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Should small businesses use psychometric testing?

Lead consultant at Test Partnership, Ben Schwencke, answers the timely question: Should small businesses use psychometric testing?

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Yeah, they definitely should. In fact, in some ways, it's almost more important that small businesses use psychometrics compared to large ones for a couple of different reasons. So in the big businesses of the world, multinationals, government, and so on, the real benefit of psychometrics is scalability in that you can add thousands and thousands of candidates just instantly, basically inviting them, they participate, and that saves you hours and hours of CV sifting, early stage interviews which has a real cost for a large organization with huge volumes of applicants. So that's the main reason they do it. Now, of course, in small businesses that's less of an issue, although it's still a big advantage, of course. Really, it's more about quality of hire. Now, quality of hire matters more in small businesses than it does in large ones.

Because, you know, if you make one bad hire in a team of ten people, the team could be very much derailed. Almost everyone will feel that on a day to day basis when someone is just not pulling their own weight. In a large organization of a thousand people, however, it's a drop in the ocean. It really isn't as much of an issue.

And so as a result, in large organizations, the scalability, ease of access, these assessments is the big advantage, and the quality of higher benefits are a sort of happy bonus. Now the opposite is true in small organizations. To be clear, we have now maybe a hundred years of evidence that psychometric assessments are extremely useful when it comes to maximizing the quality of hire.

Ability tests, personality questionnaires, situational judgment tests, knowledge tests, work samples tests, huge, huge body of evidence. So there's really no basis to question the validity of these assessments in practice. But in any case, the real benefit in a small business is that quality of hire issue because the stakes are just so high.

One mishire is just a catastrophe for a small business. As a result, you do need to be more careful. Now, in addition to that, large businesses, they sort of benefit from having huge volumes of applicants. They benefit in a couple of ways. Now imagine you have an assessment and it's okay, you know, it has a little bit of validity to it, but you're testing thousands of people and you're only going to select a small subset of those candidates.

They're going to be the top 5, 10, 1 percent of performers, something like that. And as a result, they're probably going to be better than average candidates overall. Even if the selection tool isn't great. Just purely by numbers, by picking the top performers, you're almost certainly going to get some utility out of that.

When you have 10 people, and you need to take 5 people to interview, the odds are they're going to be average on any metric that you measure. Consequently, you really have to get more information per unit time per candidate with small volumes, because the differences between them are really likely going to be quite slim.

And so finding those hidden gems, those really key candidates in a small volume of applicants, you need really powerful assessments and you need quite a lot of them. As a result, it is, yeah, it's more important overall, I would say, especially from a quality of hire perspective, but potentially even in general for small businesses to use psychometrics.