Candidates for high-level openings at financial services firms can expect psychological testing to be part of the hiring process.
In recent years, such testing has increased, and observers say the trend will continue. Investment firms, after all, like basing their decisions on in-depth analysis. With billions of dollars at stake, they want to ensure they hire the right people to manage staff and make important strategic decisions. "All firms are trying to find a differentiator, a more creative way to find and hire people," says David Barone, a London-based recruiter who focuses on the financial services sector for executive search firm DHR International. "Financial services people are very inquisitive. They take an analytical approach to business."
The growth comes amid a flurry of new and improved testing products. Some use the latest psychological research to simulate realistic business situations, which attempt to forecast how candidates might respond to specific situations. As such, they may make strengths and weaknesses more apparent and find differences between candidates that weren't obvious in interviews.
Opinions vary on how much financial services companies are using simulation-based testing. Barone says about one in two firms in the sector may be using such tools, especially at more senior levels. "The further up the food chain you go, the more they are being used," he says.
However, Joe McCabe, a Boston-based consultant for executive search firm Christian & Timbers, puts the number closer to one in 10, though he agrees "the use of these tests is more widespread" than it's been in the past.
While not everyone thinks the use of such tests are growing, they do see the use of psychological testing in general as being widespread. Mike Poskey, vice president for Dallas-based ZeroRiskHR, says so-called assessment tests "are losing ground," but believes as much as 60 percent of financial services firms are employing some form of psychological testing as they make their hiring decisions. ZeroRiskHR itself offers different psychological tests as part of its services to help companies identify and hire the best applicants. Its clientele has grown over the past decade from about 10 to more than 130 financial services firms, including commercial and investment banks.
Barone says testing is effective for measuring things like leadership, management skills and the ability to work in teams. He says they can be "deal-makers or deal-breakers" in deciding whether to hire someone, because they offer more objective analysis of how candidates will react in given situations. "It's easier to get information from tests than from interviews," he says. "They're more scientifically consistent than the information one gains from face-to-face interviews."
Some executives resent testing, says McCabe. They believe that their career success offers sufficient evidence about their ability to handle the jobs they're seeking. "I've had pushback from candidates," he says. "They're asking 'why are you putting me through this?'"
Moreover, Poskey says firms shouldn't base their hiring decisions too heavily on tests of any stripe, since they don't always accurately predict an executive's behavior. Instead, the tests should serve as one part of a hiring process, raising specific issues that interviewers can explore in more detail. "They're not meant to make a decision for you," he says. "It has to be a piece of a puzzle, a roadmap to what a firm needs to focus on. They should offer direction in how to probe areas further."
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