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The idea of the 'assessment centre' has gained momentum during the past decade as a multidimensional approach designed by an organisation to provide reliable and valid information about a range of competencies of an employee considered essential for successful performance at a target level in a specific job. There is a great deal of published evidence available in the US demonstrating that assessment centre ratings correlate strongly with job performance. The experience of a number of Indian companies is similar and some of them have been able to convert their human resource development department from cost centres to profit centres. The paper describes objectives, approaches and steps involved in establishing an assessment/development centre so that competencies needing improvement could be identified and developed through development centres. Benefits of competency based assessment to the individuals and organisations have also been summarised.