Decisions, Decisions: Using Psychometric Testing to Select Entrepreneurs with High Potential

In emerging economies, demand for enterprise programmes usually massively outweighs supply: there are more people who need support than can be accommodated. This results in organisations having to be selective about who to accept onto their programmes.

At Balloon, we believe in selecting those who are going to make the most of that opportunity. Doing so means maximum impact per spend, where impact translates into helping that person out of poverty, creating jobs, and increasing the goods and services available in the community.

So far so good. Now the hard part. If we are prioritising people who will make the most of the opportunity, how do we even begin to go about identify these ‘high potential’ entrepreneurs? In most developing countries the number of informal sector entrepreneurs is massive. Finding high potential entrepreneurs is like finding a needle in a haystack.

At the same time, the information necessary to guide our choice is usually lacking. For example, most entrepreneurs we work with do not have education records; financial records; personal credit history or any kind of biographical data. Similarly, techniques that work in some contexts, such as interviews or assessment days, just don’t seem to work well here. So how do we make this decision accurately?

Enter Psychometric Testing.

Psychometric assessment essentially means measuring aspects of individuals’ characteristics, normally through a questionnaire or test. You’ve probably encountered psychometrics before. Lots of big companies use them to screen candidates (personality tests, numerical reasoning etc.). There are also loads of (bad) psychometric tests on social media, the kind that tell you whether you’re a good boyfriend/girlfriend or which character from Harry Potter you are.

So we started thinking: ‘could we build a psychometric tool that identifies high potential entrepreneurs?’ Backed by a £20,000 grant funded by the UKs Department for International Development and administered through the International Citizen Service (ICS) programme, this is exactly what we have set out to do. ICS is an overseas volunteering programme funded by UK Government and led by VSO.

The process for building an effective psychometric tool is:

Step 1:

Identify which characteristics are important in high potential entrepreneurs (e.g. proactivity)

Step 2:

Design a psychometric test to asses these characteristics and use it as part of an assessment process

Step 3:

Compare assessment data to monitoring and evaluation data to validate the tool

Step 4:

Iterate/improve the assessment based on data

Working with psychometric experts META, based at University College London, we have set up an interesting experiment (across 15 of our programmes) to build and validate a psychometric assessment tool. This process started in the summer of 2016 and META was first used on a Balloon programme in January 2017. We are hoping to have concrete numbers to report back to you by the end of the year, so watch this space.

It’s true, we know a psychometric tool is not going to fix all our selection problems overnight. Selection is a sophisticated decision making process that very few would claim they have perfected.  But we are hopeful that psychometrics can give us a useful source of information in a context where information is at a premium. This in turn will help us make better decisions about who to select onto our programmes, which in turn helps us maximise our impact.

This blog was written for us by Dr Nicholas Andreou, who is Insight & Impact Lead here at Balloon. If you're interested in finding out more about our psychometric testing, and META, then email info@balloonventures.com.

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