I have heard about some companies that give take-home financial modeling tests to job applicants, where the test isn’t due back for a matter of days. The value of these to employers is questionable. What job applicant doesn’t enlist help from all of the most experienced modelers they know the second they get the test?
If I were an employer who gave take-home tests, I would do the following:
1) Immediately reject anyone who did not have a 100% accurate answer, because they don’t even demonstrate the effort it takes to call in a favor and have someone else help them do their work so they can get the job
2) Immediately reject anyone who turned in a messy spreadsheet, because they don’t demonstrate the willingness to turn in a presentable work product, not even during the courtship phase of the relationship
3) Further consider those who turned in perfect spreadsheets, but test these applicants in person under proctored conditions to see if they actually did the work themselves, or at least came to understand how to do the work in the process of having someone else do the work for them.
Maybe I’m being too harsh, but I can’t help thinking about how competitive the world is. Have you ever been in New York City and just stood still and marveled at how many people there are, just in New York, who are all essentially striving for the same exact thing from 5 to 9 (no, I didn’t accidentally transpose the numbers)? It’s kind of scary, especially when you think about how the U.S. grows in population every day. Makes you want to not sleep sometimes and just work and work and work to secure your hold on where you are currently.
Are you an employer who gives these tests, or have you taken one and gotten feedback on your work product? Am I partially or totally paranoid? Let’s hear your thoughts.
Great post Bruce. I’ve had multiple friends experience this, even those applying for positions with small companies and entrepreneurs. All of them enlist at least the help of friends to check their work.
I’m not sure they should be immediately rejected if their work isn’t 100% accurate. Many assumptions used in the model could be up for debate, I just think it’s critical to justify all of your work in a logical fashion.
I love these posts focused towards young professionals and students, keep it up!
Hi Joe, by “accurate”, I just meant that all of the formulas were sound. Assumptions will naturally vary wildly, which is why most of these tests likely provide the assumptions to be used. Thanks for the feedback!
Thanks for the clarification Bruce, I completely agree. However, I think these tests could be more useful if the assumptions were not provided which would test the applicants understanding of the market (or at least their ability to track someone down who knows the market).
I have never been given a take home test. Invariably, almost every time I have bumped into one of these excel tests (or word, ppt, outlook, etc) it is literally an idiots test to see if i can open the program and recreate work or utilize simple tools to solve everyday questions. I’ve always expected it to be more involved, but it usually comes down to some simple formulas and literally wasting time getting things to match the master as far as presentation (like a header or margin is hard to do). Anyway, almost always I find these tests demeaning and would rather walk out right then, but I stick around to see how I score and tell the interviewer what a waste of time it is.
I think the problem almost comes down to the fact that the analysis you’re asked to do is not being reviewing by an analyst but a manager or hr moron. And the tests are the worst at small companies where the guy running it thinks he knows everything and only those with excellent scores get to meet with him. That happened about 18 months ago to me when I was still thinking I needed a job and not to go on my own. I scored 100% and finished in 11 minutes. The manager laughed at me for thinking I was done, then apologized when he scored it. I met with the owner, was offered the job, and declined and left. It was really bothersome that people can act like that, not people I want to deal with on a daily basis.
Back to the article, I think I’d probably do the same. I mean, I’ve helped friends do their online testing and take home bs. It only makes sense that you’d want people that have a network that can help them out. And the proctored stuff is important, but really, it’s just such a waste of time unless it’s known up front (and 90% of the time they haven’t told me until after I’m there and have to pass the tests to get the actual face to face interview). That right there has me ready to leave as well.
Hey Josh, I’ve had a different experience with these types of tests. A friend of mine recently had to model out a deal as part of the interview process for a real estate private equity company. It was a complex deal and luckily for him, it was a deal that another of our friends had actually just worked on. It really challenged his modeling skills and assumptions.
I don’t know if this is the norm, but when used correctly these types of tests can be a great way to gauge skills. That being said, skills can also be picked up on the job very quickly and aptitude can me measured in other ways.
Well – I find this an interesting topic right now so I thought I would leave my opinion. I have two years experience as an analyst within RE corporate finance and investment management. I have a friend who currently has an interview with a market leader in RE IM as an analyst where they have been informed there will be an excel modelling test. I personally would expect it to be in-house………..accurate overview of the individuals capabilities, no questions needed or ambiguity. If I had a model for three days or a whole afternoon – it would be more a case of digging out the relevant models from the armory of models collected over time – lets be honest a RE analyst – debt, JV, indirect, direct, portfolio – you accumulate many a model. The company i work for has a standard RE admission model – actually it originally came from one of the big four accountancy companies. I find it useful for myself to do this model from scratch once every 6 months to stop myself becoming lazy and reliant on other models I have – it also keeps my basic investment / modelling principles intact. They can sometimes drift I find…….. What would be useful – is if there was somewhere where you could get different tests / models in one place – say 4 / 5 / 6 – testing different elements such as sale and lease back – debt profiles etc etc. They would be good for current analysts to brush up on – and for people wanting practice models before interviews – and for in house training / home work.
I use excel everyday regarding RE. Good to see a public forum for this ! Perhaps I will revisit in a few weeks having received feedback from my friend.