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They can be very effective. The most important thing though is how accurate the test is, and if it's testing for the key skills required in the job. My brother-in-law just started using customized tests to hire salespeople and he told me a fascinating story. They were looking to add a 'hunter', someone to break into new accounts and develop new business. They had plenty of 'farmers' in-house who were great at servicing and growing existing accounts. They met a guy who had industry experience and a great personality. They liked him, and could picture him fitting in well and were about to extend an offer, but then were persuaded to hold off and do the test first.
The test results came back as 'do not hire.'
My brother-in-law was shocked and disappointed and curious as to why? The test revealed quite clearly that this candidates strengths were not as a 'hunter' but rather as a 'farmer', and the candidate confirmed that that's what he preferred as well. It hadn't come out in the interview, but the personality test made it crystal clear. So an offer was not extended and my brother-in-law is now using these tests on all hires. He was impressed!
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