Interesting, thanks. I'm surprised that the 'formal testing', which I take to mean exams, are so highly thought of considering how bad a test they are considered to be in education thinking.
Exams of a sort. But not necessarily written and not necessarily with a "right answer". Also, they have to be carefully structured to be testing for something in particular.
You have to go through the process of:
* Identifying the exact skills and traits desirable in the candidate..
* Working out how to measure those skills
* Working out a way to test for that measure
* Working out a series of questions that fulfil this
* Working out how to translate the answers into the measure.
So, for example, to test for signs of ability to present to clients, we had the candidates prepare and present a five minute talk. When grading that talk, we had REALLY precise measures for four specific criteria. Measures that followed a four point scale of, basically, "Didn't exhibit behaviour/skill at all" --> "Some evidence" --> "Much evidence" --> "Lots of evidence". The criteria were to do with structure of talk, confidence of talk, ability to handle questions and communication skill.
The candidate then had to have zero "no evidence" ratings to get more than a 1, at least three out of four "some evidence" ratings to get more than a 2, at least two out of four "much evidence" ratings to get a 3 and at least two out of four "lots of evidence" ratings to get a 4. That gave them their score for the "presentation" element.
So exams of a type, but live exams testing something specific.