We used to put one of our staff in a group of would be applicants at a place I used to work when we were having group selection. They would observe the candidates when they thought they weren't being "observed" by us. What it proved time and again was the way people acted when they were being themselves could be vastly different to how they acted when being in an interview scenario. The ones that looked perfect on paper were often the ones who got the worst assessment from our insider.
"Massive ego" was usually the cause of a rejection from a seemingly perfect candidate.
Actually one place that is very good for observing applicants is in a social setting, e.g. a few bevvies at the pub. In fact I understand Cathay have a cocktail evening which is part of the "interview process".