Why should investors use these assessments?
Testing is more effective than gut feeling alone…
Investors can spend a lot of time defining the mix of personality attributes, abilities, motivations, experience and qualifications necessary for success, but while experience and qualifications can be accurately determined quite easily, it is more challenging to objectively assess whether a potential investment has the right mix of personality attributes, motivations and abilities necessary for success.
This is where psychometric testing comes in – with valid, reliable psychometric tests, you can objectively measure whether a founding team has the right mix of abilities, personality and motivations necessary to succeed in a particular industry. There are other subjective methods that can assess personality traits, abilities and motivations such as interviews, CVs and reference checking.
Although these subjective methods are a crucial part of the investment selection process, relying solely on these methods to make investments could be a mistake. It’s too easy for your gut to fall in love with charismatic founders who have resumes that look great and who say all the right things during an interview. High-quality psychometric testing provides standardised, objective data to supplement your intuition and data from interviews, resumes and background checks.
For example, one of our Financial Service clients had a huge turnover problem with Spot FX Dealers. No matter what method they used, they kept hiring people who would either leave or lacked the necessary skills. We incorporated personality and ability tests to screen candidates that they were considering calling to interview. We set a cut-off point in terms of scores on the tests and only candidates that made the cut-off point were invited to interview. This resulted in a dramatic reduction in interviews with unsuitable candidates and a dramatic increase in their selection success rate from 1 out of 13 to an industry high of 7.8 out of 10.