By comparing students to each other, information about how well the student is doing, plus how well an institution or person is teaching can be discovered. There would seem to be nothing inherently controversial about that. However, there are many respected educators and psychologists who are deeply opposed to normative testing, particularly in schools.
For many years a controversy over standardized testing has raged around the globe with the two sides divided aover the use and benefits of and form of standardized test.
White, middle-class norms from a generation ago cannot be applied to ethnically diverse students of today. However, the high cost of 'norming' means that out of date materials are still being used and this disadvantages certain ethnic groups; in particularly new arrivals to a demographic area will do badly and so will appear to be less able than those who fitted the norm at the time the assessments were originally created.
Numerous stories of schools weeding out low performing students to make the school look better should not be ignored. However, it must be noted that most test publishers are strongly opposed to such bad practice.
it is argued that white, middle-class authors will subconsciously include their own personal bias in their assessments. For clarity, here is an exaggerated example maths question:
"If John has 3 nickels and gives two to Janice who has two dimes, how much will the girl have."
A student recently arrived from Asia might not know that John is a boys name and janice is a girls name. They might also not be aware that the slang terms 'nickels' and 'dimes' are related to 5 and 10 cents. therefore the student would answer wrongly and would be incorrectly seen as poor at maths.
If a school knows the questions, they teach toward them, rather than teaching to ensure the pupils receive a rounded education. This does the pupils at that school no benefit in that they do not receive the best education they migh otherwise have got. It is also bad for morale of other schools which may be unfairly judged as failing their pupils.
There are some excellent books about the Standardized testing controversy from Amazon.com which will help you decide on the merits of standardized tests yourself:
Case Against Standardized Testing:
by Alfie Kohn