Knowledge Series - 1

PSYCHOMETRICS IN
CORPORATE INDIA

A FOCUS GROUP STUDY

By:
Ranjan Sinha, MBA
Dr. Cabot Jaffee, PhD.
Dr. Vasanthi Srinivasan, PhD.
Reimara Valk, MSc.
Chandana Reddy
 TABLE OF
CONTENTS
* Executive Summary Pg. 1

* The science behind the art of Human Resource Management

1.1 Psychometrics
Pg. 2-3

* Objectives & Methodology

2.1 Objectives of the Study
Pg. 3-4

2.2 Methodology

* Current State of Psychometrics in India

3.1 India Story
Pg. 4-6

3.2 Psychometric tools currently used in India

3.3 Purpose of using psychometric assessment tools
3.4 Use of psychometric tools at different job levels:
3.5 Recruitment and Selection Process: The importance of psychometric assessment tools
3.6 The layers in recruitment /selection process and the use of psychometric tools

* Emerging trends and Best-suited assessment practices Pg. 6-9

4.1 Gaps in current availability/usage of psychometric assessments tools
4.2 Challenges/Reluctance in using psychometric assessment tools
4.3 Expectations from Psychometric Tools
4.4 Test validity and reliability
4.5 Conclusion
4.6 Recommendations
4.7 Hiring Risk Management System

* Authors Pg. 10

* About Global Talent Metrics Pg. 11

* References Pg. 12
 EXECUTIVE SUMMARY

Some HR professionals in India still question the validity and credibility of psychometric
assessments or discount the use of such tools.

Six focus groups sessions were conducted in Mumbai, Bangalore and Delhi, between January
and February 2009.

In India, it is critical for organizations to deploy psychometric assessments that are easy to administer
and provide results that are fast, accurate and predictive.
The most frequently mentioned purpose of using psychometric assessment tools was for the
recruitment and selection. The next frequently mentioned purpose was learning and development.

Psychometric tools were mostly used for entry level job positions, 55% candidates reported using
psychometrics for.

Most respondents also indicated that Psychometric tests are used in the hiring process as a validation
tool for interviews and are therefore often administered after interviewing
Most companies indicated the use of Executive Search firms for sourcing senior management staff.
While the principal means of selecting applicants is through interviews, participants highlighted several drawbacks in the
use of interviews as a method to hiring talent, A prominent opinion was that Interviews come with an element of bias
Organizations are hiring large number of people, one of the participants highlighted their volume hiring to be in the range
of 2000 people per year at a campus level.

Participants expressed a need for an India-focused psychometric assessment which until date they had not found.
A key reason for avoiding psychometric assessments was due to the lack of knowledge in psychometrics, its uses,
applicability and awareness of the product. A challenge that HR managers currently using such assessments faced was the
interpretation of test results.

The toughest challenge was to sell psychometric assessment tools to higher management, convincing management of the
benefits and building a belief that a valid decision can be made on a hiring tool.
Context background is crucial. Variance in the workplace matters a lot. Interpretation in Indian context will be different.
The staffing budget allocated depends on the level of recruitment and stability of organization.

Define, measure and document excellence for your organization by implementing psychometric assessment tools to
address the right fit of a candidate with your organization and to ensure performance excellence and endured tenure.
Most participants wished for a tool that can decide whether the candidate is the "Right Fit" for the organization.
Many participants preferred a tool that is online - which makes it flexible, consistent and cost effective.

Hiring Risk Management Systems through proven, validated and relevant methods collect data about a person (typically
using psychometric tools), his/her historical "performance" data (if it exists) and combines it with organizational and job
related factors using predictive analytics to provide an easy to use decision making tool as an interview guide for
recruiters and managers.
1
 THE SCIENCE BEHIND THE ART OF
HUMAN RESOURCE MANAGEMENT

With a liability to build well oiled "people production lines" for organizations, the role of the HR is undoubtedly the most vital for
any business. What began as an administrative function within a business has today transformed into a function that builds and
manages the organizations' employee life-cycle. The dawn of HR as a strategic function can be marked to when the term
"Organizations" superseded the term "Businesses". As companies graduated from businesses to organizations, managing and
improving the employee life-cycle was equated to the growth of the organization. Through structured methods and innovative
concepts evolved several talent management and enrichment systems and process that make up today's HR function.

These systems and processes essentially revolve around the following key areas:
- Recruitment and selection
- Individual development programs
- Learning and development
- Competency mapping
- Promotions and appraisal processes
- Career planning
- Coaching and counseling
- Succession planning
- Benchmarking internal people and the industry
- Assessing leadership skills
- Employee engagement

Organizations have increasingly innovated tools, systems and processes along these phases to ensure they acquire, foster and
retain the "Right" talent. Companies invest significant time and money to acquire these assets. Every time a company extends an
offer, it needs to answer few critical questions such as:

"Will the person be able to perform the job and to what level of excellence?"
"Will the person stay in the job long enough to justify the costs that are associated with hiring and training the person" i.e. Does
my company offer what this person is looking for in terms of his psychological, sociological and demographical needs?

Most of these decisions are taken typically through a nebulous process of unstructured interview, utilizing information about the
candidate that is confined to a resume (not necessarily an unbiased or accurate representation of the individual) and the
recruiters or managers interpretation of "right" talent, with scope for bias exposing the organization to significant hiring risks.
With the risk of misjudged hiring looming high and challenged by the need to acquire talent for high impact jobs and in most
cases, volume hiring, recruiters and HR executives are faced with a daunting challenge. With the risks of hiring looming high on
hiring systems and processes, organisations are infusing scientific methods into the traditional hiring systems an processes, to
reinforce the "Right" quotient in the talent acquiring process.

3
PSYCHOMETRICS
Psychometrics is the field of study concerned with the theory and technique of educational and psychological measurement,
which includes the measurement of knowledge, abilities, attitudes, and personality traits. It is primarily concerned with the study
of measurement instruments such as questionnaires and tests. Much of the early theoretical and applied work in psychometrics
was undertaken in an attempt to measure intelligence.
Originally built during the World War era, psychometric algorithms have since been mimicked as a tool and model across the
globe. This has, through time, led HR professionals to question the validity and credibility of psychometric assessments or
discount the use of such tools.

The rationale for the present study was to

explore the current state of psychometric
assessments used by organizations in India.
Maintaining an industry approach to identify
gaps in available psychometric assessment tools
& the need for enhancements, focus group study
was conducted in key cities across the country by
inviting senior HR professionals working in varied
sectors. Adopting a qualitative methodology of
research, topics such as psychometric tools in use,
recruitment, attrition, costs of recruitment &
attrition were studied in detail.
We use basic tests for recruitment and have avoided psychometric
assessment since these assessments are not validated for India.
The company also develops training programs around the basic
tests, used pre and post training. By repeated matching they are
able to identify and measure their talent pool for very basic
factors: says the VP - HR of a leading automotive giant.
Source: Global Talent Metrics: Focus Group Study .

OBJECTIVES & METHODOLOGY

OBJECTIVES OF THE FOCUS GROUPS

The prime objective of the focus groups was to explore the psychometric assessment landscape in India. The study was
aimed to gain the following insights:
The variety of psychometric assessments that are used by organizations in India.

"I have seen the use of many psychometric tools whether in

selection, training of development and in assessments
centers. What I would also like to understand from this
session though interactions, is the experience of people
using psychometric and how the other functions would
look at psychometric contributing to the business."

(Head HR, A leading Manufacturing company)

4
 Understand the stages of talent acquisition/engagement in which the psychometric assessments are being used:
Sourcing . Hiring . Retention . Training & Development . Exit

"We are here to know that what more has evolved in psychometric
testing and how it can become a much more closer to HR than what it
was earlier. It still carries that image of that it is a test and I would like
to find something hidden, I don't know. Whether people undergoing
this still today they feel uncomfortable and it is time to make them
comfortable. That's where I'm trying…"

(Director HR, A white-goods manufacturing company,)

Demonstrate the "gaps" or opportunities for improving the state of psychometric assessments in India.
Discuss the assessments that provide Indian-based companies an opportunity to reduce their cost-per-hire.
Most importantly, share knowledge on how organizations can improve their quality-of-hire.

METHODOLOGY
In order to gather information on the current state of psychometric assessments and the products in India, senior HR
professionals from across industries, sectors and organisations were invited to attend focus group studies conducted across
the country.

Locations & time period

Six focus groups sessions were conducted, 2 sessions across 3 metropolitan cities in: Mumbai, Bangalore and Delhi, between
January and February 2009. The focus group sessions were held at renowned hotels, away from the corporate environment,
ensuring participants networked & shared opinions, thoughts and ideas.

Each session had a facilitator, a moderator & a research associate. The facilitator briefly explained the purpose of the focus group
sessions and introduced the focus group team. The moderator guided the discussion from topic to topic, probed and encouraged
discussion, ensuring disciplined use of time, giving all participants the opportunity to contribute their views. Using examples
such as the recruitment of a pilot, participants were encouraged to identify appropriate assessment tools for specific job skills
and competencies. This method would be an effective way to probe the issues HR professionals are facing, particularly identifying
barriers to use psychometric assessment tools and perceived benefits of the tools that participants were currently using in their
companies or had used in companies they had worked for earlier. Open discussions were held to investigate whether participants
felt that they shared similar experiences in using psychometric assessment tools and to build a synergy of ideas in a dynamic
way. The topics included recruitment and selection processes, usage, utility and costs of psychometric assessment tools and the
purpose of using such tools.

Some of the questions asked were:

1. Do you have experience with using psychometric assessment tools?
2. What is your organization's purpose of using psychometric assessment tools? For example, recruitment, selection, placement,
training, development, promotions etc.
3. What is the current hiring process, For example, psychometric tests, interviews, assessment centers, reference and
background check etc.

5
The research associate, in addition to the moderator, posed questions on topics that had not yet been addressed by participants
or to probe further on a particular topic in order to meet the original aims of conducting these focus group sessions and trying
to identify gaps in the findings so far. A white board was used to visualize the issues addressed by participants. All sessions were
videotaped for precise references for the future.

Focus group data analysis

To analyze the qualitative data, content analysis was conducted & focused on analyzing the frequency of particular words or
phrases. An initial grouping by emerging themes & topics including the frequency was made by the research associate. The
structured transcripts were then examined by the moderator & recurring themes were identified. A comparison was made with
notes made by both the moderator & the research associate. Quotations which illustrate key issues were identified & are
mentioned in the next section.

CURRENT STATE OF
PSYCHOMETRICS IN INDIA

THE INDIA STORY

While psychometrics is broadly an effective and efficient tool for managing talent, its delivery and impact has been questioned
time and again. Many HR professionals who work in staffing face constant pressure from their internal client groups to deliver
qualified candidates quickly and, as a result, they lack the time and resources to create new recruiting and selection programs. In
India, where the labour market provides a far greater number of candidates per job opening, it is critical for organizations to
deploy psychometric assessments that are easy to administer and provide results that are fast, & accurate. Clearly, any
assessment that reduces cost-per-hire and improves the time associated with filling openings adds value. Ultimately, however,
the assessment should improve quality-of-hire, which is a true leading indicator in predicting performance, turnover and
operating results.

A lot of factors are considered while building a psychometric assessment solution, which include the state of the labour market
and the country's social environment. Psychometric tests are widely used in the US and Europe. However, psychometric
assessments are nascent in India. When psychometric testing was introduced in India, it was hailed as a "major help" to
organizations as they attempted to find the right people, with the right frame of mind.
The below diagram maps some of the prominent psychometric assessments services in India on the price & experience level of
the employee for which the tools have been designed. The objective of this table is to provide a comprehensive view enabling
organizations to identify the right psychometric assessment solution based on their hiring pattern and their budget.

6
PSYCHOMETRIC LANDSCAPE IN INDIA:

SHL, DDI, and others are distributors of products and not

innovators or developers of tools for the Indian market

6 Years +

SHL

2-5Years THOMAS
DDI

PAC, Meta-I,
STG, Skill
Profiler,
MeritTrac &
others
0-2 Years

0 100 200 400 600 800 1000 + 1200

PSYCHOMETRIC TOOLS CURRENTLY USED IN INDIA

- Thomas profiling
- 16PF
- Firo B
- Predictive Index
- DISC
- MBTI
- Work-based simulation
- Technical tests
- Behavioral tests
- Aptitude: verbal reasoning, mathematics, problem-solving, general knowledge
- IQ tests
- Personality and Preference Inventory-Normative (PAPI): Used predominantly used in India for hiring. It is also used for
people who are in the system with up to 2 years of experience.

THREE COMPANIES MENTIONED RATHER UNKNOWN TOOLS:

- SHL: competency tool for India. The participant has used the tool in Singapore, Hong Kong and the UK in comparative groups
and has made a comparison to the Indian group.

- The Hay Group's psychometric tool evaluates 6 different types of leadership. The tool is used for identifying his/ her leadership
style and the shortcomings and improvements for the same. Experts believe that at least 4 leadership styles are taken as a
benchmark of good leadership skills. A single style cannot work for the organization forever; the role might change demanding a
different skill set the individual will therefore need to be able to adapt his/her leadership style accordingly.

7
The bar chart below (see figure 2), shows the tests that participants used in their organizations or had used in previous
organizations. In addition to some well-known psychometric tests, participants also mentioned the use of relatively unknown,
rather recently developed in-house tests. It was recorded that personality tests such as Myers Briggs Type Indicator (MBTI) and
Preference Inventory-Normative (PAPI) are used in India predominantly for hiring.
Thomas profiling

Psychometric assessment tools 16PF

Firo B
Predictive Index
6 DISC
Numerical/verbal/istening
Belbin roles
Aptitude tests
5
TAT (especia
ly atentry leve
ls )
WAT
Situational tests

4 Group exercises/case studies

GRID analysis
IQ and EQ tests atentry level )
Frequency

MBTI
3 Simulation tests
Skills based testatentry level
Technical tests
Behavioural tests
2 DPQ
MIP
MAP
Inventory
1
Caliber
CPI 260
Galops (used fordeve
lopment )
0 Technical tests
SHL
1
Hay Group tool
Types of tools PAPI

PURPOSE OF USING PSYCHOMETRIC ASSESSMENT TOOLS

The most frequently mentioned purpose of using psychometric assessment tools was for the recruitment and selection. The next
frequently mentioned purpose was learning and development. Competency mapping, performance appraisal and using tools
for validation of other assessment practices such as interviews were reported equally. Following the two prime purposes for
usage of psychometric assessment tools, broad range of purposes was mentioned by the participants covering the full Human
Capital cycle from recruitment to exit. Figure 1 below shows the full range and the frequency of use shared by participants.

Use ofpsychometric assessmenttools

Recruitment/hiring

9 promotion

learning & development

careerplanning/development
8

on-boarding

manpow
erplanning
7
placement

training
6
coaching & counseling

competencymapping

5 performance appraisal

grow
th potential
Frequency

4 P-O fit

Talentmanagement/Talent
mapping
succession planning
3
Benchmarking internal
people/industry
SWOT analysis employees
2
employee engagement

validation (o
fo
therrecr.
practices )
1 Leadership/supervisory/manage
rial skills
reducing atrition

0 retention
1
capabilityassessment
Purpose ofusage

8
 Assessment center within organization is used for leadership
development, career development, counseling, 360 degree
assessment. Feedback is posted on the intranet. Identifying
passion, correlation with engagement. Budget for using
psychometric assessments is a couple of million dollars. The
organization hires 8000-9000 people per year. - Sr. VP and Global
Head, Talent Transformation, of a leading IT firm.

USE OF PSYCHOMETRIC TOOLS AT DIFFERENT JOB LEVELS

Psychometric tools were mostly used for entry level job positions. The pie chart shows the percentage of usage at each job level.

Figure3

18%
Freshers/entry level
lateral hiring
managerial level
seniorlevel
18%
55%

9%

Particularly in IT companies, psychometric assessments are used for entry level. Participants justified the use or non-use of
psychometric assessment tools at these levels:
"In campus hiring psychometric tools are not used, because of the costs and the time; everything has to be done in one day: tests
and interviews."
"At the senior level psychometric tests are used to check the technical knowledge of the person in a domain. The performance
appraisal system is built in such a way that the tool shows what is viable; it is an in-house assessment tool and modules are built
for the IT teams."
Participants however, did mention that psychometric tests are administered when a person enters the organization at any level.

9
RECRUITMENT AND SELECTION PROCESS:
The importance of psychometric assessment tools
Participants indicated that Psychometric tests are used in the hiring process as a validation tool for interviews and are therefore
often administered after interviewing.
Participants were asked to outline their recruitment and selection process used in their organization, while referring
emphasizing the processes where psychometric assessment tools have been deployed.

. "We first conduct interviews, then administer tests. Identify which competencies are lacking then decide which kind of job the
candidate to assign to."
. "Psychometric tests don't come cheap. These are introduced later in the recruitment process stage before the final round of
interviewing. The test report is used before the last round of interviewing."
. "Psychometric tools are used in the final round where it makes a difference."
. "Not using psychometric tests alone. Competency based interview,; preparing a psychometric repor, satisfaction with the
connection between the report and the interview. Providing the senior most people with the report to show how it is working
out. Hence, we first conduct an interview & then administer the psychometric test."

THE LAYERS IN RECRUITMENT /SELECTION PROCESS

- Campus hiring: 50% of the focus group participants used campus hiring. In fact, campus recruitment has gone up and in some
companies in India and this has become a major responsibility of HR managers (Rao, 2008). Organizations hire large number of
people, one of the participants highlighted their volume hiring to be in the range of 2000 people per year at a campus level.

- Company Portal/ Job Portal: Internet based recruitment has gone up and the most popular among job portals is Naukri.com.
For example, ICICI bank has automated its recruitment through its career site which includes features like job postings,
organization profile, online skills tests and virtual interviews. Only a small population of participants indicated the use of
internet based recruitment, they however leveraged their own company website to post vacancies and to recruit people.

- Executive search firms for senior levels: Most companies indicated the use of Executive Search firms for sourcing senior
management staff. Participant quote: "Senior management recruitment is handled by executive search firms, and mandatory
psychometric tests are used for extensive profiling."

- Recruitment vendor: The purpose of hiring through a recruitment vendor was to deploy recruitment tools, where the profile
of the candidate would be sold to the organization instead of internal recruiters administering tests. Psychometric test in this
process is outsourced.

- Applicant tracking: Very few organizations indicated using any means of applicant tracking.

- Psychometric testing: Almost 50% of participants have used explored or considered psychometric tests as a part of their
organizations. However a larger population of participants considered psychometric tools but did not use the tools for
reasons such as: cost, lack of knowledge in the domain and validity and reliability concerns

- Interviewing: The principal means of selecting applicants is through interviews. Organizations use interviews as an
assessment of competencies for talent management, moreover interviews are used to reconfirm tests results. Some excerpts
of participants views on interviews:

. "Capability to be in a role. Test him/her on whether he/she is a fast or slow track person. Not everybody can identify this. It
comes from interaction and body language."
. "Panel interviewing at VP level to prevent misjudgment of interviewer on hiring. If there are gaps, then probe further. It
depends on the interviewer skills, not the panel. Are there guidelines?"

10
 . "In the interview process there is an 80% matching with Thomas profiling; it can be confusing relying on the tool. Interview is
just learning."
. "Interview plays a role. Body language shows clearly what the person is in for. Interview is most suited to assess the PO fit."
. "The person is interviewed and understands repercussions. Selectively he /she will respond. When taking a psychometric test
the interviewee does not understand where it is leading to."

- Participants also highlighted several drawbacks in the use of interviews:

. "Interviews cannot overlook bias that the interviewer might have assimilated. If the interviewer sees the candidate as too
ambitious, he might come to the conclusion that the candidate, if hired, will quit soon. . What you are looking at is the
opportunity a person has on the job."

. "While conducting interviews, you tend to view people the way you are yourself. You tend to assume that people are who we
are. The interviewer forms a bias in hiring based on if we stay long or if we change jobs."

It was concluded that the Interview drawbacks can stimulate the use psychometric testing tools.
Several participants in the focus groups expressed that they were not familiar with using psychometric assessment tools.

We give the person a test which gives a 'fair idea' of the person's
numerical ability. Predictive Index is used just or profiling, a
helping hand to whether it matches with the interview. I have seen
effectiveness of tests within the company which has over 40,000
people to administer tests to. It serves as a platform for deciding
whom to take on. Asst VP - HR pf a leading Retail Chain.

EMERGING TRENDS AND BEST-SUITED

ASSESSMENT PRACTICES

Table 1: Gaps in psychometric assessment tools

Gaps Participant comments

Tool adjusted for Indian geography, No India focused assessment

culture and language Lot of assimilation for India required
"Tests from other cultures to India; what is foreign won't be accepted in India; tag
of India will be accepted; adapting what is available and suitable; not happy with
the vocabulary: English language is not appropriate in Indian tests; Thomas
profiling translating into Hindi and Marathi is not accurate"
There is no standardized industry or state specific tool.

11
 Gaps Participant comments

Familiarity with tools No knowledge, faith of awareness in psychometric tests.

Design and usage of tools No tool available to assess the cultural match within organization

A gap that was common across all focus groups was that in contrast to familiarity with well-known tests, participants were not
aware of customized tests available for specific companies.

CHALLENGES AND RELUCTANCE IN USING PSYCHOMETRIC

ASSESSMENTS TOOLS
There were quite a number of challenges mentioned in using psychometric assessments tools. A key reason for avoiding
psychometric assessments was due to the lack of knowledge in psychometrics, its uses, applicability and awareness of the
product. A challenge that HR managers currently using such assessments faced was the interpretation of test results. As a result
some HR managers do not divulge the candidate's score, but merely points at areas where the candidate did not suit the
requirements. Some of the key areas of reluctance in using these tools, as mentioned by the participants are:
- Lot of resources required to administer tests
- Unsure of validity and reliability of the psychometric tests used.
- Lack of knowledge of HR professionals, recruiters and managers in interpreting results of tests
and how to use the outcomes.
- Selling psychometric tests to top management (validity; reliability; ROI)
- There is no knowledge, faith or awareness in psychometric tests
- People do not understand which type of psychometric assessment tools to use for which purpose
- Lack of statistics showing value for money
- Reluctance of senior job applicants to fill out a test

Research to convince the boss; give actual numbers on people

who were successful and create a basic sheet based on this data.
Show earlier success in similar kind of roles. DISC is used as a self-
development tool. It is crude, you get a graph, not an
authenticated report. The outcome is used as additional input for
senior management for decision making. It is not used for the
staffing part, but it is extensively used for development.
Sr. Manager, HR of a leading IT firm

An elaboration of lack of interpretation skills is given here forth:

"Tests are free in the public domain and people do not know how to interpret the results. There is an issue of 'post-assessment'
interpretation. There is a need to get into the interpretation, and the adaptability of interpretation of the instrument, because
90% of its effectiveness is based on that. Interpretation also depends on the recruiter's experience."

The toughest challenge was to sell psychometric assessment tools to higher management, convincing management of the
benefits and building a belief that a valid decision can be made on a hiring tool. Convincing top management was addressed in
all six of the focus groups and was mentioned repeatedly by participants as being a major challenge. Participants mentioned
that senior management does not understand the value of using psychometric assessments tools. It is a challenge to make a
value proposition: "how will it add value to what I am doing today?"

12
One of the participants expressed:
"Compared to the West, India is lagging behind in understanding, knowledge and the mindset for people in management to
make these tools more effective. Management needs to believe in such assessments."

Another participant stated:

"It's how people accept it right from Chandigarh to Kanyakumari because at every location when you go different set of people
look at it differently"

EXPECTATIONS FROM PSYCHOMETRIC TOOLS

Further to exploring the gaps in psychometric tools participants were asked to list their expectations from a psychometric tools
beginning with their most important expectation. At the top of the list ranked the wish to have easily available and
interpretable results.

Rank Expectations Details

1 Efficient use and Interpretable results
- composite instrument and a final index to provide differences
in candidates,
- Composite score report on existing employees
- Find a test that can be used more often, on a large number of
people, which is less costly

2 Tool that assesses a person's characteristics
- psychometric tool should measure the attitude of the person
- Checklist with specific behavior traits, this makes hiring easier for
customer support positions.
- Should be clear on what the company is hiring for based on
competency framework specified for the company. Can we
use an aptitude test customized for competency framework
of the company? Aptitude is organization specific
- Different tools for different personalities
- Testing tool to identify skill maturity. Look at competency
based tests.

3 India-industry customized tool - Context background is crucial. Variance in the workplace matters
a lot. Interpretation in Indian context will be different.

4 Online tool - online tests have preference

- Flexibility of an online system that is fairly consistent and
cost effective.

5 Training - Is there a tool to get post-training feedback?

- Is there a licensed trainer available in India?

6 Right fit - analyze top performers to retain people to meet organization's

expectations
- Introduce a psychometric assessment tool to get the right
candidate in place.

13
 Give items on the aptitude side, give section wise, percentile score.
Must be cost-effective. Employee turnover is low. Throughput is
higher than the industry, 16-18%. Assoc. VP - HR, of a prominent
BPO.

The need for psychometric assessment tools is instigated by for example incorrect hiring decisions. There is a need for tests
that are a proof of retention and enhance the predictability of job performance and likelihood to stay with the organization for
long periods of time. As one the participants stated:

"If the hiring decisions are not going right, then the need arises and companies look to assessments tools for a better fit. Look
at the roles, performance on the job, competencies and job change."

Are costs an issue or a deterrent in using psychometric assessment tools?

Answers to this question varied between participants and between groups. Cost is an issue and a major factor in deciding to
implement psychometric tools. There was a clear consent amongst the participants in all the focus groups that psychometric
tests are expensive and a key factor for companies to inhibit the use of these assessments.

Issues that were expressed:

- Use of psychometric assessment tools is on a per use basis; Price limits to use it extensively
- range of costs is 3x the compensation
- Costs of psychometrics are Rs. 200-1500. Rs. 2000 for 3 test reports
- 15 months to break even the costs of recruitment and salary
- Campus recruitment has high costs for logistics
- Tests are expensive, Rs. 2000-3000 for senior and niche positions, like legal positions.
- Few thousand rupees per person
- Thomas profiling is Rs. 1000, per candidate, which is too expensive.

The staffing budget allocated depends on the level of recruitment and stability of organization. One of the participants whose
company allocates 40% of the budget for psychometric tests posed the following question:

"Is there a particular figure? 10% of the hiring costs?"

Broadly, most participating companies displayed a cost conscious mindset, however mere costs were not deterrents to using
psychometric assessments. Nevertheless organizations are selective in using tests determined by the job level being assessed
and also know the amount they are wiling to pay for tests. Participants' are willing to pay Rs. 200 per psychometric assessment.
On further probing that whether candidates will be willing to pay for these tests, participants agreed that a college student
would be willing to pay if he/she can see the value it can have on their resume. It was clear from the discussions in all focus
groups that cost was one of the bigger stumbling blocks to in using psychometric tests.

ATTRITION
In addition to exploring the use of psychometric assessment tools and inquiring about the recruitment process, the topic of
employee attrition was addressed in each focus group. "There is a lot of attrition. What can be done and how reliable are the
instruments?" Many participants acknowledged that a valid instrument that measures likelihood of attrition was yet to be
found. Participants addressed the trends, shared ways of trying to prevent attrition and elaborated on the costs of attrition.
Once this issue had been raised other participants expressed their concerns. The table below provides an overview of
attrition issues.

14
 Attrition Participant comments

Trends - Talent acquisition: a team that tracks a person in the first year.
- Peer pressure is high. Salary comes first, then what you are doing
and where you work. The job content takes a back seat, pay comes first.
- At entry/junior level the hygiene factor is very important.
- Highest attrition at the front end, attrition at trainers' level.

Challenges - Ambition is high. You have to be an expert in interviewing to assess the

ambitions of a candidate. How to retain people? Attrition is high in
life insurance. Recruiting 400 people per month.
- Exit interview; there is no way of stopping them from moving.
Cultural fitment: not able to fit into the culture.

Rates - 5% of bottom performers need to leave.

- Involuntary attrition is at a higher level. Scales have turned due to
market condition. 70% involuntary, 30% voluntary attrition.
- Involuntary attrition 70% in IT.
- Insurance industry has a high attrition rate.

Costs - Costs of attrition: amount of training invested, individual costs,

infrastructure, manager spending time on hiring

Outcomes - One person leaves, the second feels rejected. This results in employee
dissatisfaction and disengagement. This creates a wrong impression in
the minds of remaining employees and customers. It creates
a bad environment.

Test Validity and Reliability

An important issue addressed throughout the six focus groups was validity and reliability of psychometric assessments tools.
The validity (predictive, construct, incremental) of different assessment methods has been debated in the academic literature.
Experts have questioned the accuracy of the tests in what they are supposed to measure. This in turn has its influence on the
predictive power of these tests and the desired outcome for an organization. In case of measuring employee turnover, the
validity in this test is the accuracy with which the questions can predict employee tenure. Validity correlates to how accurately
a tool measures what it is theoretically supposed to measure.

A test with low validity seems unlikely to result in good hiring decisions and would be much more costly in the long run.
However, the value of assessments depends, among other parameters, on the number and quality of applicants found in the
candidate pool. This will determine if an assessment will work and how well it will work. Even assessments with relatively low
validity can add substantial value when they are used to evaluate large numbers of candidates.

Test validity was repeatedly mentioned as a challenge in acceptance and using psychometric tests. The relation between Indian
culture, and acceptance of tests in the Indian market was addressed by one participant:
"Psychometric tests become accepted when you have a validated report with cross-cultural validation. Then acceptance
becomes higher when selling it to management"
"If a test is able to get a lot of predictions right, then it is easier to sell it to management"

15
 I have 15 years of experience of using psychometric assessment
tests. Company uses these for career management and senior
leadership development. In India using psychometric assessment
tools is new especially in IT. One needs to assess the socio-cultural
background to predict. Using and validating, statistical validity
regarding relation to socio-cultural background. - V.P. Head - HR
of a leading IT firm.

CONCLUSION

Decisions to deploy psychometric tools are made by top

management. The role of HR professionals is to convince top
management about the utility of validated tools that accurately
and reliably predict success on the job, such as performance and
retention in order to select the candidates that fit the
organization. An easy-to- administer and easy to interpret report
of a psychometric assessment tool will make it easier to convince
top management.

Overall, the majority of the participants used psychometric assessment tools in their current organizations or had used it in
previous organizations that they had worked for. Only a few participants did not use psychometric tools in their organizations.

Hiring people is an investment and hiring the wrong people can be very expensive some times as much as -500%. Proper
placement and matching of individuals with the company is crucial. An improper placement will result in HR wastage and
attrition, on the other hand a well-motivated employee is likely to stay longer and contribute better. By selecting employees
who have positive work attitudes, who are high performers and who are more likely to stay longer with the organization, an
organization will build a workforce that make the business succeed. Selecting the right people for the right jobs constitutes a
source of competitive advantage.

Successful companies will know how to attract and harness the right talent at the right time. In this era with global economic
crises, yet an Indian economy with considerable growth presents challenges and opportunities for HR to move front and center
and make a major contribution to business results by adopting validated psychometric assessment tools that increases the
likelihood of successful hires that perform and remain with the organization.

16
RECOMMENDATIONS

To highlight the course of action for organizations in order to make their recruitment process more efficient we recommend:

. Define, measure and document excellence for your organization by implementing psychometric assessment tools to address
the right fit of a candidate with your organization and to ensure performance excellence and endured tenure.
Indian organizations also tend to have human resources practices that emphasize person organization fit. For example,
organizations in India are more likely to use internal recruitment and word-of-mouth advertising, and rely strongly on
recommendations for selection. These studies seem to suggest that, in India, the primary attachment to an organization is
through fit with the organization, not with the job. Therefore, a psychometric test that could capture the fit of the person to the
organization as opposed to the job as such is a welcome addition to the range of already existing, widely used methods.

. Implement a psychometric screening tool that can predict and reduce attrition in addition to the selecting methods already
in use.

. Promote self-screening among candidates by administering the online STAR Personal survey to show individuals the company
culture match with the organization.

. Implement a psychometric assessment system that will generate the company's desired ROI of recruitment. ROI on
recruitment is high if it is scientific [1].

. Convince management of the utility of psychometric assessment by showing proof of a validated tool.

HIRING RISK MANAGEMENT SYSTEMS

While companies constantly manage business risks like extending credit, underwriting insurance, selling mortgage, investing
their cash utilizing tools and models to set guidelines for their managers. We all know hiring decisions are not perfect and have
the most significant impact on the short and long term value of the company, however most companies do not systematically
manage their hiring risk.

WHAT IS A HIRING RISK MANAGEMENT SYSTEM?

Hiring Risk Management Systems are similar to any other risk management systems in approach.
For example, Banks: Before extending a loan (mortgage); banks request the applicant for certain information as determinant
factors to ascertain the risk the company undertakes when giving someone a mortgage. They input the information into a
system that utilizes sophisticated algorithms and in-turn compares them with historic outcomes to decided whether to give
someone a loan, how much and at what interest rates.

Similarly, Hiring Risk Management Systems through proven, validated and relevant methods collect data about a person
(typically using psychometric tools), his/her historical "performance" data (if it exists) and combines it with organizational and
job related factors using predictive analytics to provide an easy to use decision making tool as an interview guide for recruiters
and managers. These systems take complex analytics and data analysis and present them as simple ready to use decision
making tools.

Hiring Risk Management System ties business outcomes to hiring decisions and gives your organization the ability to develop
QUANTIFIABLE metrics around

- Hiring process efficiency

- Cost per hire
- Workforce performance
- Talent measurement.

17
Successful HR professionals have always understood that the recruiting selection process must be systematized and linked to
revenues and profits.

A Hiring Risk Management System can provide the information platform and data that business leaders need to make
decisions about human resource, cost allocation, process improvement, staff performance and ultimately, the future-direction
of the company, to significantly improve the quality of hire.

GLOBAL TALENT METRICS

Global Talent Metrics (GTM) is a human resource information services company, dedicated to helping organizations and
individuals make better hiring and selection decisions with greater confidence and control.

Established in 2006, Global Talent Metrics is a part of Alignmark.Inc, a leading provider of innovative products and services that
help organizations optimize their investment in human capital across Europe, USA and Latin America for over 30 years.
Leveraging this global expertise in the design and deployment of assessment and by combining dedicated research on Indian
organizations and individuals, we offer a range of innovative solutions in the areas of talent management.

A team of expert industrial and clinical psychologists and technologists make up the research wing, which is at the core of the
Global Talent Metrics. Over the last 30 years, the team has developed innovative solutions and products for over 100 global
giants that have gained significant competitive advantage by better managing their talent.

18
 AUTHORS

CABOT L. JAFFEE, SR., PH.D.

CHAIRMAN, GLOBAL TALENT METRICS

Dr. Jaffee is a recognized authority in the area of personnel evaluation and development. He has been a nominee for the Training
Magazine Hall of Fame. He started his career with ATandT and was responsible for assessment center activities for the Bell System.
For over 30 years, he has been a consultant for a variety of organizations in the U.S. and other countries, both in the private and
public sectors.

Dr. Jaffee's areas of expertise include testing, electronic selection, assessment centers, job analysis, career development,
managerial development, performance appraisal and legal concerns associated with personnel evaluation. As one of the world's
leading experts in the area of personnel evaluation, Dr. Jaffee has been an expert witness in a variety of court cases.

Dr. Jaffee has published extensively in the field, and has authored several books, chapters and numerous articles. He has been a
frequent presenter at major conferences including the American Society for Training and Development's National Conference,
Training, American Society of Personnel Administration's National Conference, etc.
Dr. Jaffee holds a B.A. degree in Psychology from New York University, an M.A. degree from Columbia University and a Ph.D.
degree in Psychology from Florida State University. Dr. Jaffee has been on the faculties of the University of Tennessee and the
University of Central Florida. He has given guest seminars on personnel practices at such institutions as the University of
Michigan, etc.

RANJAN SINHA
CHAIRMAN AND CEO, SUMMIT HR

Ranjan Sinha has founded and directed a number of service and technology companies in the area of human resources, e-mail
and marketing services in India and the USA. Ranjan founded Summit HR with the vision of helping CEOs and their teams win the
war for talent. Summit HR is recognized as the Top HR Outsourcing Company by The Wall Street Journal®, International
Association of Outsourcing Professionals, The Gartner Group and Fortune® magazine.
Ranjan has been selected as the "HR Outsourcing Superstar' several times by HR Outsourcing Today magazine for his
contributions to the HR Industry in the US and India. He is a frequent speaker on various industry panels on Talent Management,
Hiring Risk Management and HR Outsourcing. He currently writes a column for The Financial Express and has written numerous
articles on Six Sigma applications in HR and Talent Supply Chain Management. Ranjan serves on the board of Summit HR
Worldwide Inc., Global Talent Management Inc. and Greenwich Capital Venture Corporation.Ranjan lives in California and is a
member of the Young Presidents Organization (YPO), Northern California Chapter. Ranjan has a Masters Degree from The
Wharton School of Business and a MBA from the Indian Institute of Management, Bangalore. He has a B. Tech from the Indian
Institute of Technology, Roorkee.

19
DR. VASANTHI SRINIVASAN, PHD
PROFESSOR, INDIAN INSTITUTE OF MANAGEMENT BANGALORE (IIMB)

Prof. Vasanthi has a Bachelors degree in Commerce from Bangalore and a Post Graduate Diploma in Personnel Management
and Industrial Relations from XLRI, Jamshedpur. She worked with Wipro Limited before getting her Fellow in Management
(doctoral degree) from the Indian Institute of Management, Bangalore. Her consulting experience has largely been in designing
and developing performance management systems. Her areas of interest are Performance Management, Team based Human
Resource Management systems and International Human Resource management. She has done specialized performance
management workshops for senior and middle level managers in a number of organizations. She is currently the Executive
committee member of the International Society of Business Ethics and Economics and is the head of the Faculty of HRM and
OB at IIMB.

REIMARA VALK
SENIOR RESEARCH ANALYST, GLOBAL TALENT METRICS / IIMB

Reimara Valk (MSc, BA Honors, BA) is a Senior Research Analyst for Global Talent Metrics based at the Indian Institute of
Management Bangalore (IIMB), India. In collaboration with professor Vasanthi Srinivasan, (IIMB) Reimara has worked on various
studies in the field of human resources (HR), including work-family balance of women and male IT professionals in India,
global staffing strategies of expatriates involving companies like Sun Microsystems, Google, Volvo, Honeywell, Alcatel-Lucent,
Philips, Bosch, Hyatt Hotels, employee attrition in India - a collaborative endeavor between IIMB, Summit HR Worldwide and
Alignmark Inc. Reimara has gained prior work experiences in the area of HR and business process analyses, customer services
and facilities management within industries such as IT, chemical manufacturing, healthcare, hospitality and municipality
government across the Netherlands, UK and India.

CHANDANA REDDY
PRODUCT MANAGEMENT CONSULTANT, GLOBAL TALENT METRICS

Chandana Reddy has over 15 years of experience in software product marketing in psychometrics, K-12 education, assessment
and analysis. She has worked extensively with globally distributed engineering teams and customers in the US and India to
define, develop and deploy products. Her most recent venture School Portfolio developed in partnership with a non-profit
organization - Education For the Future and Dr. Victoria Bernhardt is a software platform that assists with the creation of a school
or district Continuous Improvement Portfolio to support the process of systemic continuous improvement in learning
organizations. She has trained and coached over 3,000 educators, teachers and principals , across 60 school districts on the use
of data analysis, quantitative techniques and use of standardized assessments to help improve student and teachers
performance. She is a frequent speaker at various K-12 education conferences and forums across the country.
Chandana started her career in software outsourcing and managed product development alliances with key partners such as
Motion Picture Association of America, Sony Pictures, Buena Vista Home Pictures, and Santa Clara County Office of Education in
California, Pearson Learning, Scantron Corporation and MGT of America.

20
 REFERENCES

1. Rao, T.V. (2008). Hurconomics: making the HRD missionary business driven. New Delhi: oxford and IBH Publishing Services.
2. Ryan, A.M. and Tippins, N.T. (2004). Attracting and selecting: what psychological research tells us. Human Resource
Management, 43 (4), 305-318.
3. Polonsky, M.J. and Waller, D.S.(2005). Designing and Managing a research project: a business student's guide. New Delhi: Sage
Publications India Pvt. Ltd.
4. Ramamoorthy, N., and Carroll, S. (1998). Individualism/collectivism orientations and Reactions toward alternative human
resource management practices. Human Relations, 51, 571-588.
5. Budhwar, P.S., and Khatri, N. (2001). A comparative study of HR practices in Britain and India. International Journal of Human
Resource Management, 12, 800-826.
6. Sinha, J.B.P.(1998). Cultural embeddedness and the developmental role of industrial organizations in India. In: Triandis, H.C.,
Dunnette, M.D. and Hough, L.M. (eds.) handbook of industrial and organizational Psychology, vol. 4. Palo Alto, Ca, USA:
Consulting psychologist press.
7. Mattone, J.S., Jaffee, C.L. and Struth, M.R. (2009). Sales Results are Predictable! A Sales Leader's Guide to Measuring and
Managing Leading Indicators. White paper series AlignMark Inc., 1-28.
8. Tippins, N. T. (2002). Issues in implementing large scale selection programs. In J. W. Hedge and E. D. Pulakos (Eds.), Implementing
organization interventions: Steps, processes, and best practices (pp. 232-269). San Francisco: Jossey- Bass. (pp. 232-269). San
Francisco: Jossey- Bass.

Academic Snippets
1. Sackett, P. R., Schmitt, N., Ellingson, J. E., and Kabin, M. B. (2001) suggested that the item content of a psychometric test
should not be unfamiliar to those of a particular culture and should not be more verbally complex than warranted by
job requirements.
2. Ryan, A.M. and Tippins, N.T. (2004) believes that the usefulness of a selection tool in any given situation will require evaluating
context-specific information such as the selection ratio (number of candidates hired relative to the number of candidates who
applied), hiring cycle time, costs of a selection error (e.g., cost of replacement, error, lost opportunities), marketability (getting
people in the organization to use the tools), timeliness (feedback to applicants and hiring managers), and management of the
process (selection system administrator ability and credibility)-are all context-specific and may be more challenging for some
HR managers than others.
3. Tippins, N. T. (2002), argues that putting a selection system into use involves a host of implementation issues-decisions about
the ordering of process elements, the ways in which information will be combined, the use of technology in delivery of tools,
the training of tool users, policies (e.g., waivers), the database structure and access, and communications about the system-all
of which contribute to the success or failure of a selection system.
4. Mattone, J.S., Jaffee, C.L. and Struth, M.R. (2009), believes that technology should be leveraged to help organizations source and
screen talent more effectively.

21
SOME OF THE PARTICIPANTS

Name Designation Company Name

MetLife India Insurance Company
Mr. Kiran Yadav Deputy Director - HR
Private Limited
Senior Vice President and Global
Mr. Anand Pillai H C L Technologies Limited
Head - Talent Transformation
Mr. Rahul Gautam Manager - HR Nokia India Private Limited

Mr. Pramath Nath Centre Manager HP Global e-Business Operations Private Limited

Dr. N Kulkarni Chief Human Resources Manager H M T Machine Tools Limited

Mr. Shehnaz Begum Assistant Manager - HR Hewlett - Packard India Private Limited

Mr. Kapadia Manager - Human Resources Infineon Technologies India Private Limited

Mr. Tripathy Manager Infosys BPO Limited

Assistant Manage
Mr. Sultana ING Vysya Life Insurance Company Limited
- Talent Acquisition

Mr. V Ramaswamy Deputy General Manager - HR Jindal Aluminium Limited

Senior Director - Human

Mr. Ramachandran Motorola India Private Limited
Resources Indian Subcontinent
Dr. Bandyopadhyay Vice President and Head - HR Perot Systems (India) Limited

Mr. Srivatsan Senior Manager - HR T T K Prestige Limited

Mr. Rajendra Hedge Deputy General Manager - HR Toyota Kirloskar Motor Private Limited

Mr. Govindraj Head - Placement U T L Technologies Limited

Mr. S Sindhu Vice President - HR Godrej Agrovet Limited

Mr. Singh Khanduja Assistant Vice President - HR Reliance Industries Limited

Mr. D Patil Vice President - HR Repro India Limited

Head - Human Capital and

Mr. Pagey Sharekhan Limited
Organisation Development
Mr. Telang Chief Manager - HR TechProcess Solutions Limited

Vice President - Corporate The Bombay Dyeing and Manufacturing

Mr. Dasmahapatra
Human Resources Company Limited
Deputy General Manager The Bombay Dyeing and Manufacturing
Mrs. Kaushik
Corporate HR Company Limited

Mr. Godbole Chief Manager The New India Assurance Company Limited

Mr. N Joshi Vice President - HR and ER Unichem Laboratories Limited

22
INDIA USA
Potential House, 1057 Maitland Center Commons Blvd
35/B, 2nd floor, 1st Main Suite 200
3rd Phase, JP Nagar Maitland, Florida 32751
Bangalore - 560 078

For more information

Contact : Pavan Sriram or visit www.stargtm.com

Email : pavans@stargtm.com