ANALYSIS
IMPERIAL METRICS
Peter Saville and Tom Hopton consider the fundaments of psychometric testing and why it is the most effective tool in the modern recruitment industry.
Hiring the right person for the right job is obviously crucial for business success, particularly in times of recession.
Yet, it is surprising how little importance many businesses place on the selection process. Employing an executive can easily turn into a quarter of a million pound investment. But many companies take large risks by making decisions on the basis of a CV (which research shows are often exaggerated) and perhaps just a one hour interview (which are not particularly good predictors of how people perform at work, because of many potential biases).
Psychometric assessments involve the measurement of concepts such as intelligence, ability and personality and while study after study has shown that they outperform job interviews, they remain surprisingly controversial.
Some employers will even use methods such as graphology, which have never convincingly been shown to offer any predictive power in job selection, over psychometrics.
Despite the fact that many employers fear psychometrics or regard them as mumbo-jumbo, modern, job-relevant and well-designed psychometrics can halve the risk of making serious selection errors.
Naval history
This knowledge is not new. When Samuel Pepys introduced navigation tests to the British Navy in 1673, he was implementing a job-relevant ability test to select the most able seamen.
He wanted to promote competence and to ensure that it was ability, and not corruption, social class or the old-boys network which guided job selection and promotion through the ranks to captaincy.
By selecting the best sailors, Pepys helped sustain a cycle of competence where the most talented individuals became captains and then trained their men in the best possible way.
Not all psychometrics are created equal, however. There are poor psychometric assessments on the market and test-users need to do their due diligence to check that the assessment they are using is backed up by data and there is evidence that it works.
The benchmark against which all assessments must be judged is their criterion validity, or how accurately they measure the important aspects of job performance. Some personality questionnaires exist, for example, which include obscure, clinically-based and/or poorly-written items, often with no relevance to the world of work.
A comparison of the validity of different psychometrics on the market can be found at www.savilleconsulting.com/howvalidisyourtest.
Modern personality assessments such as the Saville Consulting Wave® were designed specifically for the world of work. They contain only questions relevant to workplace behaviours and competencies.
For example, they contain questions concerning recent advances in workplace technology, which are not captured by those questionnaires designed twenty-five years ago or more. Recent studies show that well-designed and job-relevant psychometrics can outperform other popular selection tools such as job references, educational qualifications, application forms and even structured job interviews in predicting how an applicant will perform at work.
A study of 1000 graduates commissioned by Saville Consulting also revealed that graduates prefer psychometrics to other selection methods. Over half of graduates thought that personality questionnaires (53 per cent) and ability tests (56 per cent) were useful in job selection, while just 41 per cent thought that interviews were useful.
Somewhat surprisingly, job applicants also tend to prefer rigorous selection processes, as long as they are also perceived as fair.
Costly mistakes
Businesses need to ask themselves why they continue to make major decisions without using these more objective methods for predicting performance at work.
So how much does a good psychometric assessment cost? At up to £100 per candidate, the cost is barely noticeable when compared to the possible return on investment which comes from selecting the most talented people.
The difference in financial return which comes from hiring a top-level performer compared to a bottom-level performer can be startling.
If job applicants were selected purely on the basis of chance, one in every five applicants selected would prove to be in the bottom 20 per cent of performers.
The most valid psychometric assessments can reduce the risk of poor selection to the extent that only one in every fifty applicants selected will turn out to be such a poor performer.
When the validity of the psychometric questionnaire is higher, the chance of selecting the best applicants increases and the chance of selecting the poorest applicants decreases dramatically.
Poor selection practices are costly both because poor performers are not as productive as good performers and because there are major costs associated with rectifying a poor selection decision.
Effective psychometrics can be put to use in increasing the chance of selecting the best performers and reducing the chance of selecting the poorest performers.
They contribute to efficient risk management in hiring and improving selection can lead to substantial financial returns.
Simply put, good psychometric assessment, backed up by good interviewing, dramatically reduces the risk of hiring poor performers.
Professor Peter Saville is an industrial psychologist and international chairman of Saville Consulting Group. Tom Hopton is a consultant at Saville Consulting who graduated from Oxford University as an experimental psychologist.
Yet, it is surprising how little importance many businesses place on the selection process. Employing an executive can easily turn into a quarter of a million pound investment. But many companies take large risks by making decisions on the basis of a CV (which research shows are often exaggerated) and perhaps just a one hour interview (which are not particularly good predictors of how people perform at work, because of many potential biases).
Psychometric assessments involve the measurement of concepts such as intelligence, ability and personality and while study after study has shown that they outperform job interviews, they remain surprisingly controversial.
Some employers will even use methods such as graphology, which have never convincingly been shown to offer any predictive power in job selection, over psychometrics.
Despite the fact that many employers fear psychometrics or regard them as mumbo-jumbo, modern, job-relevant and well-designed psychometrics can halve the risk of making serious selection errors.
Naval history
This knowledge is not new. When Samuel Pepys introduced navigation tests to the British Navy in 1673, he was implementing a job-relevant ability test to select the most able seamen.
He wanted to promote competence and to ensure that it was ability, and not corruption, social class or the old-boys network which guided job selection and promotion through the ranks to captaincy.
By selecting the best sailors, Pepys helped sustain a cycle of competence where the most talented individuals became captains and then trained their men in the best possible way.
Not all psychometrics are created equal, however. There are poor psychometric assessments on the market and test-users need to do their due diligence to check that the assessment they are using is backed up by data and there is evidence that it works.
The benchmark against which all assessments must be judged is their criterion validity, or how accurately they measure the important aspects of job performance. Some personality questionnaires exist, for example, which include obscure, clinically-based and/or poorly-written items, often with no relevance to the world of work.
A comparison of the validity of different psychometrics on the market can be found at www.savilleconsulting.com/howvalidisyourtest.
Modern personality assessments such as the Saville Consulting Wave® were designed specifically for the world of work. They contain only questions relevant to workplace behaviours and competencies.
For example, they contain questions concerning recent advances in workplace technology, which are not captured by those questionnaires designed twenty-five years ago or more. Recent studies show that well-designed and job-relevant psychometrics can outperform other popular selection tools such as job references, educational qualifications, application forms and even structured job interviews in predicting how an applicant will perform at work.
A study of 1000 graduates commissioned by Saville Consulting also revealed that graduates prefer psychometrics to other selection methods. Over half of graduates thought that personality questionnaires (53 per cent) and ability tests (56 per cent) were useful in job selection, while just 41 per cent thought that interviews were useful.
Somewhat surprisingly, job applicants also tend to prefer rigorous selection processes, as long as they are also perceived as fair.
Costly mistakes
Businesses need to ask themselves why they continue to make major decisions without using these more objective methods for predicting performance at work.
So how much does a good psychometric assessment cost? At up to £100 per candidate, the cost is barely noticeable when compared to the possible return on investment which comes from selecting the most talented people.
The difference in financial return which comes from hiring a top-level performer compared to a bottom-level performer can be startling.
If job applicants were selected purely on the basis of chance, one in every five applicants selected would prove to be in the bottom 20 per cent of performers.
The most valid psychometric assessments can reduce the risk of poor selection to the extent that only one in every fifty applicants selected will turn out to be such a poor performer.
When the validity of the psychometric questionnaire is higher, the chance of selecting the best applicants increases and the chance of selecting the poorest applicants decreases dramatically.
Poor selection practices are costly both because poor performers are not as productive as good performers and because there are major costs associated with rectifying a poor selection decision.
Effective psychometrics can be put to use in increasing the chance of selecting the best performers and reducing the chance of selecting the poorest performers.
They contribute to efficient risk management in hiring and improving selection can lead to substantial financial returns.
Simply put, good psychometric assessment, backed up by good interviewing, dramatically reduces the risk of hiring poor performers.
Professor Peter Saville is an industrial psychologist and international chairman of Saville Consulting Group. Tom Hopton is a consultant at Saville Consulting who graduated from Oxford University as an experimental psychologist.
