Psychological Testing as a Risk Management Strategy

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How many times have you heard a manager say something like “but she/he interviewed so well”?

Then the story unfolds.  After six months on the job an employee is not working out.  The manager is baffled; the person came highly recommended and seemed to click with people during the interview phase.  All agreed the person was a good hire, but now his/her job performance is meeting few, if any of the expectations others initially had.

Things could have been different.  Psychologists have developed tests to measure almost everything that they think can be measured about a person including physical and intellectual abilities, personality traits, interests, motives, values, attitudes, opinions, preferences, and skills.  As organizational psychologists, we know testing can improve the effectiveness of any number of human resource and organizational management practices such as hiring, promoting, coaching, and developing employees.

Think of testing as Risk Management
Consider the “costs “of a poor hiring decision.  Among other things they can include:

Wasted salary and benefit dollars

  • Lost time
  • Lost productivity
  • Lost opportunity
  • Irritation, annoyance, and frustration
  • Decreased morale
  • Outplacement costs
  • Severance pay
  • Legal fees
  • New recruitment costs

The cost of a mistake is high for the organization and the prospective employee.  Bringing a new person into an organization takes money, time, and energy.  The higher the position, the more expensive the mistake.

Testing – as part of the hiring process – is a way to minimize these risks.  People are complex.  In order to predict their success, organizational psychologists often use a series of tests that collectively can help describe a person’s work style and habits.  This is commonly referred to as assessment.  The idea is to gather multiple kinds of information about an individual in a short timeframe.  It typically includes several kinds of tests that measure things about a person that are relevant to performance on the job, including a person’s interests and motivations, personality traits, thinking and reasoning abilities, and work skills or style.  The picture that emerges of that person can help a hiring manager better understand what someone is really like and how they might fit into the organization or work team.  Assessment information can be used to confirm interview impressions, opinions from references, or raise questions for further investigation so that a better decision can be made.  That is, to hire the people who will be successful and to pass on those who won’t be.

Sounds good, but does assessment really work?
Yes, but it depends.

It depends on things like the quality of the tests that are used, which and how many tests are used, the experience or judgment of the psychologist using the tests, and how well the psychologist understands the job requirements and work environment.

But the scientific evidence is clear: across large numbers of people, test results are significantly correlated with job performance, early identification of potential, performance in training programs, and overall career success and advancement.  This means test data, under the right conditions and used responsibly, can predict how and how well people will perform in real world settings. 

The evidence is clear, and its not really new!  One of the earliest studies organizational psychologists point to was conducted on managers at AT & T in the 1950s and 1960s.  Managers were followed over the course of their careers and when things like promotions, salary increases, and other indices of career “success” were compared to these managers’ assessment results, clear and statistically significant results were found.  The better new managers performed on tests in the assessment process at the time they were hired, the more likely they were to advance and find career success in their work (Bray & Grant, 1966).  Later research that analyzed results from 50 different studies that collectively included over 12,000 individuals conducted over a 36-year time period confirmed that results from assessment processes were indeed related to job performance, ratings of potential, and career advancement (Gaugler, Rosenthal, Thornton, & Benston, 1987).

But isn’t testing . . . dangerous?
Anything is dangerous if not used properly.  No argument from us.  There are plenty of court cases that have supported peoples’ claims of unfair hiring and personnel practices.  But when tests are used carefully and correctly, they are “safe” and useful.

In a recent chapter, one of organizational psychology’s most respected and prominent practitioners concluded: “I am not aware of any legal suit based on civil rights and equal employment opportunity law that specifically complains about a traditional individual; psychological assessment conducted by an assessing psychologist for an employment or organizational purpose” (Jeanneret, 1998, p.100).

OK.  But just how good are tests?  How helpful can they be?
Testing is far from perfect.  Assessment processes are good, but they are not a crystal ball.  On the other hand, they are as good or better than a lot of things we tend to generally take as fact or truth.

For example, did you know that the relationship between assessment data and job success is about twice as strong as the relationship between predictions from job interviews (alone) and job success?

Here are some other interesting comparisons.  The relationship between assessment data and job success is:

  • About 15 times stronger than the relationship between taking aspirin and reduced risk of heart attack;
  • About 4½ times stronger than the relationship between smoking and subsequent incidence
    of lung cancer;
  • Parallels the effectiveness of viagra on improved male sexual functioning;
  • Mirrors the (statistical) relationship between elevation above sea level and lower daily temperatures (Meyer, et al, 2001). 

Everyone who lives near mountains knows for a fact that the higher you go, the cooler it gets.  Tests aren’t perfect, but they aren’t bad.  The Meyer et al article puts assessment in a fascinating perspective.  Read the article yourself if you are interested.

So how is testing best used in organizations . . . just for hiring?
Not necessarily.

Assessment processes are equally useful for accelerating people’s development, improving coaching effectiveness, and the effectiveness of other human resource practices and systems.  People we work with often find that the assessment process is a good source for insights and assistance in determining their future direction, and an effective tool for learning about themselves, and for identifying and targeting areas they need to improve.  Assessment data provides a rich picture of an individual that includes information about things that are hard to see or that people sometimes find hard to describe.  These “invisibles” include insights about a person’s motivations (i.e., what they most enjoy doing), their reasoning abilities (i.e., how quickly or easily they might learn new things), and their unique skills (i.e., an unwavering sense of responsibility, genuine creativity, or a real willingness to embrace change), to name a few.

Armed with these insights, you can take a great deal of risk out of your investments in human capital.  Managers can become better coaches and mentors, and individuals themselves can and often do take better steps toward advancing their own growth, effectiveness and satisfaction at work.  At a team level, team leaders can use assessment information to gain insights about their team members and overall team functioning.  Organizations can use assessment information to aid retention, training design, “talent management”, and succession efforts. 

I hope some of you have found this article informative, and maybe a bit provocative.  If you would like to discuss how testing and assessment might help you or your organization, I invite you to contact me.

If You Want to Read More

Bray, D.W. & Grant, D.L. (1966).  The assessment center in the measurement of potential for business management.  Psychological Monographs, 80 (17, Whole No. 625).

Gaugler, B.B., Rosenthal, D.B., Thornton III, G.C., & Benston, C. (1987).  Meta-analysis of assessment center validity.  Journal of Applied Psychology, Vol. 72, No. 3, 493-511.

Jeanneret, R. (1998). Ethical, legal and professional issues for individual assessment.  In Individual Psychological Assessment , R. Jeanneret & R. Silzer (eds.), San Francisco: Jossey-Bass.

Meyer, G.J., Finn, S.E., Eyde, L.D., Kay, G.G., Moreland, K.L., Dies, R.R., Eisman, E.J., Kubiszyn, T.W., & Reed, G.M. (2001).  Psychological testing and psychological assessment.  American Psychologist, Vol. 56, No. 2, 128-165.

MDA Leadership Consulting