THE GLUCK REPORT, Part II: Going to the Source

Edward Hoffman wrote the book on psychological testing at work. Hoffman is a New York-based licensed psychologist and organizational consultant specializing in testing, an adjunct professor at Yeshiva University, and author of more than a dozen books, including Psychological Testing at Work (McGraw-Hill). Here’s what he told me about how advisors can use testing. You can contact him at [email protected].

How big is psychological testing in the workplace and what companies are using it? A big problem is that the information is proprietary. So for many tests in business, there is little concrete information available. While the Myers-Briggs Type Indicator (MBTI) is an exception, precise data are hard to come by. Because the testing companies are privately held, they are not bound to give information out. Conservatively, though, it’s safe to assume the industry is probably generating about $100 million to $200 million annually in sales, with major corporations accounting for a big portion. The two major uses are in hiring and in management training and development.

How do companies use psychological testing, and is there any evidence that it increases profits? Large retail companies like Home Depot use personality testing to screen out dishonest employees in the hiring process. These tests are highly effective, but at times, honest but cynical people do get erroneously screened out. In the financial sector, testing is widely used to determine who will be the best salesperson or stockbroker. Salespeople can and do fail, and they get terminated for not scoring high enough on extroversion. To the extent that large profit-driven companies spend a lot of time and money in employee screening and in management training and development, they definitely find it is effective. Some studies have looked at results of integrity and honesty testing, and it does seem to be accurate. But there is not a huge amount of hard data. The test providers are reluctant to undertake those studies because they may undermine their products. This doesn’t mean that the tests don’t work; it merely means the companies are reluctant to expose their test to that kind of outside scrutiny. One big exception is the MBTI, which has generated thousands of studies. The studies generally have been psychological, rather than business-oriented. The studies do not tell us whether certain companies are more profitable because they used testing.

Can a small business with 2, 10, or 20 employees use psychological testing effectively? Absolutely. You are focusing on the cutting edge when you talk about and show small companies how they can use testing. I am sure small businesses over the next decade will start to see its value and will start using testing to help understand employees and to increase job satisfaction, motivation, and productivity. There are four tests that would be helpful for a small business to use. But I do have some caveats before telling you about them. If a business owner does not have a background in psychology, it might be worthwhile to hire a psychologist–not to give the tests but to provide a couple of hours of consultation about what the tests will do and how to understand them. Most small businesses cannot afford to hire a psychologist for dozens of hours. But there are hundreds of assessment Web sites and thousands of tests, many of dubious validity. There are a lot of charlatans out there, and getting some professional assistance is wise. Before any small business owner decides to go ahead, he should hire a psychologist with expertise in testing. The couple of hours of consulting will allow an expert to explain what the tests are, their value, their limitations, and how they can be used. A small insurance business might want to attract different personalities than a financial planning firm. So you need some consulting to help you understand what kind of people you want and do not want in your company, and what the issues are with the employees you currently have on your staff.

Since we know the most about the efficacy of MBTI, please tell me about it. MBTI is a very good test. More than a million people take MBTI annually and there are excellent reasons why it is the most popular personality test in business in the world today. It sheds light on important dimensions of our personalities and how they affect our performance at work. Better tests can and will be developed. But it is easy to take. It takes no more than 20 minutes. It gives results that are interesting and significant.

What does MBTI measure? How each of us stands with regard to four major dimensions of personality. The first is whether you are an introvert or extrovert. If you’re an extrovert, you get energized by being in groups and in crowds, and it’s easy for people to read your emotions. It has nothing to do with how likable you are, how many friends you have, whether you’re kindly. What make this concrete for everyone is that the opposite is what makes us feel drained. Some people feel drained by working in a group for several hours, and others feel drained by working alone. This trait of getting excited by having other people around is important in business, and there’s no doubt that extroversion is an important personality trait. Companies in the investment field see this as a very important trait. Extroversion is the single most difficult personality trait to change. In general, psychologists believe it is difficult to change our core psychological traits. The four dimensions of personality are inborn and don’t change easily. By the time we’re 18 years old, they won’t change at all. The only limitation of the MBTI–and, ironically, what makes it unique–is that the results are dichotomous. You’re either one thing or the other. Most tests don’t have that, and it doesn’t make much sense to us because, as a psychologist, everything can be seen on a continuum.