SCIENCE TRANSLATIONS
Everything You Want to Know about Psychometric Assessments
(and probably more)
By Nikki Blacksmith, Ph.D. and Kelly Diouf
There are myriad judgments and decisions investors and leaders need to make about people in startups. Should I hire this person? Will we get an ROI if we invest in this team? Which employees should be part of the leadership training? What are the employees’ perceptions of my leadership skills? Is the morale amongst employees positive in my startup? Is the CEO doing the best possible job? Will this person be a good fit for our executive team?
If you have ever had to make any personnel or venture investment decisions, you know it’s not a simple task; you need to accumulate and integrate many unique pieces of information. Despite the decisions’ complexity, most leaders, managers, and investors rely on gut instinct and personal assumptions. Although there are reasons and times to listen to your gut instinct, that time is not when you need to decide whether or not to invest seven figures in a group of strangers with a new business idea.
Over the last century, industrial-organizational psychologists have developed decision aids called psychometric assessments for a wide range of people-related investments. Research has demonstrated that psychometric assessments substantially reduce errors in predicting peoples’ performance and outperform decisions made without psychometric assessments (i.e., decision aids).
This blog will introduce psychometric assessments, their historical evolution, what they measure, and how organizations use them as decision aids.
What are psychometric assessments?
Psychometrics is the science of measuring psychological attributes. More specifically, psychometric assessments measure attributes such as, but not limited to, cognitive abilities and skills, emotional fluency (sometimes referred to as emotional intelligence), personality traits, interests, attitudes, and values. They uncover essential information about people by objectively assessing psychological attributes.
Organizations use psychometric assessments to help organizations with hiring, developing, and evaluating performance. Since the beginning of the 21st century, organizations have been increasingly interested in psychometric assessments. Approximately 75% of Fortune 500 companies now use assessments.
In this blog, we will review the history of psychometric assessments, describe what they are and what they do, and share how you can use them to improve firm performance.
The Historical Evolution of Fair and Valid Assessments
Those around us differ from ourselves. But how and why people differ is not readily apparent. Human beings have been analyzing and attempting to understand those differences for thousands of years. One of the earliest documented accounts attempting to explain differences in people dates back to Plato (429–347 BC). However, it wasn’t until the early 20th century that organizations began using psychometric assessments to assess differences in people. In 1917, the United States Army and psychologist Robert Yerkes introduced the Army Alpha and Beta tests to determine which soldiers would be the most effective officers during the war. Though the intent of these tests was to provide a competitive advantage in the war, there was broad criticism of these tests, especially regarding unethical use and discrimination. The U.S. Department of Defense and Intelligence agencies invested in research to build fair assessments for selection and training, focusing on understanding how to develop valid assessments.
Throughout the 1930s and 1940s, psychologists advanced theory and understanding of individual differences, primarily with regard to personality and cognitive ability. However, due to the inability to replicate studies along with issues of racism and discrimination, research on individual differences was stagnant during the second half of the 20th century. It was not until the 1980s-1990s that the study of individual differences was revived. Over the last 40 years, psychologists have conducted thousands of studies to inform the development of valid assessments and determine how to use assessments for decision-making ethically.
Since then, authoritative institutions such as the American Psychological Association (APA), National Council on Measurement in Education, and the American Educational Research Association introduced guidelines, Standards for Educational and Psychological Testing, for the development of valid assessments and ethical use of assessments. The Society for Industrial-Organizational Psychology built on those standards and developed principles for the ethical use of assessments in organizations. In addition, trained psychologists developing psychometric assessments must adhere to APA’s ethical principles, which emphasize the importance of responsibility to society, social justice, integrity, and human rights and dignity.
What do assessments measure?
Psychometric assessments measure psychological attributes (i.e., constructs) that include individual differences, attitudes, and perceptions. Some psychometric assessments, such as personality tests, measure attributes deeply rooted in a person’s history and remain relatively stable over time. Psychometric assessments can also measure individual differences that are less stable and dependent on the situation, such as attitudes or perceptions like engagement or team cohesion.
Methods vs. Attributes
As psychologists, we would be remiss if we did not note that it is imperative to distinguish between the method used to measure the attributes and the attributes measured by the method. For example, a personality test is a self-report assessment (method) that measures personality traits such as extraversion (attribute). Similar to how a ruler (method) is used to measure an inch (attribute). In other words, psychometric assessments are a tool used to measure psychological attributes.
Methods (Type of Assessment)
Below are some examples of the various methods used to measure psychological attributes, though not an exhaustive list.
Psychological Attributes
Below are some examples of the various psychological attributes measured by the methods listed above, though not an exhaustive list.
- Personality traits (e.g., extraversion)
- Attitudes
- Perceptions (e.g., the job performance of leaders)
- Team phenomena (e.g., cohesion, shared mental models)
- Behavior
Purposes
While there are numerous reasons to use a psychometric assessment, the most common uses include:
- Conducting an organizational needs analysis or work analysis
- Recruiting and selecting new hires
- Managing human capital performance
- Assessing employee attitudes and motivation
- Examining workforce health and well-Being
- Building or sustaining organizational Culture
- Determining reasons for turnover
- Developing competencies and skills
Conclusion
Psychometric assessments are currently the best aid available to manage and make human capital decisions. Most large organizations have been using and benefiting from psychometric assessments for decades. However, it is much less likely for startups and investment firms to leverage psychometric assessments as decision aids. This is surprising and concerning because new venture investment decisions are much higher stakes, and startups’ cost of human capital problems is enormous. It’s not uncommon for a single person to be the reason for the demise of a startup.
Our team at Blackhawke is working to tailor psychometric assessments for investment decisions and growing human capital in startups. For example, psychometric assessments ought to be used to conduct due diligence on the human capital aspects of a startup. Startups can use psychometric assessments to build a strong team, gain leadership self-awareness, hire new employees, and much more. Stay tuned as we continue to write about how to leverage psychometric assessments in the entrepreneurial ecosystem.
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