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Assessment Saves Millions in Down Economy

Turnover has dropped to 117 percent in a time of growth.

September 18, 2003
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Related Topics: Recruitment, Staffing Management
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Name: Outsourcing Solutions
Location: St. Louis
Business: Provider of debt-collection services
Employees: 80,000

When the economy was booming a few years ago, staff members at OSI were forced to hire almost anyone who walked through the door. There was no real screening process for debt collectors at the company’s 13 call centers, says Clay Boyles, regional human resources director. "If they could communicate reasonably well, that’s all we looked for." As a result, skill levels were often minimal, and many recruits quit in the first weeks or months on the job. Turnover was a whopping 222 percent, and it was difficult to keep seats filled, he says.

    It was during this good economy that Boyles went looking for a tool to help him reduce turnover. He selected Spherion Assessment Services to develop a custom pre-employment assessment test for all of the call centers. Spherion’s psychologists interviewed the company’s top and bottom performers and created an online assessment test that evaluates candidates on five established competencies for service rep and supervisor roles.

    "The test was a godsend," Boyles says. In the good economy, it helped hiring managers weed out applicants who would most likely perform poorly or quit in the first 30 days, which made it a valuable investment, he says. But now, when the economy is struggling and his applicant pool is much larger, the assessment test is saving the company millions of dollars in personnel and turnover costs. In the past they were fortunate to have a small pool of applicants to choose from, he says. "No one grows up wanting to be a debt collector." But with today’s high unemployment rates, if Boyles puts an ad in the Sunday paper, there will be 150 applicants at the door on Monday morning. "We don’t have the capacity to handle that," he says.

    Before they even speak with a recruiter, candidates are given the assessment test. They receive a good, average, or low rating. The last group, about 15 percent of the applicant pool, is automatically eliminated from the interview process. "That saves us a ton of time," says Boyles. It also saves the company from making a lot of bad hires. Before they started using the assessment test, at least half of those people would have been given jobs.

    The test costs $8 per person, running the company roughly $10,000 per month for the six offices that use it. It’s an expense that the executive team has questioned in a time of cost-cutting, but Boyles defends it vigorously. "The assessment process is a cost-cutting tool," he says. It’s especially helpful when he’s ramping up a new office. "There is no way I could go through a pile of applications and get 60 good collectors in the door through interviews alone." The test helps him identify the best candidates in a much shorter amount of time.

    And he has proof that the tool is paying off. In the two years since it was implemented, turnover has dropped to 117 percent during a time when the company more than doubled the number of service reps, from 700 to 1,800, and added two call centers. "To reduce turnover in a time of growth is impressive," he says. "Usually when you are hiring to fill seats, turnover spikes."

Boyles estimates the savings related to the assessment process to be a million dollars per year. That number incorporates the saving of roughly $5,000 per person for hiring costs, plus the salaries of three full-time recruiters that the company is able to do without because it is hiring fewer people and interviewing fewer candidates. That number does not include increases in productivity. Three years ago if an employee stayed three months, managers considered it a successful hire, he says. But research shows that 80 percent of the money OSI collects comes from customer-service reps who have been with the company for six months or more. "No one thought about that cost of turnover," he says. "The people who aren’t right for the job leave in the first 90 days."

Now they recognize the value of the top performers and, thanks to better hiring decisions, revenues and gross collections across the company are up. For example, after reducing the number of reps at the call center in San Antonio, Texas, from 100 to the 60 top people, collections went up for the following two months. "We are screening the riffraff out at the door, which allows us to support and focus on our best performers."

Workforce, April 2003, p. 66 -- Subscribe Now!

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