What is Psychometric Assessment?
The aim of Psychometric Assessment is to evaluate behavioural traits and performance and to better assess the likelihood of a person succeeding in a particular role, either at entry level or in a development capacity making it the ideal support tool for screening out and selecting in. Psychometrics add quantitative measures to qualitative assessments to reduce risk around decision making.
Psychometric assessment is utilised by about 80 % of US Fortune 500 and 75 % of UK Times 100 companies. Schmidt and Hunter (1999) found that Psychometric Assessments combined with a structured interview is the simplest, fastest, and most cost-effective way to predict how someone is actually going to perform once they’re hired.
The main strength of Psychometric Assessments, when used alongside interviews and reference checks, lies in the fact that they afford a greater level of certainty within hiring and retention rates. They also offer a fair and equal assessment of candidates and employees, giving the employers and management teams an impartial and unbiased view of the person’s work-related behaviour and style.
Relying on interviews alone is too subjective and causes two major problems. Most commonly, the wrong people get selected or promoted. Secondly, often the right candidates are overlooked as they appear to not display the ‘’right traits’’ in an interview. In this instance transitioning from subjective to scientific talent identification via psychometric assessment has proven efficacy, and therefore a significant return on investment.
Benefits of Psychometric Assessments as outlined by Dr. Neha Manchada, (2017)
With the advent of ipsative test design, it has become difficult for applicants to ‘’cheat’’. The design of the test ensures that the test-taker can see no apparent pattern and hence, is forced to answer honestly. Any effort to rig the assessment is quickly spotted and will put a question mark on the integrity of the applicant.
Often the interviewers’ time comes at a premium. A quick scan of a psychometric report can help them quickly come to the point. At interview stage, they can frame very relevant, probing questions around both strengths and problem areas of the candidates highlighted in their report reducing interview time significantly.
Reduces Interviewer Mistakes
Interviews, especially unstructured ones, are among the least valid of all screening methods. The chances of the interviewer’s ‘gut-feeling’ being accurate are only as good as rolling a dice. In other words, entirely up to chance. Psychometric assessment can reduce mistakes by supplementing subjective interviews with quantitative data.
Increases Objectivity – avoiding biases
While it is easy to verify hard facts of professional qualifications and competency, analysing softer elements like motivation, conflict resolution capacity, leadership skills etc., is another matter. When a person is asked to assess these qualities, personal biases creep in unconsciously. When hiring, many people succumb to similarity bias, meaning that we often hire those who we perceive as similar to us, but not necessarily the right candidate for the role.
Psychometric tests address this bias. A test does not care what an individual looks like, their gender, race, sexual orientation, etc. With the help of these tests an employer can pre-define the ‘ideal candidate’ and all applicants can then be compared to it.
Speed and Efficiency
Large organizations receive hundreds of CV’s every week. Psychometric assessments act as an effective filter on that flood of applicants. By filtering out candidates who are grossly mismatched to positions they applied for, these tests help narrow in on the people the company would want to spend time and energy on.
In addition to hiring and making a choice between candidates, Psychometric Assessment adds value in three main areas; Leadership Identification and Progression, Assessing Employee Potential and Retention.
Psychometric Assessment and Leadership – Adapted from article by Dr Tomas Chamorro Premuzic (2017)
These tools can bring new depth to a company’s assessment of a new hire or an existing employee’s abilities or leadership potential. When combined with qualitative assessment such as interviews, psychometrics can also help determine an employee’s potential to take on larger or more challenging roles. A major advantage is also that it measures an individual’s ability against a comparison group. This allows the assessors to benchmark the candidate’s ability against the available talent pool.
One of the biggest challenges organisations face today is identifying the next generation of leaders. All too often, when we ask business leaders how they know if someone has potential or talent for leadership, the most common answers are “Well, you just know” or “I know it when I see it”. While there are clearly some highly intuitive people, who are capable of spotting true potential by following their instincts, most people are less intuitive than they think, which causes two big problems.
The first is that the wrong people get selected or promoted into leadership positions. This happens in every organisation, including companies that invest a huge amount of money in talent management.
The second is that the right people – those who should actually lead – get overlooked. Although these individuals possess many of the critical qualities necessary for a leader, for example good judgment, humility and the ability to build high-performing teams, they are generally less focused on self-promotion, networking and political manoeuvring. The result is a paradoxical system where the drivers of leadership emergence are not just different, but often the opposite of the drivers of leadership effectiveness. In other words, what gets you there won’t make you effective; what makes you effective won’t get you there.
The challenge for businesses is clear. It is to end up with more true positives and less false positives, as well as increasing the true negatives while reducing the false negatives. Although there is no single recipe for achieving this, transitioning from intuitive to scientific talent identification via psychometric assessment helps hugely and therefore has a big return on investment.
Assessing Employee Potential
It is commonly acknowledged that interviews alone are not a good indicator for employee potential. For example, psychopathic and narcissistic individuals tend to perform well on selection interviews, and they are often described as charming and charismatic by their supervisors. Scientific personality assessments are immune to these manipulation tactics and therefore highlight the true risks associated with such candidates. In a similar fashion, they are also useful in flagging those who may ‘shine’ in an interview and on paper but fail to perform in a practical role.
Comprehensive testing enables organisations to create job benchmarks based on an analysis of those employees who deliver performance excellence in their role, as well as identifying the characteristics of those employees who under-perform in the same role. In other words it measures individuals against benchmarks created from real, measurable performance factors, not subjective profiles.
Scientific studies have long suggested that investing in the right people will maximize organizations’ returns. In sum, most organizations can upgrade their talent identification processes by using a combination of interview and psychometric assessment. Not many employees are highly able, socially skilled, and driven — but if you bet on those who are, which involves evaluating these qualities as accurately as you can, through interview and psychometric assessment, you will end up with a higher proportion of future stars who will contribute disproportionately to the organization. Investing in those individuals will produce the highest ROI.
Retention (Mettlpsych, 2017)
What is now apparent from recent research is that companies looking to retain the best workers need to update and expand their employee development process. Employees, now more than ever desire proactive and regular interactions with their managers and expect their organizations to place a focus on implementing strong employee engagement initiatives. In order to engage, motivate and ultimately retain top talent, employers must first understand the underlying motivation and engagement styles of their employees.
Several studies claim that between 75-90% of new employees will decide whether or not to stay in the job, within the first 6 months of employment. Although high turnover costs may not produce recordable associated losses, many employers and HR professionals underestimate the high impact of ‘hidden costs.’
Which is why a lot of them don’t currently put in the effort to understand why an employee decides to leave when they do. Sometimes the cause could be as innocuous as a lack of guidance in the first few months to an overall disconnect with other team members.
Just finding out why an employee is unhappy, employers can do a lot more to decrease the number of people who leave the firm. Scheduling psychometric assessments at random for batches of employees has been discovered to be an effective manner into understanding the mindset of a dissatisfied employee much before the decision to resign is made.
This is also in some form a way to engage in a better manner with employees in order to achieve a specific output, in this case, to retain the employee with the firm. In a study by William M. Mercer Inc., 45% of employers reported turnover costs of $10,000 per lost employee and 20% reported costs closer to $30,000.
After losing an employee, employers often bear the financial burden of recruitment, interviewing, hiring, training, learning curves, a decrease in employee morale, and lost company knowledge, credibility and customers. This stands in stark contrast to conducting psychometric assessments that come at the cost of an annual corporate celebration at a mid-size firm, for several hundred employees.
If and when an employee decides to turn in their resignation, using psychometric assessments in an exit situation can reveal whether individuals feel under-appreciated or find there to be a lack of communication, and also how critical it is to change a specific process. Thus providing a mine of data that organizations can use to create a better retention strategy.
Hiring the right talent can save organizations approximately three times the cost of attrition or wrong hire, and reliable psychometric tools can help in that process.
China Resources Asset Management undertook a transition in 2016, from managing internal assets within the group to taking on external financial markets.
The company launched a talent assessment project, aiming to understand the current talent pool; define what kind of talent the company would require in the future; and how to cultivate that talent. Through the use of Saville assessment competency standards were developed and built, talent-role matching suggestions were made, and an employee development programme was implemented. Employees were able to assess their performance more effectively, while managers better understood the potential of their talent tool. For the long run, the project helped to focus the talent management pipeline on factors that are key to the future development of the business, and keep a focus on continuously honing employee skills with an eye to high-potential talent. It essentially developed a blueprint that compliments and reflects the business’s strategic plan.
Using 73 applicants and 12 experienced interviewers, who each had over 10 years’ experience, the researchers found that all 12 of the interviewers were unable accurately to identify two of the most important traits associated with performance: being industrious and resilient to stress. These traits are often difficult to assess in an interview and require a professional assessment tool to uncover (Barrick, Patton & Haugland, 2000)
In studies compiled by Anova, Psychometric Assessment was found to significantly decrease turnover. In 2001 labour turnover for a financial organisation was 65.5% (of the 84 hired, 55 left), whereas after the implementation of Psychometric Assessment in 2002, labour turnover rate was 23.3% (of the 86 hired, 20 left). Reducing labour turnover from 65.5% to 23.3% had a major cost saving benefit. Average cost of hiring £7500 (conservative). In 2001 55 left. At £7500 each this is a cost of £412,500. In 2002 only 20 left. At £7500 each this is cost of £150,000 Saving £262,500
In terms of profiling, it also found that top performers in 2002 averaged a match of 87.7% to the job profile whereas bottom performers in 2002 averaged a match of 76.7% to the job match profile, highlighting the importance of person-job fit. If we look at the company side, the job interview process in many organizations is fixated on ensuring that new hires are technically competent. But hiring for ‘’fit’’ is far more predictive of new hire success or failure. 46% of newly-hired employees will fail within 18 months, while only 19% will achieve unequivocal success, and person-job fit overwhelmingly dominates the list of why new-hire failure occurs. Skills are important, but when a high skilled but also highly creative, risk-taking, non-linear thinking individual gets hired to work in a play-it-safe culture where risk and innovation are discouraged, failure to succeed is almost inevitable.
Through the job match profile (pattern), the company can identify top performers. Replacing bottom performers with top performers can have a dramatic effect.
They found that average performance of bottom performers was £6220 (10.8% of target) while average performance of top performers was £95850 (133.6% of target). Replacing a top performer with a bottom performer of which there were 12 would result in an increase in revenue turnover of £89630 x 12 equalling £1.08m. The results of this study effectively highlights the importance of identifying and retaining high potential employees.