Return on investment analyses (such as the work carried out by the performance assessment specialist Pan on large-scale testing exercises) show that good psychometric tests, particularly delivered online, can cut recruitment costs by 30% to 40%, and reduce the time a new recruit takes to become fully effective. In other words, testing offers hard, bottom-line organisational value.
About 70% of UK companies with more than 50 employees use psychometric tests, according to the annual recruitment and retention survey by the Chartered Institute of Personnel and Development. Test use is growing outside its European and North American heartland: major Chinese banks use tests to employ senior managers, and Indian call centres use them to reduce staff turnover. This suggests that worldwide spend on tests is well above the last reliable estimate of between £1bn and £1.5bn. As the international economy grows, people become an increasingly important and costly organisational resource. People - not systems - deliver high service standards, drive up customer satisfaction, and create successful relationships with suppliers and partners. Tests are diagnostics for people in the same way that other technologies run diagnostics on delivery and production systems.
Psychometric tests are used in all aspects of HR work, although they are not a 'magic bullet'. They are part of a menu of information sources, such as structured interviews, CVs, supervisor ratings and appraisal results which, combined in the right way, provide insights into how people work. They can improve the accuracy of processes that predict a person's future behaviour, success in a job or learning a new skill.
Psychometric testing's scientific approach to prediction is one of its main contributions to business planning. Tests also create shared understanding and language to discuss HR issues in a team or organisation.