Psychometric evaluation for restructures in the gun

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The Inland Revenue Department (IRD) is facing its own judicial audit, when it came to light mid-October that it was using psychometric testing to decide which of its current employees would stay and which would go during a restructure.

The IRD has agreed to temporarily suspend use of the information already gathered on its employees from psychometric tests, to await the outcome of an urgent hearing before the Employment Court.

There is nothing new about employers and recruiters using psychometric tests to assess the suitability of new employees. Advocates of psychometric testing claim it enables a prospective employer to avoid employing someone who may give a stellar performance at a job interview, but be unable to follow through in their day-to-day performance. Detractors say the tests are unreliable (a test taker may obtain a completely different result in a subsequent test), are vulnerable to cultural and age-related bias and are expensive.

Whatever one’s views on these tests in the pre-employment space, the trend of using them to evaluate existing staff during restructures faces some significant hurdles as the IRD are, somewhat belatedly it appears, discovering.

In 2013, a number of government departments were criticised for using psychometric testing to evaluate existing employees during restructures, most notably, the Department of Conservation, the Department of Corrections, the Ministry of Education and the Ministry of Business, Innovation and Employment (MBIE).

Information obtained under the Official Information Act by the Public Service Association (PSA) at that time, showed government departments were spending around $1.5 million of the public purse per annum on these tests. IRD only appeared to be using the tests for recruitment, not restructures, back in 2013.

The practice of using psychometric tests during restructures appeared to have lost traction following the 2013 Employment Court judgment of Gilbert v Transfield (NZ) Limited where Chief Judge Colgan (as he then was) was highly critical of Transfield (now Broadspectrum) for dismissing Mr Gilbert during a restructure, largely based on the results of his psychometric tests.

His honour stated: “This is an example of an employer not only ignoring relevant criteria (skills and experience) but also of taking into account irrelevant criteria (psychometric and personality type testing designed for potential new employees where none was in that position) . To justify its extraordinary decision to ignore completely what it knew about Mr Gilbert’s performance of his job, the defendant was driven to say that its long established and indeed still current employee performance assessment mechanisms are of limited, if any, value. That beggars belief. If it were really so, one might well wonder why they continue to be used for ongoing performance assessments of employees including for remuneration reviews.”

Mr Gilbert was reinstated to his position, received lost remuneration backdated to his dismissal and awarded $15,000 in compensation.

So, did the IRD just miss the memo on this when it embarked on psychometric testing of hundreds of its employees this year, to decide who might keep their jobs? How much of the taxpayers’ money has been spent on evaluating test results asking for agree/disagree answers to statements such as “I hate opera singing” and “My good friends know how to party”? Are these answers likely to better assess an employee’s skills, than say, the last ten years of performance results and reviews?

Seeing taxpayer money wasted is always an irritation, but when it is being wasted by the tax department itself, well, that just takes it to a whole new level. Christchurch ratepayers may feel even more personally aggrieved, given it was disclosed this month that 85 jobs have been axed at the Council and 99 new positions created. Redundant staff have been told that they may need to undergo psychometric testing when applying for the new positions, unquestionably being paid for from rates revenue.

Employment law principles require that where redundancies look likely during a restructure, and decisions need to be made on who will remain and who will leave, an employer must consider all relevant factors and ignore all irrelevant factors. Relevant factors are usually set out in a selection criteria matrix and typically include factors such as skills, education, reliability and performance. Irrelevant factors are likely to include agree/disagree answers to “I like to try exotic foods” and “If it feels good, do it.”

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About Author

Erin Burke

Employment Lawyer and Director at Practica Legal Email: erin@practicalegal.co.nz phone: 027 459 3375

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