Assessing technical skills is not easy. While working at an investment bank and interviewing many junior hires, I asked a colleague how he assessed their technical ability. The response I received was, “Oh, I have a great question, I ask them how many tennis balls can fit in the room!” Perhaps not shocking for some consulting interviews, but I haven’t seen such spatial reasoning translate incredibly well into a technically sound skill set. So, that basically conveys one opinion of mine: not having a financial modeling test is a bad idea.
Building Your Own In-House Financial Modeling Test
The next thought, which many companies implement, is to have a test of their own. However, I’ve found this flawed by at least three main problems:
- The tests are often very subjective: The creator builds the test understanding their own specific needs. It usually cannot be used by other teams, as the questions require reorientation. Similarly, the answers tend to be subjective; having a candidate build or interpret parts of a model. How right or wrong the answer is, is usually up to the grader.
- Benchmarking is difficult: Related to point 1, is whether legal oxandrolone online in uk the test has been carefully designed such that it covers a diverse set of relevant topics, difficulty level controlled, and whether it can be deployed in such a way that results can quickly be compared across candidates. Establishing a benchmark is challenging, particularly with only having the subset of candidates that are applying to that specific company. A proper benchmark is based on candidates applying to many different similar companies.
- In-house tests can be time consuming to create and facilitate well: Typically, mid-level business leaders build and deploy financial modeling tests. This requires time away from business duties to create and grade the tests. Deploying the tests should be done in a secure manner, to avoid cheating. An additional concern is social media, where test topics could undoubtedly leak. This requires the business leader to constantly refresh the test topics and questions.
Outsourcing Financial Modeling Testing
An ideal situation is to entrust a professional organization to administer testing and interpret the results in an easy to understand manner. However, this can be constrained by a number of factors, namely:
- Shortage of Qualified Providers: There really isn’t an abundance of financial modeling testing companies out there and the term “qualified” is incredibly important. When you do find a company, you have to ask the question, “How do you know how to test people for such as specific, complicated skill set?”
- Ease of Implementation: The process of making sure the outsourced company knows your needs can seem overwhelming, particularly if your company operates in a niche space. The best outsourced companies can adapt to your needs and streamline the process.
- Cost: Possibly the biggest decision is based on the fact that everyone works off of a budget. However, strategic managers think about the big picture and longer term. If you hire the wrong person, not only could you be throwing away tens of thousands of dollars, but you are wasting time developing the wrong talent. Its most beneficial to analyze the cost of testing many, versus having to let go of just a few.