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Emergence of Psychometric Test in the Indian Corporate World

Monday, October 03, 2016
By Yogesh Mariwalla

Yogesh Mariwalla
Chief Executive Officer, Index Advisory Private Limited

Psychometrics literally means measurement of the soul. As an area of work Psychometric deals with the technique of psychological measurement. This measurement is about attitude, personality traits and abilities. Psychometric tests were initially used in the army to ensure that people with the right attitude were selected.

Psychometric Tests for Human Resources

The use of psychometric tests in the corporate world began in the area of selection of employees for organisations. More and more companies started realizing that the cost of a wrong recruitment is very high. These costs go beyond the visible costs of having to recruit an alternate person, salary costs, cost of training and retraining. An individual is more than this. What we need to find out is his values, attitudes, beliefs, biases, past learning, etc.

As much as individuals are different so are organisations. The success of the individual can only happen when the culture of the individual matches that of an organization. Psychometric tests are very effective in measuring this cultural fit of the individual to an organization.

Over the last 5-6 years the scope of psychometric tests has evolved beyond the recruitment space. They are now used in deciding the promotions, job rotations, career moves and related areas. Most organisations by now have a reasonably evolved competency matrix framework. What they were lacking is a method to measure these defined competencies in an individual.

Challenges in Using Psychometric Tests:
In the Indian context two challenges remain for the use of Psychometric tests. One is the relative high cost of the tests and another is their applicability and validity in the Indian context. As the cost per person is considered high, the tests are normally used only at the end, once the candidate goes through the entire selection process. At this stage it is normally very difficult to reject a candidate as he has been interviewed by the senior management and there is a tendency to believe their judgment rather than the test.  

The other problem is that most of these tests are made for foreign audiences and hence the Indian audience finds it difficult to relate to some of the questions. This holds true especially in the normed tests (which compare the candidate results with a set of data) where the target population is usually American or British.

It would be ideal for organisations to have tailor made tests designed for the organization. As said, organisations are also different as individuals are different. Thus the meaning of team work may be different in different organisations.

Psychometric Tests Seeking New Frontiers:
Today Psychometric tests have grown beyond the HR space and are being used for lending decisions. This is especially true in countries like India where credit history is not easily available. And even if credit history is available it normally would indicate ability to pay and not intention to pay. The three key areas where these tests are being effectively used are medical loans, loans to SMEs and educational loans. An unexplored area still is the loans for consumer products.

In the long run, if effectively used, psychometric tests could emerge as the answer to the problem that banks and NBFCs are seeking to penetrate that large segment of the population which is under banked and underserved and therefore unable to fulfill their needs due to lack of funds.

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