Fortune 500 companies including Exxon Mobil, PricewaterhouseCoopers, Barclays, McKinsey and Unilever use psychometric testing to select and develop their staff, and they have become a popular tool here in the GCC too. The Abu Dhabi University Knowledge Group surveyed over 100 organisations in the GCC on whether they use psychometric tests, and which ones they use.

We found that 51 per cent of our sample are currently using psychometrics with many using more than one test as part of their HR initiatives. Of the organisations using these tests, 86 per cent use personality questionnaires, 64 per cent use cognitive ability tests and 48 per cent work with Emotional Intelligence questionnaires.

Hold on — what are psychometric tests? They are standardised, scientific measurements of cognitive ability and personality style. When used correctly, occupational psychometric tests can help to select the right people for roles in organisations and reduce the risk of a bad hire.

They can also provide insight into employees’ personalities, abilities, and other preferences, which can be used to define and support their development needs. Here are a few points that will help you as a hiring manager, or an HR professional, to minimise potential risks and maximise the predictive accuracy of these tests.

1. Determine the business need

Psychometric tests can only help if you know what you need them to predict. For instance, some of our survey respondents used personality questionnaires on their own as part of a selection process, when they should have been using cognitive ability tests as well. Determining the Key Performance Indicators (KPI) of a job role can help one decide which psychometric test to use and avoid tools that do not fit the bill. Beware of silver-tongued salespeople!

2. Use qualified professionals

There is a risk that someone without the appropriate knowledge and experience may use psychometric tests as part of a selection process. This can cause serious harm to the participant, as well as the reputation of your organisation and that of the test publisher. Personality questionnaires and cognitive ability tests are based on scientific research and use distinct terminology to explain results.

Qualified users are essential for a thorough understanding of reports, and for delivering feedback to participants in a comprehensive, objective and tactful manner. Test users should also know which tools are fit for purpose, and how to incorporate psychometrics into your talent management initiatives.

3. Buy reliable and valid tests

If you have a British Psychological Society (BPS) Test User on your team, they should be able to recommend appropriate tests for your needs. Look for tests that have been independently reviewed by the BPS or the Buros Centre for Testing in the US. Unfortunately, there are well-marketed products available that have not been independently validated and have questionable results.

4. Return on investment

Ultimately, your organisation will want to see a return on the money invested. So, cost-effective and well-designed talent management initiatives are required to ensure the best possible candidates are attracted, selected, developed and managed. Different studies will give you different costs for hiring and replacing staff, but here are a couple of references here to give you an idea.

The Chartered Institute of Personnel and Development (CIPD) produced a report in 2015 about Resourcing and Talent Planning in the UK. They estimated that the median cost of hiring senior managers/directors was £7,250 (Dh34,148, $9,000). They also estimated the cost for other employees at £2,000 ($2,500).

Impact on profits

The Centre for American Progress (CAP), a high profile public policy research and advocacy organisation in the US, pooled data from 30 different US studies for various job categories and found that companies would typically pay about one-fifth of an employee’s annual salary to replace them. Very highly paid senior individuals may cost up to 213 per cent of their annual salary to replace.

Not to mention the potential impact on profits and culture on an organisation when hiring C-suite level executives.

The RoI of psychometrics should take into account the cost and the validity of the tools you plan to use. However, if hiring managers and HR professionals use the right tools with the right methodology, they can significantly raise their chances of selecting, developing and retaining the right talent, and save the cost of a bad hire.

The writer is a business psychologist specialising in talent management at Abu Dhabi University Knowledge Group (ADUKG).