
can
be
used
to
differentiate
and

classify
Talent
Assessment
vendors.

It
is
important
to
note
that
our
model
does
not
use

assessment
type
(i.e.,
personality,
assessment
center,
etc.)
to
classify
vendors.

Many
vendors

offer
a
range
of
assessment
types
that
are
similar
in
nature,
making
content
a
poor
method
of

differentiation.

Instead
our
scheme
uses
two
heuristics.

First,
we
provide
a
quadrant-‐based
scheme
that
places
vendors
according
to
their
ability
to

manage
the
tradeoff
between
ease
of
implementation
(referred
to
as
“Fluidity”)
and
accuracy

of
their
solutions
(referred
to
as
“Power”).

Secondly,
we
support
the
quadrant
scheme
with
a

simple
categorization
model
that
facilitates
the
placement
of
vendors
within
quadrants
based

on
their
implementation
approach
(i.e.,
methodology)
and
use
of
technology.

Note:
This
report
does
not
include
the
names
of
specific
vendors
within
the
classification
scheme.

This
information
is
available
via
a
direct
engagement
with
Rocket-‐Hire.

Categorizing
the
Market
–
A
Quadrant-‐Based
Scheme

Fluidity
vs.
Power

The
effective
use
of
Talent
Assessment
requires
the
management
of
many
tradeoffs,
all
of

which
boil
down
to
one
key
focus-‐
balancing
the
time
and
expense
required
to
achieve

predictive
accuracy.

Traditionally,
achieving
higher
levels
of
accuracy
requires

more
time
and
expense
in
the
development,
configuration,
and
implementation

of
an
assessment.

While
more
traditional
assessment
methodologies
focus
almost
entirely
on
driving
precision
via

a
very
labor
intensive
model,
technology
and
market
demand
for
less
expensive,
easy
to
deploy

tools
have
led
to
the
development
of
methodologies
designed
to
increase
the
speed
and
ease

with
which
an
assessment
can
be
implemented.

No
matter
what
specific
type
of
assessment

content
is
involved,
vendors
are
continually
searching
for
the
formula
that
will
support
both

ease
of
implementation
and
accuracy.

The
wide
range
of
different
approaches
to
the
tradeoff
between
speed
and
accuracy
has

resulted
in
the
development
of
a
significant
number
of
differing
methodologies.

In
many
cases

a
focus
on
speed
results
in
a
methodology
that
deviates
from
core
best
practices.

On
the
other

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
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hand,
traditional
best
practices
based
methodologies
can
drive
high
levels
of
accuracy
but

require
a
great
deal
of
time
and
expense
to
configure
and
implement.

Our
classification
schema
(see
Figure
2)
is
comprised
of
two
parameters
—
fluidity
and
power

—
that
create
four
quadrants.

These
key
parameters
are
defined
as:

§ Fluidity
–
The
ease
and
speed
at
which
an
assessment
can
be
deployed.

Fluidity

represents
the
labor
intensiveness
of
a
vendor’s
methodology
for
configuring,

implementing,
and
evaluating
an
assessment.

§ Power
–
The
predictive
accuracy
of
the
assessment
(AKA,
validity).

Power
represents
the

extent
to
which
the
assessment
measures
things
that
it
is
supposed
to
and
can
deliver

outcomes
that
create
value.

Figure
2
–
Talent
Assessment
Quad
Scheme

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
20

The
Four
Quadrants
In
Our
Model
Include:

Quadrant
1
–
High
Fluidity,
High
Power

è
Disruption
and
the
Future
of
Talent
Assessment

Vendors
in
this
space
are
using
technology
and
assessment
science
to
disrupt
the
market
by

offering
tools
that
are
both
fluid
and
powerful.

This
is
the
quadrant
will
continue
to
expand
as

vendors
find
ways
to
support
the
ability
to
quickly
drive
precision
at
scale.

Quadrant
2
–
High
Fluidity,
Low
Power

è
A
Crowded
Space

This
quadrant
is
crowded
as
many
vendors
offer
products
that
lead
with
ease
of

implementation
but
sacrifice
predictive
accuracy.

Vendors
in
this
quadrant
vary
quite
a
bit

based
on
their
methodologies.

It
is
often
difficult
for
consumers
to
understand
the
difference

between
vendors
in
this
quadrant
and
those
offering
solutions
of
higher
quality.

Quadrant
3
–
Low
Fluidity,
Low
Power

è
Dead
Zone

There
are
almost
no
vendors
working
in
this
space,
few
vendors
fit
this
model
as
it
represents

the
intersection
of
two
undesirable
parameters.

Vendors
in
this
quadrant
have
little
of
value
to

offer
and
should
be
avoided.

Quadrant
4
–
Low
Fluidity,
High
Power

è
Traditional
Methods

This
quadrant
includes
vendors
who
take
a
careful,
more
handcrafted
approach
to
ensuring

that
Talent
Assessments
are
“dialed
in”
precisely
for
a
given
client
situation.

Even
with

currently
available
technologies,
driving
high
levels
of
accuracy
requires
a
good
deal
of
effort.

This
quadrant
will
remain
filled
with
strong
offerings
and
represents
the
core
of
the
market
at

present,
but
will
slowly
erode
as
technology
continues
to
drive
change
in
methodologies
and

the
market
moves
towards
Quadrant
1.

Vendor
Categories
–
Placing
Vendors
in
the
Quad
Scheme

Given
the
number
of
methodologies
and
ways
in
which
Talent
Assessment
can
be
sold,
it
is

difficult
to
create
clearly
defined
vendor
categories
into
which
vendors
can
be
cleanly
placed.

However,
in
an
effort
to
simplify
the
classification
process,
we
present
a
simple
categorization

structure
that
includes
three
categories
that
are
not
mutually
exclusive
(many
vendors
fit
into

more
than
one
category).

Note
that
our
categorization
model
does
not
focus
on
the
specific
type
of
content
sold
by
a

vendor
(i.e.,
personality
tests).
Outside
of
niche
vendors
specializing
in
only
one
type
of

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
21

assessment
content,
we
feel
that
assessment
type
does
not
provide
the
ability
to
truly

differentiate
vendors.

We
feel
that
vendors
are
best
differentiated
via
the
process
by
which

their
content
is
deployed
(e.g..,
methodology)
and
the
use
of
technology
to
support

deployment.

The
remainder
of
this
section
summarizes
our
placement
of
each
firm
type
within

the
quad
scheme
(this
information
is
depicted
in
Figure
2).

A. High-‐Touch
Consulting
Firms

Quadrant
3
–
Low
Fluidity,
High
Power

While
many
Talent
Assessment
methodologies
require
some
consultation,
firms
in
this

category
are
differentiated
because
they
lead
with
a
high-‐touch
approach
marked
by
a

heavy
reliance
on
professional
services.

Talent
Assessment
has
traditionally
focused
on
a
heavy
level
of
engagement
between

provider
and
consumer,
thus
this
category
is
comprised
of
firms
that
use
more
traditional

methods.

These
methods
require
consultative
partnerships
with
clients
and
often
sync
with

the
development
of
people
processes
across
a
wide
range
of
scenarios.

High-‐touch
firms

focus
on
the
development
of
strategy
with
their
clients
while
also
providing
the
services

needed
for
execution
(i.e.,
the
development,
implementation,
and
evaluation
of
customized

Talent
Assessment
tools).

There
are
three
types
of
vendors
found
within
this
category:

1. General
consulting
firms
with
an
HR
practice
area
–
Large
consulting
firms
often

create
and
use
Talent
Assessment
as
part
of
the
toolset
needed
to
serve
their
clients.

Talent
Assessment
is
rarely
the
only
tool
these
companies
provide
to
their
clients,

rather
it
is
part
of
a
more
comprehensive
partnership.

2. Talent
Assessment
consulting
firms
–
These
firms
consult
only
on
Talent
Assessment.

They
often
use
a
core
set
of
tools
that
are
customized
for
clients.

These
firms

heavily
leverage
professional
services
when
working
with
their
clients.

Most
of

these
firms
have
an
I/O
psychology
background
and
use
more
traditional

methodologies.

3. Developers
of
custom
assessment
content–
These
firms
develop
bespoke

assessments
for
clients.

They
focus
less
on
strategy
and
more
on
the
test

development
process.

These
firms
often
specialize
in
the
development
and

maintenance
of
certification
exams,
licensure
exams,
and
knowledge
tests.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
22

B. Blended
Approach
–
Product
Firms

Quadrants
1,2,
and
3

These
quadrants
represent
the
most
crowded
segment
of
the
market
and
differentiating

the
vendors
found
within
can
be
difficult.

Firms
in
this
category
take
a
more
transactional,

productized
approach
that
focuses
on
reducing
the
time
to
deploy
assessments.

Due
to
the

complexities
associated
with
Talent
Assessments,
product
firms
often
must
support
their

offerings
with
a
full
slate
of
professional
services.

Vendors
in
this
category
are

differentiated
from
consulting
focused
firms
because
any
professional
services
required
to

support
their
products
don’t
center
on
customization
of
assessment
content.

There
are
three
types
of
vendors
within
this
category:

1. Test
publishers/transactional
solutions
–
Includes
firms
that
create
discreet
tests

that
measure
specific
traits
or
are
packaged
for
a
specific
job.

This
area
includes

traditional
vendors
who
have
been
selling
the
same
basic
content
for
decades.

Most

vendors
in
this
category
offer
solid
products
that
have
been
proven
to
work.

Despite

the
quality
associated
with
it,
the
test
publisher
model
is
starting
to
fade
as
an

increasing
number
of
firms
have
been
purchased
for
their
content
and
integrated

into
larger
entities.

There
are
also
an
increasing
number
of
companies
offering

transactional
solutions
for
sale
directly
with
no
human
intervention
or
consulting
to

support.

Both
test
publishers
and
transactional
sellers
are
increasingly
focused
on

supporting
the
SMB
market.

2. Solution
providers
–
At
present,
this
is
the
largest
area
within
the
entire
Talent

Assessment
space.

There
are
a
rapidly
increasing
number
of
companies
offering

technology
based
assessment
platforms
that
can
be
used
to
quickly
and
easily

support
implementation.

This
is
one
of
the
main
entry
points
into
the
market
as

firms
continue
to
create
technology-‐based
solutions
that
attempt
to
be
both
highly

fluid
and
highly
accurate.

Most
of
these
firms
are
product
focused
and
any
required

consulting
services
focus
on
supporting
the
product
rather
than
creating
custom

content.

There
is
a
tremendous
amount
of
variation
within
this
category
–
making
it

hard
for
non-‐experts
to
differentiate
the
quality
of
a
given
vendor.

3. Providers
of
specialized
assessments–
This
area
includes
firms
that
provide
a
highly

specialized
assessment
product
or
solution.

Many
of
these
providers
offer
highly

specialized
tools
(i.e.,
call
centers,
job
specific
simulations,
etc.),
or
work
exclusively

within
an
industry
vertical.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
23

C. Technology
Firms
–
Leading
with
True
Innovation

Quadrant
1

This
category
includes
firms
that
were
created
around
technology
as
opposed
to
a
specific

Talent
Assessment
method
or
model.

These
firms
are
using
combinations
of
assessment

content,
AI,
mobile,
social
and
big
data
to
create
a
new
brand
of
measurement
products

that
represent
a
departure
from
traditional
methods
and
products.

There
are
three
types
of
vendors
within
this
category:

1. Measurement
innovators
–
Includes
companies
using
Talent
Assessment
as
the
core

of
a
market
offering
that
is
disruptive
or
highly
novel.

This
includes
a
range
of
firms

that
may
use
AI
and
big
data
based
solutions
to
predict
job
success.

Some
of
these

firms
use
non-‐traditional
approaches
such
as
neuroscience
based
assessments
or

games.

2. Integrated
platform
providers
–
This
is
a
rapidly
growing
area
within
Talent

Assessment
that
includes
HR
technology
and
HCM
providers
who
are
adding

assessment
functionality
in
combination
with
analytics
to
drive
new
levels
of
insight

around
talent.

3. Sourcing
and
predictive
matching
tools
–
There
are
an
increasing
number
of

providers
that
are
using
psychometrically
based
tools
to
support
enhanced
sourcing,

moving
assessment
outside
of
the
funnel
in
an
effort
to
reduce
the
friction
that

plagues
this
area.

These
providers
are
creating
talent
marketplaces
in
which

assessed
candidates
are
matched
with
job
openings
based
on
a
combination
of
both

AI
and
psychometric
data.

Sourcing
is
also
well
suited
for
the
use
of
social
data
and

connections
to
support
a
more
quality
focused
sourcing
process
that
is
a
win-‐win
for

candidates
and
employers
alike.

This
is
an
area
where
we
expect
to
see
the

significant
growth
and
innovation
over
the
coming
years.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
24

Part
III:

Market
Opportunity

This
section
frames
market
opportunity
via
a
summary
of
trends
and
technologies
that
will

create
disruption
within
the
Talent
Assessment
space.

It
closes
with
the
identification
of
the

five
areas
that
represent
the
most
significant
market
opportunities
for
Talent
Assessment
as
we

move
towards
2020.

Trends
and
Technologies

Trends
Limiting
Strong
Growth
2015–2017

While
the
overall
outlook
for
Talent
Assessment
in
2015
is
favorable,
the
following
trends
will

continue
to
limit
the
size
of
market
increases
over
the
coming
few
years.

§ Assessment
continues
to
be
a
hard
sell
at
the
enterprise
level
–
Traditionally
long
sales

cycles
are
getting
even
longer.

Most
end
users
still
don’t
understand
the
value

of
Talent
Assessments
and
will
continue
to
put
it
off
as
secondary
to
the

adoption
of
new
systems
such
as
Applicant
Tracking
Systems
(ATS).

As
HCM

providers’
Talent
Assessment
strategies
mature,
uptake
at
the
enterprise
level
will

increase
significantly.

§ Assessment
is
becoming
commoditized
–
The
proliferation
of
new
vendors
entering
the

space,
the
difficulty
of
fielding
quality
solutions
at
scale,
and
the
consolidation
of
Talent

Assessment
into
larger
HCM
systems
are
threatening
to
commoditize
the
industry.

This
is

driving
prices
down
and
creating
increased
confusion
amongst
consumers.

§ The
value
of
Talent
Assessment
will
remain
obscured
by
lack
of
quality,
reliable

performance
data
–
To
truly
show
the
value
of
Talent
Assessment,
its
relationship
to
key

performance
indicators
must
be
demonstrated.

End
users
will
continue
to
struggle
to

provide
the
data
needed
to
clearly
show
the
ROI
of
their
assessment
programs.
As

vendors
provide
improved
tools
and
processes
for
better
collection
and
curation
of

performance
data,
dramatic
increases
in
the
predictive
accuracy
of
assessments
will
result

and
the
uptake
of
assessments
will
increase.

§ Assessments
still
look
(mostly)
old
fashioned
–
Change
is
slow
to
come
to
the
assessment

industry.

While
the
coming
year
will
see
the
continued
rise
of
new
start
ups
with
fresh

ideas,
it
will
take
some
time
for
their
products
to
mature.

The
norm
in
the
industry

is
still
tests
that
are
not
user
friendly
and
often
receive
push
back
from
end

users
who
feel
it
is
a
sandbag
in
the
workflow
of
the
hiring
process.

©2014
Rocket-‐Hire,
LLC
•
October
2014
|
25

§ Increasing
pressure
for
mobile
assessments
remains
unmet
–
Talent
Assessment
is
still
a

research-‐science
based
discipline
that
remains
conservative.

While
all
the
big
providers

have
some
mobile
offerings,
there
remains
trepidation
around
the
equivalency
of
mobile

assessments
to
more
traditional
methods.

On
top
of
this,
changes
in
mobile
technologies

are
happening
very
fast.

Eventually
new
item
modalities
will
be
created
that
are
in
sync

with
mobile
capabilities,
we
expect
this
is
still
several
years
out.

Looking
Towards
2020

As
we
approach
2020,
the
trends
below
will
have
a
significant
impact
on
the
Talent
Assessment

market
and
will
be
largely
responsible
for
the
additional
market
growth.

These
are
the
trends

that
will
shape
the
future
of
the
Talent
Assessment
space.

§ HCM
suite
providers’
offerings
mature
–
Talent
Assessments
will
be
much
more

mainstream
by
2020,
creating
more
market
penetration
for
providers
and
driving

significant
increases
in
revenues.

Growth
will
come
via
HCM
providers’
ability
to

support
integrated
talent
management
with
predictive
data
and
analytics

that
will
support
insight
that
is
directly
linked
to
business
operations
and

strategy.

§ Increasing
number
of
non-‐traditional
predictive
tools
compete
with
Psychology
based

Talent
Assessments
–
Predicting
success
in
hiring
is
no
longer
the
sole
domain
of
I/O

Psychologists.

There
are
a
growing
number
of
non-‐psychological
tools
that
are
being

touted
as
scientifically
sound
ways
to
model
hiring
success.

These
are
mostly
AI
based

predictive
tools,
but
also
include
neuroscience
based
assessments.

We
can
expect
to
see

growing
tension
between
the
traditional
ways
and
advanced
technologies
that
threaten

to
marginalize
them.

§ Increasing
focus
on
“fit”
–
The
ability
to
determine
the
level
of
“fit14
”
between
the
values

of
applicants
and
those
of
employers
is
a
universally
popular
idea.

At
present,
its

execution
has
been
limited.

Increased
mobile
and
social
recruiting
technologies
using
AI

and
crowdsourcing
combined
with
psychometrics
will
provide
a
winning
formula.

§ The
candidate
voice
will
begin
to
force
a
change
–
Increased
social
connectivity
is
placing

bottom
up
pressures
on
companies
to
adapt
or
die.

Increasing
pressures
on
corporations

to
view
their
hiring
process
as
an
extension
of
their
corporate
brand
will
force
a
change.

The
candidate
experience
for
Talent
Assessment
is
notoriously
poor
and
companies
are

slowly
putting
pressure
on
assessment
providers
to
create
a
better
candidate
experience.

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§ SMB
market
for
assessments
begins
to
heat
up
–
Quality
transactional
tools
that
can
be

quickly
targeted
for
specific
jobs
or
populations
will
continue
to
become
available.

The

ability
to
leverage
taxonomic
tools
such
as
O*NET15

to
localize
and
optimize
assessment

content
will
help
assessments
become
more
widely
used.

§ Social
and
AI
forever
change
sourcing
–
Social
job
matching
is
pushing
Talent
Assessment

up
the
funnel16
-‐
making
it
easier
to
leverage
the
benefits
of
quality
psychometrics
to
help

job
seekers
find
jobs
(and
vice
versa).

§ Credentialing
begins
to
mature
–
There
is
no
doubt
that
credentialing
will
be
a
major

force
in
the
future
of
hiring
and
that
credentials
will
be
at
least
partially
based
on

assessments.

The
coming
changes
in
learning
and
the
higher
education
system
will

demand
it.

Once
LinkedIn
and
Facebook
field
trusted
badging
systems,
everything
will

change.
The
ability
to
use
digital
merit
badges
to
verify
important
information
will
be
the

deathblow
to
traditional
methods
such
as
resumes.

§ Interactivity
moves
closer
to
mainstream
–
Gamification
is
already
starting
to
be
a

significant
pressure
in
the
assessment
industry.

There
are
still
significant
measurement

issues
with
games
and
simulations,
but
they
are
on
the
forefront
of
research
in
the
space

and
it
is
an
eventuality
that
assessments
will
become
more
interactive
as
time
goes
on.

Technologies
On
Which
Change
Will
Be
Built

These
are
the
ingredients
that
will/are
bring
change
to
the
Talent
Assessment
landscape
by

allowing
assessments
to
be
shorter,
more
accurate,
more
engaging,
and
more
socially

connected.

§ Crowdsourcing/Collective
intelligence

§ Machine
learning17

§ Gamification

§ Mobile
technology

§ Sentiment
Analysis18

§ Speech
recognition/text
to
speech

§ Supercharged
AI
&
Analytics

§ Natural
language
processing19

§ Writing
content
analysis

§ Content
authoring
systems

©2014
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LLC
•
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2014
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27

Summary
of
Major
Talent
Assessment
Market
Opportunities

All
of
the
trends
and
information
summarized
in
this
report
suggest
that
there
will
be
an

increasing
opportunity
for
Talent
Assessment
as
a
revenue
engine
for
a
variety
of
different

types
of
business.
While
traditional
methods
will
remain
lucrative
due
to
their
high

profit
margin
and
history
of
success,
there
is
tremendous
opportunity
for

disruption
within
the
Talent
Assessment
space.

This
disruption
will
leverage
the
use
of

technology
and
science
to
simultaneously
drive
both
speed
(e.g.,
Fluidity)
and
accuracy
(e.g.,

Power).

The
increasing
ability
of
technology
to
increase
fluidity
and
power
of
Talent
Assessment
has

placed
us
on
the
edge
of
a
major
shift
in
the
field.

The
future
of
the
space
will
be
defined
not

by
I/O
psychologists,
but
rather
by
multi-‐disciplinary
collaboration
between
psychologists,

sociologists,
data
scientists
and
computer
scientists.
The
increased
role
of
analytics
and
hard

data
within
HR
practices
will
drive
new
levels
of
insight
that
will
raise
the
bar
for
accountability

amongst
Talent
Assessment
vendors,
forcing
them
to
adapt
or
die.

Based
on
our
thorough
review
of
the
Talent
Assessment
market,
opportunity
and
growth
will

center
around
the
following:

§ OPTIMIZED
SOURCING
–
The
existing
sourcing
process
has
been
broken
since
the
days

of
the
first
job
board.

There
is
a
tremendous
amount
of
friction
in
the

sourcing
area
and
a
tremendous
amount
of
value
to
be
extracted
via

reducing
it.

The
highest
growth
area
within
the
overall
market
will
center
on
the
use

of
socially
based
sourcing
tools
that
combine
AI,
psychometric
measurement
tools
and

advanced
predictive
analytics.

The
data
collected
in
the
sourcing
process
will
continue

to
have
value
across
the
entire
employee
lifecycle,
driving
increased
value
for
those
who

can
support
both
pre
and
post
hire
needs.

Moving
psychometrics
to
the
sourcing
area

will
also
support
the
value
of
psychometrics
without
all
the
adoption
hassle
currently

marking
the
enterprise
sales
of
Talent
Assessments.

Keywords:
Fit,
cultural
fit,
social
job
matching,
social
sourcing,
talent
communities

§ EMBEDDED
PSYCHOMETRIC
MEASUREMENT
–
HR
technology
providers
will
begin
to

figure
out
that
outsourcing
Talent
Assessment
to
a
third
party
vendor
is
both
expensive

and
unwieldy
and
will
increasingly
seek
to
own
their
own
assessment
content.

Ownership
of
content
provides
an
economic
advantage
creating
pure
profit
once
the

sunk
cost
of
obtaining
content
has
been
paid
off.

Ownership
of
content
also
ensures

more
control
over
how
assessments
are
delivered
and
complete
ownership
of

assessment
data.

Data
ownership
is
significant
because
it
allows
more
latitude
in
the

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analysis
of
data
across
the
entire
employee
lifecycle,
thus
supporting
deeper
levels
of

insight
for
clients.

The
next
five
years
will
see
significant
increase
in
the

number
of
HR
technology
vendors
who
invest
in
owning
and
embedding

assessment
content.

Once
this
content
is
paid
off,
these
firms
will
be
able
to
drive

significant
increases
in
revenue
as
they
provide
their
owners
a
key
ingredient
in
using

data
to
show
direct
value
to
their
clients’
business
line.

Keywords:
Integrated
talent
management,
HCM
platform,
predictive
analytics,
data

warehousing,
employee
lifecycle

§ INTERACTIVITY
AND
GAMIFIED
PSYCHOMETRIC
ASSESSMENTS
–
Engagement
is

becoming
a
critical
driver
of
success
in
the
hiring
process
and
beyond.

The
current

assessment
experience
is
looking
increasingly
old
fashioned.

Generational
pressures
will
demand
that
assessments
change
to
look
and

feel
similar
to
current
user
experiences.

The
space
is
wide
open
for
increases
in

engagement
around
the
measurement
experience.

We
can
expect
to
see
many
user

experiences
becoming
measurement
tools
via
the
ability
to
harvest
data
that
can
be

analyzed
and
interpreted
to
make
predictive
decisions.

Firms
that
can
create
engaging

tools
that
are
also
scientifically
sound
will
have
a
significant
opportunity
to
gain
market

share.

Keywords:
Engagement,
Mobile,
Social,
User
experience,
employment
brand,
social

data,
credentialing

§ DRIVING
PRECISION
AT
SCALE
–
There
is
tremendous
opportunity
for
mass

customizable
transactional
Talent
Assessment
products.

The
inability
to
customize
an

assessment
for
a
given
situation
results
in
decreases
in
accuracy.

The
alternative
has

traditionally
required
significant
time
and
money
to
manually
calibrate
an
assessment.

Advances
in
AI,
job
taxonomies,
and
analytics
provide
the
foundation
for
a
new
breed
of

tools
that
support
both
fluidity
and
power.

These
tools
are
well
positioned
to
tap
into

the
SMB
market,
a
segment
that
has
been
largely
underserved
when
it
comes
to
quality

Talent
Assessment
products.

Keywords:
SMB,
O*NET,
transactional,
mass
customization,
individual
contributors

§ NICHE
BASED
SIMULATIONS
–
When
it
comes
to
predicting
job
success,
work
samples

and
simulations
are
hard
to
beat.

However,
these
tools
are
often
very
expensive
and

are
unable
to
replicate
many
work
environments.

Advances
in
technology
are
allowing

©2014
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LLC
•
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2014
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the
creation
of
work
samples
and
simulations
that
are
flexible
and
engaging,
while

remaining
relatively
inexpensive.

There
are
certain
niche
jobs
or
industry
verticals
(i.e.,

nursing,
financial
analysis,
etc.)
that
will
benefit
from
the
use
of
accurate
and
engaging

simulation
tools.

As
time
goes
on,
expect
to
see
more
simulations
that
serve
the
needs

of
both
hiring
and
training.

These
simulations
will
be
delivered
via
engaging
platforms

that
can
be
used
across
the
entire
employee
lifecycle.

Keywords:
Manufacturing,
work
sample,
industry
verticals,
serious
games,
authoring

systems,
branching
logic,
sentiment
analysis

©2014
Rocket-‐Hire,
LLC
•
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Conclusion

While
it
can
be
extremely
complex
in
its
execution,
Talent
Assessment
represents
a
component

that
has
significant
value
to
both
talent
acquisition
and
talent
management
platforms.

It
is

expected
to
be
a
high
growth
area
over
the
coming
years,
with
the
most
significant
growth

coming
as
technology
becomes
more
deeply
blended
with
the
science
of
psychological

measurement.

As
time
goes
on,
approaches
that
are
based
purely
in
psychology
will
fade
in

favor
of
a
range
of
new
methodologies.

The
most
significant
growth
in
the
use
of
assessments

will
come
in
two
areas.

The
first
is
sourcing,
as
AI
and
measurement
combine
to
reduce
the

friction
that
has
plagued
this
area.

The
second
is
via
their
integration
into
HCM
platforms
that

house
both
predictor
and
outcome
data.

Owning
both
data
streams
will
support
new
levels
of

business
intelligence
—
allowing
companies
deeper
levels
of
insight
into
the
value
of
their

human
capital.

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•
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S o u r c e s

1

http://www.gartner.com/it-‐glossary/hcm-‐human-‐capital-‐management/

2

http://www.aberdeen.com/research/9003/rr-‐assessments-‐hcm-‐hr/content.aspx

3

http://www.bersin.com/lexicon/Details.aspx?id=12860

4

http://www.slideshare.net/JeffMonk/human-‐capital-‐management-‐software-‐market-‐
overview

5

http://pando.com/2013/08/14/the-‐bubble-‐around-‐talent-‐and-‐human-‐capital-‐
management-‐is-‐too-‐big/

6

http://www.idc.com/getdoc.jsp?containerId=241032

7

http://www.forbes.com/sites/joshbersin/2014/06/26/the-‐talent-‐management-‐software-‐
market-‐surges-‐ahead/

8

http://www.reuters.com/article/2012/07/02/corporateexecutiveboard-‐acquisition-‐
idUSL3E8I26DU20120702

9

http://www.bersin.com/blog/post/2012/07/Corporate-‐Executive-‐Board-‐acquires-‐SHL-‐
Heating-‐Up-‐the-‐Market-‐for-‐HR-‐Services-‐and-‐Data.aspx

10

http://searchconsumerization.techtarget.com/definition/SoLoMo-‐social-‐local-‐and-‐mobile

11
http://www.pwc.com/talentchallenge

12

http://dupress.com/articles/human-‐capital-‐trends-‐2014-‐survey-‐top-‐10-‐findings/

13

http://www.bls.gov/opub/ted/2014/ted_20140701.htm

14

http://www.ere.net/2004/05/20/the-‐value-‐of-‐person-‐organization-‐fit/

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15

http://en.wikipedia.org/wiki/Occupational_Information_Network

16

http://www.ere.net/2014/06/05/why-‐social-‐job-‐matching-‐will-‐replace-‐talent-‐
assessment-‐tests/

17

http://en.wikipedia.org/wiki/Machine_learning

18
http://en.wikipedia.org/wiki/Sentiment_analysis

19
http://en.wikipedia.org/wiki/Natural_language_processing

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