An Ultimate Guide To Psychometric Testing :

How Psychometrics Help in Organizational Setting

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[1] Introduction

[2] What Do You Know About Personality Tests?

[3] What Do You Know About Cognitive Tests?

[4] Where Do You Stand with the Facts?

[5] How Do We Create or Standardize a Psychometric Test?

[6] Psychometrics: Use Cases

[7] Conclusion
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[1] Introduction
Almost all domains of applied psychology unite under the concept of measurement. Psychometrics are
designed to do just that, and the term itself is an abbreviation for ‘psychological measurement’. When we talk
about quality, we often require reference. And if it’s a conversation about psychometrics, a test within its
domain ought to do the trick. Today, it’s important to try and understand qualitative metrics that actually make
a test effective. This is all the more important with psychometric tests.

In 2018, it isn’t an understatement to find psychometrics endorsed itself into pivotal parts of the employee
lifecycle. This is enough for it to become rather indispensable, at least for the pseudo-majority that utilizes its
functionalities.

But, even with the involvement of both assessment technologies and the tests that accompany it, the results
derivative is only as good as its quality.

Key business leaders often wonder about the Returns on Investment (ROI) – be it innovation in talent
acquisition or the development of learning initiatives within the organization. On a more granular level, they
also wonder about the use cases – the depth to which a tool can be used within a particular process.

This is why we’ll be pushing into it right away.

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TABLE OF CONTENT Knowing Your Psychometrics:
Is It Right for Your Organization?

In most cases, psychometrics includes a combination of personality and cognitive tests. And for the longest
time, they’ve been splitting hairs in the organizational ecosystem.

[2] What Do You Know About Personality Tests?

Paper & Pencil personality tests in an organizational context was

near non-existent prior the beginning of the 20th century. In fact,
contemporary application of these measures and tests for personnel
selection could be attributed to the field of management science
and turn-of-the-century industrial psychologists.

Interestingly, through the aftermath of World War I, with the

expansion of American business in terms of size, complexity,
competition and employee regulation, the development of rational
management systems pushed into the spotlight. It recommended the
application of scientific methods to organizational problems.

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[2.1] Early Issues & Current Scenario

The distinction between industrial psychology and

scientific management reached its apex when
psychologists began to emphasize the importance of
individual factors such as intelligence and personality over
contextual factors such as incentives.

But, while cognitive ability testing emerged with

established and strong acceptance, personality tests failed
in terms of recognition or trust. Without any support, the
use of personality tests in employment selection evoked
controversy. In fact, several experts concluded that
personality tests used in personnel selection lacked
validity, were easily faked, and generally unsuitable for
pre-employment screening.

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[2.2] Would You Trust Personality Tests?

Models of personality have ranged from Eysenck’s 2-dimensional personality model to Cattell’s 171 traits with
a ton of others in between. With the development of sophisticated meta-analytic techniques, researchers
have been able to aggregate specific traits into broad behaviours that define job performance.

Personality assessments are rarely among tests to be considered on a standalone basis. They do function best
in combination with a battery of others. It’s why you’re likely to find different recipes to psychometric
assessments, the most common pairing being between personality and cognitive tests.

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[3] What Do You Know About Cognitive Tests?

Cognitive tests are all about measuring your competence and

intellectual capabilities. It also works into understanding your logical
and analytical reasoning abilities in a very specific area. This
translates to a reasonably accurate assessment of your abilities to
use specific job-related skills and to predict consequent job
performance.

They are generally time-limited with results measured against past

test-takers; this extrapolates into a comparable assessment of a
person’s level of ability or aptitude.

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[3.1] When is it a not good idea to use cognitive tests?

1. One Piece of a Puzzle: Cognitive assessments are only one piece of the bigger picture. Making
decisions about anything based solely on one, or even a series of aptitude tests, leave much to be desired
for in a candidate. There are competencies. Intrapersonal skills. These assessments are not one bit a
substitute for all forms of pre-employment testing.

2. For Managerial Roles: Intelligence is a factor, but for a role heavily dependent on competencies such
as leadership, influence, and networking, cognitive assessments will provide no more than half-baked
results.

3. When Experience Trumps Numbers: You must have heard about succession planning. How about
hires made due to performance shown in specific situations? Meritocracy trumps hard numbers sometimes.
Tim Cook debatably succeeded Steve Jobs for that very reason. Hiring in certain cases should value
experience over scores in an assessment.

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[4]Where Do You Stand with the Facts?

Client Speak
By now, it’s easy enough for you to assess that both personality and
cognitive tests come with their unique set of pros and cons. In
combination, they transform into a science that augment decisions into
a stratosphere unexplored. Psychometrics is something that can be
used rather extensively – be it hiring, L&D, or appraisals. It’s a pony you
should ride if your designation contains the acronym: HR.

Let’s make it a little special. Let’s show you how it works both ways:

TALENT ACQUISITION
LEARNING & DEVELOPMENT

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American Axle: Placing Employees for

[4.1]
Optimal Performance
A tier-1 player in the automotive supplier industry,
AAM employed an army of skilled engineers scattered
across different functions within the organization.
However, time revealed a couple of cracks in their
workforce structure.
1. Unidentifiable Employee Buckets
With a multitude of engineers, AAM sought efficiency
by bucketing their employees into component,
systems & application engineers.
2. Behavioural + Technical Competency Analysis
In association with Mettl, AAM realigned their
employees into buckets most suited to optimizing
overall workforce performance. It was brought to
fruition using:
1. Integrated Assessments (Psychographic +
Cognitive)
Psychographic profiling unveiled innate behavioural
competencies; the cognitive segment of assessments
worked to reveal an employee’s adeptness to one of
the three buckets: systems, application and
component.
2. Diagnostic Reports
Post-Assessment diagnostic reports were delivered

While AAM understood the varying competencies
required both technically and behaviourally to bucket
their engineers, the execution of the same proved
puzzling.
to both managers and engineers. While the
employee report provided detailed insights based on
what was revealed, including strengths and areas of
development, the manager reports possessed added
recommendation on how best to use the data
presented.

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The project included 450 employees. Assessments – both personality and cognitive in nature – provided managers
with employee inclination towards a particular bucket and a roadmap to creating individualized development
plans.

In conclusion, AAM was able to map their workforce more efficiently behind proof of hard, data-driven analytics
and numbers.

[4.2] Birla Sun Life Insurance: Hiring for Quality with Reduced Time & Cost

Birla Sun Life Insurance (BSLI) faced a couple of issues despite a widely impressive campus recruitment
strategy. It shadowed common challenges such as:

Increased Expenditure Increased Team Bandwidth

Extensive Operational Coverage Increased Efforts on Logistics

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The idea was to find the ideal candidate, anytime or anywhere. The idea was to provide opportunities to
campuses PAN-India. The idea was to scale, and smartly at that. They partnered with Mettl, starting the
relationship off with one of the company’s most primed requirement: Hiring Relationship Managers for their Asset
Management Team.

Our solution included a combination of:

1. Personality Assessments 2. Cognitive Assessments

Determined soft competencies linked to cultural Data-driven analytics from information derived from
synergy between employee and organization; directly aptitude tests are often what defines a candidate’s
impacts performance. growth pattern and potential to learn within an
organization.

We managed to conduct over some 1000 assessments for them in a two-year span.

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Quality Metrics of a Psychometric Test:
Why Should It Matter?

Psychometric tests have found use in different stages of the

employee life cycle, and also businesses close to the human resource
job description - appraisals, hiring, learning & development and
more. It’s been known to increase chances of employee success
given the correct use of both cognitive and personality tests, two of
the most important components to a psychometric test.

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[5] How Do We Create or Standardize a Psychometric Test?

In definition, a standardized test is administered and scored in a

consistent, or “standard”, manner. They are, in fact, designed in a way
that stabilizes questions, conditions for administering, scoring
procedures, and interpretations as consistent.

At the same time, in terms of creation, psychometric tests are subject

to scrutiny via validity and reliability tests. On the other hand, norming
frames the standardization process.

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[5.1] Nature of Reliability in Psychometric Tests

A test is reliable as long as it produces similar results over time, repeated administration or under similar
circumstances.

For example, it’s reasonable to expect a line that measures five centimetres on one scale to measure the same
on a different one. The line is essentially the same, and only a good scale can ensure it remains the same five
centimetres regardless of what or who measures it. When compared to psychometric assessments, a reliable
test is like that scale, with the ability to produce stable results over time.

Over the years, scholars and researchers uncovered multiple ways to check for reliability. Some include
testing the same participants at different points of time or presenting the participants different versions of the
same test to see how consistent the results are.

Suffice it to say that an assessment has to show demonstrably good reliability in order to qualify for validity.

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[5.2] Understanding Validity in Psychometric Tests

It is understandable to expect a test used in organizations to shed light on how a candidate would perform in
a particular job. With this in mind, it is essential to reiterate the difference between reliability and validity,
with the former being a prerequisite to the latter.

Let’s consider a dart player. In repeated trials, he or she continues to miss the mark consistently by about two
inches. Of course, this implies reliable aim. Each shot hits the board in a region two inches from the target. It’s
difficult to not question his validity as a professional - considering he or she doesn’t hit the bullseye as is the
aim of all professional dart players - in comparison to his or her peers.

Reliability and validity go hand in hand, but reliability by no means indicates validity. As our example showed,
having the first without the second hints at great consistency, but also inaccurate consistency.

There are tests for validity.

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[5.3] Why Norming is Essential to Psychometric Tests

Even with a test that is both reliable and valid, there exists a question about results. An assessment fails
without quantifiable results, but as often stated – human beings are far from quantifiable.

However, even that is a delicate ball game. If you think about it, picking the relatively best apple from a batch
of rotten apples would still yield a rotten apple. How then would you ensure good results from a good test?

In psychometric tests, to assess overall performance, researchers have employed standardization samples,
which simply refer to a large sample of test takers who represent the population for whom the test is
intended.

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What Can You Do with Psychometric Tests?
Beyond Traditional Use Cases
[6] Psychometrics: Use Cases
[6.1] Utilizing Psychometric Tests in Recruitments
MOST EFFECTIVE HIRING SELECTION PRACTICES
Correlation Score
Multi-Measure
Tests
Cognitive Ability
Tests

Integrity Tests

Reference Checks

E.I Tests

Personality Tests

Job Experience

0.0 0.2 0.4 0.6 0.8

The above chart is based on validity coefficients ranging from 0 to 1. The higher the number, the higher the correlation
between test scores and predicted job performance.
SOURCE: Data shared by Frank L. Schmidt

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For your reference, multi-measure tests are psychometric tests - a combination of cognitive ability, personality
and interest tests. In the table from Frank L. Schmidt’s data, research indicates 0.71+ correlation, identifying it
as the greatest predictor for job performance in the hiring scenario. It also cites the insignificance of relying
primarily on interviews, reference checks and personality tests alone.

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What’s important to note is that psychometric testing doesn’t necessarily restrict its use to larger organizations.
SMEs can use the method as part of their recruitment strategies also. Here are some inherent benefits to
including the same in your organization:

1 Interview Independence

2 Cost & Time Efficient

3 Inherent Traits

4 Standardized Testing

5 Cultural Fitment

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[6.2] Utilizing Psychometric Tests in High Potential Identification

In the business world today, there is a growing interest in high potential

(HiPo) identification. An employee’s potential evaluates the upper limit
of his or her development range. Suffice to say, the more potential they
have, the cheaper and quicker it is to develop them.

Studies indicate that investment in the right people maximizes

organizational returns, largely derivative of Pareto’s Principle or the
80/20 Rule. It roughly identifies that about 80% of the effect arise from
merely 20% of the causes.

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This is further validated by deeper research - across a broad range of industries, organizations, and tasks, a
minute portion of the workforce drive large proportions of organizational results.

The top 1%

Translates To
10% This pattern visibly grows with the
of organizational
output
complexity of the job itself. For jobs
of low complexity, top employees

The top 5% outperform average employees by a

25% rough median of 50%. You could
Impacts of organizational take manufacturing as an example
output
here. This difference rises to about
85-100% for jobs of medium
The top 20%
complexity; trainers or sales
Derives
80% managers.
of organizational
output

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Highly complex jobs, especially senior leadership roles contribute more than double of the average margin, with a
contribution output over 100%. There’s also added benefit to having these star performers in a team environment,
boosting effectiveness of other members to around 15%.

NOTE: In 2008, Howard Schultz reassumed the role of CEO at

Starbucks. He has since achieved market capitalization of $33
billion, over $11 billion in annual sales, and net annual profits of
more than $1.7 billion. This is all the more impressive when you
consider that in a struggling US economy, where average growth
of S&P 500 companies lingered at 0.4% in 2011, Starbucks’ share
price increased by more than 40%. In one sentence - high
performance to disproportionate gains for one company by one
employee. HiPo.

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[6.3] Utilizing Psychometric Tests in Employee Engagement

Engaged employees possess a sense of effective and energetic

connection with work related activities, going as far as to see
themselves as able to deal perfectly with the demands of the job. In
psychometric tests designed to assess the matter - such as the MBI
or MBI-GS - it would be wise to review the opposite pattern of
scores on the three MBI dimensions.

1. Low scores on exhaustion and cynicism

2. High scores on efficacy

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[6.4] Utilizing Psychometric Tests in Performance Evaluation

We have discussed a little about validity and reliability of a psychometric test; suffice to say, they need to
remain high on both accounts for performance evaluation also. To jog memory, you could take a look at the
chart below. It covers the metaphor of a shooting target: a wide dispersion of bullets indicates unreliability,
whereas off-centre shooting points to poor validity or bias.

Reliability
(consistency, or the absence of random errors)
High Low
True Value
High Results from different
Validity
measurements
(absence
of bias, or
systematic
errors)

Low

SOURCE: https://www.socialresearchmethods.net/kb/relandval.php

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A 2006 research revealed that in order to make psychometric tests valid, an organization is required to
supervise changes in criteria in order to keep balance of skills and personalities in need of evaluation. If
good communication skills are a mandate for a role, a baseline must be established normatively for the test
in question before the evaluation process. Again, it is wise to modify if factors of emotional stability - for
example - is required in addition to base communication.

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[7] Conclusion

An increasing number of companies have caught onto the trend by building internal analytics and data
centers within their HR department. They stand ahead much of their competition. Now the question is,

“Where do you stand?”

Well, you have the information to make an education decision now. The rest? It’s in your hands.

Godspeed.

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