Behavioural assessment | Using psychometric tools for leadership development6 min read . Updated: 25 Feb 2014, 11:43 PM IST
A new study by Tata Strategic Management Group states that the adoption rate of psychometrics in Indian companies could increase to 87% by 2016
Mumbai: Indian companies are starting to use simple psychometric interpretation instruments as human resource (HR) management tools. Most people-related decisions at companies are subjective, which make psychometric tools an important advancement in the area of HR management.
Psychometric instruments help companies measure and predict an individual’s behaviour, attitude and traits. The predictability helps companies make critical people decisions for various HR processes such as in recruitment, selection, building effective teams (with the objective of leveraging their collective synergy), and leadership development.
These are the findings of a study by Tata Strategic Management Group titled Psychometrics in Indian Organizations, which states that the estimated adoption rate of psychometrics in Indian organizations could increase to 87% by 2016, from about 50% now.
The study states that the increasing need for leaders across organizations brings into perspective the transition process of individuals from one level to another. “As individuals transition from one passage to another, typically the behavioural and value-based transition takes the longest time, as opposed to the skills and time application transition. Organizations have been promoting leaders over a period of time focusing on their technical skills and performance contributions to organizations. However, the work values and behaviours are not given due importance," it says.
Enterprise leaders must value, at their core, each behaviour that they expect others and themselves to exhibit and be judged on, states the study, authored by Rohan Chopra, principal and head (organization effectiveness), and Gunjan Shroff, associate consultant (organization effectiveness), at Tata Strategic Management Group.
Psychometric instruments play a pivotal role in measuring behaviour and attitudes that help individuals transition from one passage to another.
The study was conducted to detect whether organizations in India recognize the need to address these traits and behaviours while assessing and moving leaders in organizations—at the hiring, development, promoting or succession planning stages.
“Psychometric instruments have gained importance from the perspective of moving away from judgements and subjectivity towards an objective-driven approach to make people related decisions," the study says.
Tata Strategic Management Group found that while various organizations are using psychometric instruments today, the leaders are key motivators of these instruments in organizations and most probably will continue to be so in the subsequent organizations they lead.
Organizations that have been successful in using psychometric instruments are those with a clear objective in mind, a talent management strategy aligned to organization goals and an integrated competency framework, and psychometric instruments that can tie back in line with all these, it states.
“There are a large number of organizations that have not yet been exposed to the importance and benefits of measuring behaviour. While these organizations recognize the need to create leaders in organizations, the need to support the behavioural transition is limited," it says.
The study indicates that while organizations in India are ready to explore and accept psychometric instruments as key tools in their talent management processes and strategy, organizations have to first critically grasp the underlying specifics which drive the successful usage and implementation of psychometric instruments.
In an email interview, authors Chopra and Shroff talk about the key findings of the report. Edited excerpts:
What is the relevance of psychometrics for Indian companies?
Our study shows that psychometrics help organizations measure and predict an individual’s behaviours, attitudes and traits. The predictability helps CXOs (top executives) and managers make key people decisions for various HR processes like recruitment, selection, building effective teams (with the objective of leveraging their collective synergy), leadership development, culture building, etc. Seventy-nine per cent of the organizations are using psychometric instruments for recruitment and selection, and 68% for leadership development and high potential identification. Ninety-two per cent of the CXOs and HR heads using psychometric instruments are using these instruments across all the processes.
How many Indian companies are using this?
Our study sample indicates that more than 50% of organizations are utilizing psychometrics. However, we anticipate the adoption rate to increase to 87% in the future. IT/ITeS (information technology and IT-enabled services) followed by chemical sector are the top two sectors utilizing psychometric instruments today. The services sector, i.e. retail, education and consulting, will experience a significant increase in the number of organizations utilizing psychometric instruments by 2016.
What were these companies doing in the past?
Organizations have been focusing on measuring technical skills only for promoting and developing leaders. Assessing behaviours was a factor of judgement. Increasingly, organizations have realized that behaviours play an important part of an individual’s performance and require a more objective approach. Hence, psychometric assessments are increasingly gaining importance to facilitate movement of individuals from one role to another. Seventy-four per cent of the organizations not utilizing psychometrics today intend to do so by 2016.
What has forced them to change?
Decisions solely made on judgements can be fallacious as judgements vary from person to person. To maintain consistency and an objective method to assess behaviours—attaching numbers to intangible facets of an individual—has attracted interest.
Going forward, with the introduction of simple and easy-to-interpret instruments, industry contextualization and benchmarks will further drive adoption rate of psychometrics to 87%.
Hogan, a late entrant in the Indian market for psychometrics, is the second-most widely used tool and is gaining popularity over others, which have been longer in the market. Forty-nine per cent utilize MBTI (Myers-Briggs Type Indicator), followed by Hogan (25%) and FIRO-B (24%). Though traditional instruments (e.g. MBTI, FIRO-B) are holding ground, contemporary instruments (e.g. Hogan, PAPI, SHL, Thomas Profiling, etc.) are becoming increasingly popular as they measure specific workplace behaviours, display clear linkages to competencies and generate a variety of reports. CXOs are demanding benchmarks for behaviours across industries and roles—validated in the Indian context. This will create demand for new instruments like Jombay.
How is it helping and are they placed better with these new techniques?
a. Individual Perspective:
It helps individuals realize their hidden traits, strengths, potential areas of development and hence gives them an opportunity to modify their behaviours.
b. Organization perspective:
Psychometric assessments can be utilized at different stages of an employee life cycle and for different purposes:
(i) Recruitment stage:
It will help in ensuring culture and role fit. Helps predict successful high performance if provided with the right benchmarks.
(ii) Leadership development:
Creating self-awareness, identifying development areas, assessing an individual’s ability to work as a leader and with a team.
(iii) Performance management:
Facilitates individuals to meet targets, higher productivity through their work environment.
Eighty-eight per cent of the organizations intend to use these instruments for recruitment and selection and 76% will be utilizing them for leadership development.
What can go wrong in using these methods?
The scope of our study is not to discuss the underlying science of psychometrics. All the instruments demonstrate their validity and reliability, which is represented through Cronbach’s Alpha—a measure of internal consistency. The key to administering these tests are trust and knowledge, without which the outcomes could be misleading.
Trust: to ensure employees are comfortable and understand the objective behind these assessments;
Knowledge: individuals who analyse these reports should understand the construct behind each instrument before making decisions.
Are there examples showing the usefulness of these techniques?
In India, so far there has not been any study conducted in a controlled environment to assess the usefulness of these instruments. In fact, our study is also the first ever study done on psychometrics in Indian organizations covering various parameters of utility. However, from our experience and discussions with CXOs and our advisers, we have seen benefits across various organizations in terms of sales teams achieving their profit targets, higher productivity, reduced attrition, improvement in selection rate, successful team formations, etc. For example, a leading private bank restructured its branch workforce using psychometric assessments and has seen a high increase in the sales staff achieving their profitability targets.
A leading chemical player has used psychometric instruments to gauge leadership skills across mid, senior and top management to identify high potential, culture change and effective leadership. Seventy per cent of organizations using psychometric instruments have indicated that these instruments are used as support instruments for all talent-related decisions. Twenty-two per cent of organizations using psychometric instruments have indicated that these help them to lead to decisions like selection/rejection of a candidate.