The Importance of Psychometric Tests in Organizational Strategy

Making predictions is essential these days. We need to anticipate the climate, financial markets, political and geopolitical twists and turns and more. It bodes well that the business world is following a similar pattern. Many organizations realize the importance of psychometric tests to foresee behavior before recruitment, making psychometric tests part of their talent management initiatives.

For anyone who has ever been responsible for hiring, you must know that workforce performance varies significantly across jobs. Thus it is critical to understand the differences among individuals who systematically affect job performance, ensuring that candidates with the highest probability of success are hired.

Where Are Psychometric Tests Used?

Psychometric tests are used at every stage of an organization’s talent management process, starting from talent acquisition to talent development. Psychometric tests enhance the chances of organizational success by ensuring that the right fit candidates are hired, identified and developed for critical roles. Whether it is employee engagement, appraisals, training needs identification, leadership development, or succession planning, uses of psychometric tests can be found throughout the employee life cycle.

One of the main uses of psychometric tests in an organizational context is their application in assessing a candidate’s mental ability and behavioral style. Psychometric assessments aim to determine an individual’s suitability for a role based on the essential cognitive skills and personality characteristics. They offer crucial insights into a person’s cognitive ability and reveals his/her underlying potential.

Psychometric Assessments: Gauge Human Behaviour and Traits for Better People Decisions

Here are some uses of psychometric tests for your organization:

Learning and development can significantly benefit from the psychometric test application. With the use of psychometric tests in L&D processes, organizations can derive better outcomes. The use of psychometric tests to gauge learning agility, motivation to learn, openness to learning, preference for a learning mode can be used to design better development plans for individuals, with the right resource utilization. Eventually, companies that use psychometric testing can effectively measure the ROI and training effectiveness of their L&D interventions. 

For organizations, the use of psychometric tests gives a better understanding of the already existing strengths and potential. This can be used to create more well-defined career paths for employees to embrace a culture that ensures their success. The uses of psychometric tests also include enabling employees to remain happy and highly productive by empowering organizations to cater to their employees’ learning needs.

Organizational planning, consisting of high-potential identification, leading to leadership development and succession planning, is a pressing concern for many organizations. The use of psychometric tests in organizational planning has witnessed a surge. This is because organizations realize the importance of assessing the fitment of future leaders, leadership orientation, strategic thinking, decision-making, initiative-taking, adaptability, stakeholder management and other important competencies. 

Employees need to be assessed on a future competency framework for potential succession. The competencies need to look beyond hands-on domain knowledge and skills. The use of psychometric tests ensures that an employee is holistically evaluated on present and future competencies. 

The importance of psychometric tests also extends to fiscal benefits. The use of psychometric tests to identify behavioral traits indicative of leadership potential positively impacts performance management, ensuring strategic positions remain occupied with competent performers. This negates the cost and time on external recruitment and training, statistically more expensive than internal promotions. 

Effective organizational planning can enable an organization to navigate a challenging business environment. In situations where requirements and roles are sharply defined, the use of psychometric tests helps identify an employee’s future potential in the role. It provides advantages in objective information on employee effectiveness, behavioral competencies suited to the organizational ecosystem and leadership stage compatibility.

Note:

In 2000, after having helmed Microsoft for nearly 25 years, Bill Gates stepped his title as CEO down to Steve Ballmer. The latter went on to lead Microsoft for the next 14 years, tripling sales to $78 billion and more than doubling profits from $9 billion to $22 billion. In fact, Kinect and Xbox launched under his supervision; as did the acquisition of Skype and Yammer.

Measuring merely quarter-on-quarter growth, Balmer was among the best CEOs the world had ever seen. But in terms of long term survival, you could argue that Ballmer failed. On investigation, it’s easy enough to find that through Microsoft’s remarkable financial performance in 14 years, its leadership failed to execute on the five important technology trends of the 21st century.

While the company left the 20th century owning more than 95% of the operating systems that ran on computers – almost every desktop – its mobile OS share borders on an abysmal 0.1%. It is speculated that Ballmer failed because the CEO was a world-class executor of an existing business model, but not a world-class innovators.

Others identify with Satya Nadella, the man who succeeded Ballmer in 2014. He roped Microsoft around mobile and cloud, freed the Azure and Office teams from Windows, released a new version of Windows and killed the phone business. Nadella likely saved his company from irrelevance.

It was more appropriate for the story to precede the concept when it came to psychometric tests and its use in succession planning. Quality employees are not cut from the same cloth, and it shows from the Ballmer example. Did he possess critical competencies to Microsoft success? Yes. Did he have them all? No.

Job performance is subject to social and organizational influences. This is indicative of ‘effective job behavior,’ but what differentiates good from poor performance relies entirely on the organizational context.

Easily available quantitative goals may hinder a valid measurement of employee effectiveness, especially since these goals shift focus to short-term results. Further evidence highlights that the incorporation of countable, objective measures of performance into the overall appraisal could lead to overemphasis on fairly concrete aspects of performance and reduced emphasis on difficult to quantify aspects that yield concrete outcomes only in the longer term.

The importance of psychometric tests may be deduced from the fact they play a pivotal role in recruitment processes. Their relevance stems from their functionality to assess a candidate’s traits in different ways. Psychometric tests are frequently used in the job interview process at many companies across the globe. They play an essential role in the recruitment and selection process.

It is a general practice to base most hiring decisions on past performance or tenure and not on the candidate’s talent. Poor hiring practices cost organizations billions, annually, in recruitment expenses and lost organizational profits.

By making use of psychometric tests during the hiring process, organizations can base their selection on trustworthy criteria such as innate competencies rather than relatively irrelevant and unreliable managerial performance indicators such as past performance, tenure or skills mentioned in the CV.

Psychometric test applications help assess the innate cognitive, behavioral and personality-related competencies present in an individual in an accurate and unbiased way. It helps identify whether a candidate possesses qualities required to lead a team efficiently and sufficiently motivate and engage them in a sustained manner.

Psychometric tests are a scientific and standard method to measure an individual’s behavioral style and mental abilities. They measure a candidate’s suitability for the role -for example, leadership based on the required personality characteristics. It also identifies the extent to which the candidate’s personality and abilities match to perform the role.

An organization needs to identify a manager’s leadership style and mold it to suit the team’s requirement for the best results. To achieve this, we need to assess the behavioral and personality traits that a candidate possesses to gauge the leadership style they are likely to follow. The use of psychometric tests helps HRs and hiring managers to gain this information. Once a candidate’s predominant leadership style is identified, HRs and hiring managers can use the information to evaluate whether the candidate’s leadership style matches the team’s requirements.

Psychometric assessments can help identify the manager’s cognitive and behavioral competencies and personality type. This knowledge is crucial to understand whether a manager possesses the right temperament and skills to lead their team. If the manager falls short on these skills, they can be trained and developed to manage their teams better by focusing on the lacking skills, consciously working on improving them.

The importance of psychometric tests is also validated while aligning the innate leadership style of existing managers and molding it to get the best out of the team that they are managing.

Good managers are defined by their continuous efforts to productively engage their teams, resulting in high performance. They can successfully motivate every team member to take responsibility for their and the team’s performance. The outcome is an organization high on productivity and profitability. However, the stark reality is that a handful of managers can be graded as ‘good’ who can productively engage their teams. Studies show that only one in ten managers are effective team builders – employees the world over state managerial behavior as their most significant source of workplace stress.

High employee engagement is directly linked to higher employee productivity, organizational profitability, lower absenteeism and turnover, and overall better and safer work culture. Companies must ensure that every team is led by a competent manager who understands their team’s needs to ensure high employee engagement. Great performing teams are high on motivation and morale, and the manager is responsible for maintaining a team’s spirit.

The psychometric tests from Mercer | Mettl have been designed to evaluate behavioral and cognitive skills accurately and in a result-oriented manner. We also provide companies customizable solutions to address their specific needs at any stage of the talent management and optimization process.