Hundreds of senior managers in Australian banks, insurance companies and building societies will face greater scrutiny of their personal and professional backgrounds.
The new "fit and proper" standard issued by the Australian Prudential Regulatory Authority (APRA) has come into effect and all board members, chief executives and most senior executives should take note. The standard calls on institutions to hire executives with good character, diligence, honesty, integrity and judgement.
APRA advises institutions to examine the relevant occupational skills and experience of each person in its employ, including matters involving prior breaches of legal and fiduciary obligations (both in Australia and overseas), bad financial reputation, any substantial involvement in a business that failed due to poor management, and the bad management of personal debt.
Malcolm Cameron, a senior associate at Sparke Helmore, says it is hard to calculate the exact number of people affected because each institution must examine its own reporting and risk-control structures. The maximum fine for employing an unsuitable executive in a position of responsibility is $200,000.
The standard also applies to banking or insurance licenses
Compliance with the standard is in keeping with current best-practice recruitment in the hiring process. Companies should perform extensive reference checks, and be aware of any criminal history or previous disciplinary action taken against potential managers and also perhaps employ relevant assessments, such as psychometric assessments, to recruit the most suitable person as an executive or other senior managerial position.
Citations have been adapted from BRW Sept 28 - Oct 4, 2006
How Psychometric Testing Can Assist Companies with Recruiting the Ideal Executive
Psychometric testing refers to the process of using an objective and scientific measurement of candidate's work suitability based on the position's core-competencies. The selection report will highlight the candidate's relevant strengths and weaknesses. The aim of psychometric tests is gain an accurate, scientific and objective measurement of the candidate's cognitive abilities, personality/behavioural traits and interests.
The process of testing candidates is a bimodal process. To increase the validity of the psychometric testing process, candidates are assessed using both cognitive tests and personality assessments. An executive battery of psychometric tests can be customized to target an organizations specific area of desired traits. By way of illustration, listed below are the main areas of concentration for both cognitive/aptitude and personality assessments.
Cognitive/Aptitude Psychometric Tests
Psychometric testing can provide key insights into a candidate's ability to communicate, make decisions, calculate cause and effect in certain occupational scenarios, etc. Tests are drawn from three main cognitive aptitude types:
- Abstract reasoning: Focuses primarily on a candidate's level of fluid intelligence. Moreover, these tests measure a candidate's ability to promptly and accurately learn complex information to aid in problem solving processes.
- Verbal reasoning: Focuses on the ability to effectively pay attention to and communicate business-related concepts in a verbal form. These tests pay particular attention to candidate's effective use of written ideas and information to construct accurate conclusions.
- Numerical reasoning: Establishes a candidate's ability to perform accurate arithmetic to understand and present conclusions regarding numerical data.
Personality Psychometric Tests
Personality psychometric tests tend to measure an individual's relatively stable behavioural tendencies and preferences within an occupational context such as integrity, diligence, dutifulness, self-discipline and other personality factors.
Thus, psychometric testing provides a powerful way of ensuring the best candidates are selected by assessing their ability and preferred behavioural styles. With psychometric testing, you can:
- Make selection more objective
- Reduce selection mistakes
- Improves the efficiency of the recruitment process
- Weigh the strengths and weaknesses of a candidate
- Lower recruitment costs
There are many psychometric instruments available and therefore it is important to select and use the right instrument. At Psych Press- Talent Management Consultants, we pride ourselves on providing world-renowned assessment solutions to assist with recruitment whereby our clients can achieve the highest value to their clients. For further information on psychometric tests, please contact our Organisational Psychologists.
