So a few weeks ago I wrote about my concerns around the use of psychometric testing. Since then I have had a few people ask me what the alternative is. To sum up, the common question has been “So how are we supposed to identify high potential employees if we don’t use psychometric testing?” This leads to today’s blog which poses the question, what is more import to consider in recruitment, previous performance or future potential?
As a starting point let us distinguish between employee performance and employee potential. Performance is simply the ability of employees to achieve outcomes and to meet organisation goals. High performers consistently exceed expectation, and are manager’s go-to people for difficult projects because they have a track record of getting the job done. The distinction between good performance and bad performance is non-subjective and can be easily assessed.
Managerial potential on the other hand is far more subjective. The Corporate Executive Board claim that high potential employees have the 3 key attributes of aspiration, ability and engagement.
The first issue with this position is that unlike management performance the characteristics are subjective and cannot be assessed in a quantitative manner. Furthermore the definition is circular in nature. We define a high potential individual as someone with the ability, aspiration, and engagement to rise into and succeed in more senior roles, but we can only know that they do indeed have this potential once they have actually succeeded in a more senior role.
Despite this, a lot of thinking in the business world suggests that potential is more important than performance. A recent journal article that surveyed Human Resource Managers across various industries claimed that “potential wins out every time. Further, firms are willing to hire and pay more for high-potential candidates than those with proven performance. The research found that participants were more excited about the candidate with the thinner achievement score and greater potential score.”
However, I maintain that when we step back, ultimately all businesses survive on their results, not their potential. Shareholders invest capital into companies on the expectation they will get a return based on the businesses actual performance not on its potential. Even when investors do invest into a company for the long term, their decision is always grounded on previous results. To be successful this mindset must ultimately extend to the management team. Every employee needs to deliver if the business in question is to survive and grow. As such performance must be manager’s number one consideration and the main criteria by which employees are judged.
So what is your focus when recruiting, performance or potential??
Psychometric testing, whether it is Myers Briggs, 16 PF, the big 5 or one of the many others out there; we have all been subjected to them at some point in time. Not surprisingly, psychometric testing is a big business, with the industry generating over $500m in revenue in 2010 alone. All these tests are intended to allow managers and HR departments to trying and predict employee behaviour and performance.
But, do these tests actually tell managers anything about employees? To be honest, I really do not believe these tests are worth the paper they are printed on. I especially have concerns when the outcomes of these tests are used to make staffing and recruitment decisions. Basically, I have four fundamental issues which apply to every psychometric test on the market. Firstly, there test / retest variation rate is terrible.
To illustrate this concern, let’s look at the Myers -Briggs Temperament Indicator which is the most popular psychometric test used today. In fact 2.5 million people take the test each year. It is reported that about half the people who redo the Myers-Briggs test within in one month of originally sitting it will end up with a different profile. To me this sets of alarm bells. If there is such a large degree of variation, should managers be relying on these results to make critical recruitment and staffing decisions? I seriously doubt managers would make financial decisions based on assessment results with such large variability, so why should people management be any different? This issue of test / retest variance is common amongst psychometric tests and not just limited to the Myers-Briggs test.
The next issue I have with using psychometric testing to predict performance is that despite the number of psychometric tests available, there is no independent statistically significant evidence to support the fact that any of these tests actually predict future employee performance. I don’t want to turn this into a mathematics session but of all the psychometric tests available, the big 5 has the strongest statistical correlation to job performance. Even this test has only had limited success in predicted performance against soft skills and no success (or correlation) in predicting the performance against hard skill. So if we are looking at the pure mathematical science of these tests, they just don’t stack up.
The third issue with psychometric testing is that there is no agreement on what a good result is. Cultural backgrounds and environments will heavily dictate what is perceived as a normal response. For example, someone administering a test in a western culture would probably be looking for an employee who scores high in individuality and autonomy, but people administering the same test for the same role in an Asian environment would probably be looking for conformity and willingness to obey direction from above due to their hierarchical culture. The point is there is no correct or best answer to these tests, they are totally subjective and almost non-comparable across groups. This is becoming a bigger issue as companies start set up business in multiple countries.
Finally, all these tests assume that people will answer them honestly. I think we can all agree this just does not happen in the real world. For example when these tests are used as part of a recruiting process (which they often are) it is often in the candidates best interest to not answer the test truthfully, but rather supply answers which they believe the recruiters are looking to find. Yes I know some test have built in lie scales, but these are pretty obvious to pick up on when sitting the test. Can anyone actually say that when they completed a psychometric test as part of a recruitment process they answered with 100% honesty, and were not trying to create the profile they felt the assessors were looking for?
Despite all this, psychometric testing is still used extensively in the workplace. I would love to hear your thoughts about these, why you use them and what value you get form them.
James Hamilton & NEIL HALLs
The founders have years of experience across a diverse range of industries and business areas. Their aim is to ensure the team at Clear Path Commercial Consulting use this experience and their individual knowledge and skills to help our clients in their own business.