How to spot a 'derailer'

He described the month-long interview process as something "between witchcraft, hypnotherapy and running an emotional marathon".

He had to endure days of testing administered by a cold-faced occupational psychologist on the lookout for the next Bernie Madoff. He says the other candidate was better qualified, which made my banker friend think, "he must have tested 'Crazy!'"

Psychometric testing - looking at verbal reasoning, numeracy and personality factors through a series of questions - used to be about looking for positive qualities in job applicants.

Now it is surreptitiously being used to weed out neurotics, weirdos and people who might gamble the bank's net worth.

Questions like "Do you suffer fools gladly?" are not designed to look for leadership skills: they are there to screen for "derailers" who might fire off an explosive email too soon, gamble the bank's fortunes or get arrested for abusing staff.

This is because the interview process is notorioulsy inefficient, says John Rust, professor of psychometrics at Cambridge University, who has the unenviable job of devising the tricky questions that come up on the tests.

"Some people are very good at interviewing but crap at the actual job," he says. Interviewers may choose people they like, or in the case of hiring women, whom they fancy.

Mark Lowe, the multi-millionaire financier, is being sued for £4 million for sexual harassment by Jordan Wimmer whom he apparently "hired on the spot".

"It's fine for a small firm but you can't run a large company with people just like yourself. Most interviewers form an opinion within seconds of meeting the applicant. After that it's about reinforcing your first impressions," he says.

Companies are now spending serious money on trying to sniff out bad characters. "Everybody is looking for derailers," says Rust.

"The main trouble is that rogue traders initially succeed by doing something reckless. If they make successful trades three times in a row they assume it was because they have special powers rather than that they hit a lucky streak," he says.

Traditional personality tests are straightforward. They measure five key traits, including whether the candidate is introverted or extroverted, authoritative or collaborative, a leader or a team player, touchy-feely or cold and so on.

The questions, repeated in many different ways, are designed to look for consistency. For example, says Rust, "a Gordon Gekko character would agree with the statements 'Success is very important to me' and 'I have no doubt I will always succeed'."

A new "dark side" test, however, specifically looks for mental problems.

The Hogan Development Survey, one of three questionnaires developed by the American firm Hogan Assessment Systems and conducted in the UK exclusively by the Psychological Consultancy, uses questions specifically formulated to see how a candidate responds when he or she is tired, stressed and overworked.

The company has isolated 11 patterns of dysfunctional interpersonal leadership behaviour which they list under seemingly benign catagory headings.

"Enthusiastic-Volatile", "Shrewd-Mistrustful", "Confident-Arrogant" and "Vivacious-Eccentric" are just a few examples.

According to Rodney Warrenfeltz, managing partner at Hogan Assessment Systems, leadership derailment is often at the core of business failure.

A "shouter" for example, might hold it together in an interview but under pressure could be abusive to staff or take drugs. There are no right and wrong answers in the test, just scores (high is not good).

The "dark side" questionnaire looks out for sinister and dangerous behaviour under the headings of "bold", "mischievous", "colourful" and "imaginative".

"If a leader is too 'bold', this can lead to arrogance," says Warrenfeltz. "'Mischievous' types might see if they can earn a few extra bob using inside information.

Too 'colourful' means they are the sort of person who sucks all of the oxygen out of a room, and too 'imaginative' can result in the person coming up with wacky ideas," he continues.

Candidates with high scores are either rigorously interviewed by skilled members of the company or led to the door by security guards.

Employers usually say the "dark side" test is only used for screening, but the internet is full of stories of applicants who never got a call back after they scored too high.

Psychometric tests are now so popular that banks such as HSBC and Barclays are offering them to private clients as a way of assessing what sort of customers they will be.

If a client ticks the "I worry a lot" question, it means he's neurotic and will be glued to his Bloomberg screen all day, second-guessing the banks' investments.

The "dark side" questions are clever. When I took a sample test I thought I would come across as curious, imaginative, spontaneous and quick on my feet.

Those attributes however, could just as easily flag up wrecklessness and antisocial behaviour. "There is no way of outhinking the test," says Rust.

But I wasn't applying for a job. Getting the answers wrong could cost you the job. "I took a psychometric test when applying for a very important job," says John Gordon, co-founder of the Intelligence Squared debates.

"I ticked off all the questions about how hard I work. But the test results indicated that I was 'lying to project myself as being diligent'. I ended up not getting the job (which was running a television company). I was told I was an intellectual and not up to running a business. From then on I set out to prove them wrong," he says.

Good candidates are a dime a dozen. But a derailer is something no company can risk.