Performance Appraisal Review of Literature

REVIEW OF LITERATURE A discussion regarding use of psychometric test has been carried out in May 2001, published by centre for the economics of education by Andrew Jenkins From the article: This paper surveys the literature on the use of psychometric testing by employers, and considers whether information on psychometric testing can be used to make deductions about changes in the demand for skills in the economy. The standard approach to measuring the demand for skills, and skill shortages, is to conduct a survey of employers.

Among the main advantages of skill surveys are, firstly, that they are a direct and straightforward approach to answering questions about the extent of skill shortages and, secondly, that they can be designed to ensure that they give a representative picture of the economy as a whole. We argue that even the best of these surveys, which generally rely on the answers given by employers to a series of prompted questions, contain flaws sufficient to raise doubts about their reliability.

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Surveys are forever being published, whether by the CBI, Chambers of Commerce, government agencies, task forces or other organisations suggesting that the British economy is deficient in some skill or other and that urgent action is needed. How accurate and reliable are these surveys? Are skills shortages as serious as many of them suggest? Here we argue that there could be serious flaws in existing survey evidence. Measuring the demand for skills is beset with methodological problems and the approach adopted in many surveys is likely to be inaccurate and misleading.

Firstly, it is generous in its measurement of skill shortages. The criterion for reporting that an employer is suffering from a skill shortage is that there should be at least one of the following: Low number of applicants with the required skills Lack of work experience the company demands Lack of qualifications the company demands A number of key points emerge from this brief review of the literature on skill Shortages and the demand for skills. Firstly, mployer skill surveys suffer from a variety of methodological and definitional problems. Even the most thorough and carefully designed surveys have not avoided all of these pitfalls. Secondly, while surveys of this kind tend to show a strongly rising demand for skills, and often serious skill shortages, these are not self-evident and there is a continuing debate about the extent of change in the demand for skills in recent years. Although they provide much useful data, the results of surveys cannot therefore be taken on trust.

They needed to be treated sceptically and evaluated against other sources of evidence. We turn now to assess one such alternative source of evidence which may have the potential to complement information from skill surveys: companies’ use of psychometric tests. Psychometric testing sometimes takes place within the context of an assessment centre. Organisations use a range of selection methods, including interviews, group exercises and role playing, in-basket exercises and other methods, as well as psychometric testing in order to select from a pool of job applicants.

Our review of the literature provides strong confirmation that companies’ use of psychological tests has been growing over time. Up to the mid-1980s surveys of test usage, and indeed of recruitment and selection methods more generally, were apt to point to little change. Senath et al, reporting in 1976, concluded that there was no indication that test usage Bhad increased since the 1960s or early 1970s, ‘and possibly test usage may even have declined’.

Gill, writing in 1980 on management selection, reported ‘a high degree of satisfaction, at times bordering on complacency, with traditional methods of recruitment and selection which, as the research indicates, have not changed in any significant way in the past 10 years’. Overall, the implications of this review of the literature are that information about psychometric tests has the potential to make a useful contribution to our knowledge of the demand for skills.

It has some disadvantages compared to skill surveys. It is less representative of the economy as a whole because tests are not used by all firms or for all types of vacancies. For example, small firms are under-represented amongst those organisations which make use of tests. The principal advantage of studying psychometric test use is that it may be able to provide realistic indications of the demand for skills among test users because employers have to pay sizeable amounts of money in order to use the tests.