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Screen and Glean

October 1, 2000
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The retailer was fed up with ditchingjob applicants he liked in interviews just because they scored poorly onintegrity tests. So he quit testing. And the horror story that followed thatdecision illustrates the importance of pre-employment testing and backgroundchecks. 

    Thomas Cormack, director of operationsat Personnel Systems Corporation, a Chicago-based human resource assessment,evaluation, and development company, had just returned from overseas when hecalled to check on his disillusioned retailer-client. 

    “He asked if I had read in the paperabout the guy who kidnapped his ex-wife and raped her. It was the last guy hehired,” Cormack recalls. The moral: A pre-employment test that costs less than$10 can sometimes save a company the thousands it costs to replace a bad match,or the legal fees to defend against liability lawsuits for negligence in hiringa troubled or troublesome employee. Tests range from evaluating cognitive skillsto identifying personality traits, and can help employers avoid bad apples andmatch good ones to the right jobs. But how do you determine what to test? Wherecan tests be found? Do you have to hire expensive consultants or can you do ityourself? 

    While Fortune 500 companies can affordto hire HR personnel trained in “psychometrics” (measurement of cognitiveand psychological traits), many small and medium-sized businesses don’t havethe financial resources. 

    HR professionals can, however, restassured that there are plenty of experts, research, and resources to help eventhe smallest company navigate these waters. American businesses are prolificpre-employment testers. A recent American Management Association survey showedthat 43 percent of its responding members assess applicants with basic mathand/or literacy tests; 60 percent required specific job-skill testing ofapplicants; and 31 percent use psychological tests. 

When to test
    “The question is not, ‘Can we dobetter than we’re doing now?’ but ‘Do we need to do better?’” suggestsDr. Barbara Plake, director of the Buros Institute of Mental Measurements at theUniversity of Nebraska, which arranges annual critiques of hundreds of tests andpublishes the results. “Maybe your workforce is humming along and you don’trecognize any real problem. The old adage is, ‘If it’s not broke don’t fixit,’” she says. 

    Plake, however, suggests that companiesconduct a cost-benefit analysis. “If you need improved sales or productivity,the cost of a testing program may be worth it,” to get the right new hires inthe right jobs. Conversely, “If you’re bottom line, blacker than black, youmight not realize a meaningful gain from an assessment program,” she says. Anexample is customer-service call centers, which typically have a turnover ratebetween 30 and 60 percent, according to Tampa-based HR Directions. When a fourthof new hires are leaving in the first year, making the decision to test becomeseasier given that it costs $8,000 to $12,000 per employee for advertising,recruiting, interviewing, and training expenses. 

    Some firms, however, say testing isessential, especially in a tight labor market where the pool of availableworkers is depleted of the best and brightest. 

    “Obviously, many things make up thehiring or screening process, like reference checks, background checks, and workhistory,” says Cormack. “But to really gain true insight on a person, youneed to do some testing.” 

    Seattle aircraft-maker Boeing uses apre-employment assessment test for hourly-paid mechanics and electricians whoperform assembly work, and is happy with the results. 

    “Our managers have noticed that oncepeople come on line after taking the pre-employment tests, they tend to bebetter performers and show up for work,” says Linda Sawin, manager ofassessment services in Boeing’s human resources department. 

    The four-hour-long test measures workaptitude, including math, verbal, and spatial aspects, along with testing ofcomprehensive mechanical and electrical components. Boeing, which has 180,000employees, conducts specialized pre-employment testing for management positions.It also uses an oral, behavioral-based interview on college campuses forrecruiting salaried engineering and business positions. 

    “It’s just a small piece of therecruitment puzzle, but it really levels the playing field,” Sawin says. Thetest neutralizes the old nepotistic adage of, “Your father worked here so youcan have a job here too,” she says. “It really makes everyone equal. Somewill do better than others, but that’s how you identify people who willperform better on the job.” 

Too costly not to test
    “We’re increasingly seeing cases ofnegligent hiring that ask, ‘Did you hire a person you wouldn’t have hired if you had tested?’ “says Ronald A.Schmidt, an employment attorney and specialist in Title VII civil rights lawwith the Washington, D.C. firm of Thelen, Reid and Priest. Integrity testing,for example, works well in states where criminal records aren’t easilyaccessible, Schmidt says. 

    “Testing provides probative evidencethat the employer met its duty to reasonably investigate an applicant’s fitness,” which can reduce exposure to negligenthiring claims, Schmidt wrote in an article, “PersonalityTesting in Employment,” co-authored with attorney David Shaffer. 

    “The cost of testing is minimalcompared to the costs of employee turnover,” writes Dr. Joan Brannick,president of Brannick Human Resource Connections, in a recent white paper.“Conservative estimates of turnover costs range from one-third to one-half ofthe annual salary of the employee,” with management and highly skilled talentcosting one to two times the annual salary of the employee being replaced,Brannick notes. “How to Implement an Effective Testing Program in YourOrganization” is on her Web site, http://www.brannickhr.com/

Choosing the right test
   Pre-employment assessments generallyinclude qualifying (eligibility) and disqualifying tests, says Wendy Bliss,principal of Bliss and Associates, a Colorado Springs HR consulting firm. Alsocalled “screen-in tests,” qualifying instruments include basic skills tests,cognitive ability and aptitude tests, physical ability tests and personalitytest indicators, all to determine if applicants are qualified for the job. 

    Disqualifying tests, or“screen-out” assessments, weed out applicants that an employer doesn’twant in the selection pool, and includes drug tests, medical exams, and honestyand integrity tests, and can include controversial genetic and polygraphtesting. Bliss recommends a four-step process to determine the right test.First, ascertain the information you want from a test. 

    “Go back and look at the jobdescription and find the tasks and duties and other characteristics you’relooking to measure,” she says. Next, determine administrative aspects, such aswhether to use a written or computerized test, testing location, time and costs,and who will administer the test. The final two steps are finding out whichtests are available, and the legal ramifications of a particular test. 

    “Several thousands of tests areavailable to employers,” Bliss says. “But employers shouldn’t rush out andtake the first thing that seems like it will work.” 

Buros Institute
   One of the best resources for findingthe right test, Bliss says, is the BurosInstitute at the University of Nebraska-Lincoln. The organization’s Tests in Print listsmore than 2,900 commercially-available tests, including 560 vocational and 676personality tests. 

    In Buros’s Mental MeasurementsYearbook, published every two and a half years, descriptions and reviews areprovided for some 400 new and revised tests. Two experts each independentlyevaluate every test, in part, to verify the test publishers’ claims. Asupplement is published to the yearbook between editions. 

    “We’re the Consumer Reports fortesting,” quips Plake, the institute’s director. In addition, the institutecan tailor test searches for several criteria, such as highlights of a test’sstrengths and weaknesses. But “we’re careful about not recommendingtests,” she says. 

    Buros’s information can be retrievedfor a fee through the Silver Platter Web site. Even then, Plake recommends thatcompanies seek expert advice in choosing tests that deal with complex or highlytechnical material. “When in doubt, get a consultant,” she says. “Iwouldn’t want to be on the defense when the prosecution says, ‘It says rightthere in Yearbook the test has these particular properties that are invalid foryour use.’” It’s hard to wiggle out of it by saying, “I didn’tunderstand that,” Plake says. 

Homegrown vs. commercial
   Employers who choose to do their owntesting have two options, says Plake: Create your own test or buy one on thecommercial market. “Some companies are so specialized, it makes sense totailor their own instrument to the unique features of their organization,” shesays. “But that usually requires a company with a human-relations team skilledin test development.” Without such a team, consultants should be called in todesign a test, and that can be expensive, Plake says. 

    “Many times, a test developed thatway ends up on the commercial market because the development costs are so hugethat the company will sell the rights to a professional company to recover someof the costs.” 

    Brannick, the HR consultant, also warnscompanies to avoid developing their own tests unless they have someoneexperienced in test development and validation, the process by which a test islinked to job performance. The other option, Plake says, is for an HR departmentto cherry-pick existing tests on the commercial market. That’s where the BurosInstitute comes in. 

    In Tests in Print, comprehensiveindexes can help you select tests germane to a particular vocation or desiredmeasurement and direct you to the descriptions of individual tests appropriateto your needs. In the Mental Measurements Yearbook, independent experts providetest reviews, including evaluations of a test’s reliability and validity aswell as critiques of claims from test publishers. 

The ‘turnkey’ approach
   Some companies, however, choose theconsultant route, where employee testing has evolved from mere test developmentand administration to strategic, comprehensive turnkey approaches that go farbeyond pre-employment assessment. 

    One of the nation’s leading testcompanies is Wonderlic, based in Libertyville, Illinois. Charles F. WonderlicJr., whose grandfather founded the company in 1937, says his company’sHRMetrics program goes past traditional benchmarking. HRMetrics includesassessments and recommendations establishing new performance levels, as well astraining and workforce realignment. “Development, validation and delivery of atest is only part of the answer,” Wonderlic says. “It makes sense to put itall together in one integrated platform.” 

    While large corporations have theresources for such an approach, smaller companies usually don’t, Wonderlicsays. “Consultants are only part of the equation,” he says. “What smallercompanies are looking for is a system by which you have a group come in andquickly give them a solid picture of the organization.” Of Wonderlic’s45,000 clients, perhaps the most intriguing is the National Football League,which uses the company for intelligence testing of rookie players. 

    Cormack, whose retailer-clientprematurely pulled the plug on testing, says his company, Personnel SystemsCorp., offers integrated testing of what he describes as the ABCs of employeescreening: ability, behavior, and character. One of the linchpins of theprocess, Cormack says, is the PASS III Net Survey, a $10 test of 100 yes-noquestions that takes 10 to 15 minutes to complete. The test evaluates workethic, reliability, honesty, and drug and alcohol use. 

Background checks
   While pre-employment testing can becomplex, background check results are black and white, says Dean Supass,president and CEO of Avert, a Fort Collins, Colorado-based backgroundinformation provider and pre-employment screening consulting firm. “Withtesting, you’re trying to predict the future, while background checks say thepast is an indicator of the future,” Supass says. 

    Background checks generally includecriminal, driving, credit, and past employment history. Of the 1 million annualchecks Avert conducts, 53 percent look at criminal records. Since the companywas founded in 1986, Avert has experienced only three lawsuits challengingbackground checks. Two were dropped and one was thrown out by a judge, Supasssays. 

    One reason is that background checksare considered consumer reports, which fall under the Fair Credit Reporting Act.Applicants sign a release approving the background check, and the employeragrees to abide by terms of the act before Avert provides information, Supasssays. Even if the information is wrong, as long as it’s not used to unfairlydeny an applicant a job, Avert and the employer cannot be held responsible forincorrect information, as long as human error in reporting was to blame andaction was taken to correct the misinformation, Supass says. 

No policy
   Supass sees two mistakes that companiesmake: inconsistent hiring policies at multi-location companies, and failure ofsmall companies to write specific hiring criteria. “You may have 150distribution sites around the country, and one site will interpret the sameresult of a background check differently than another,” he says. That caninvite litigation. 

    The solution is to have a centralizedcomputer system grade results to eliminate discrepancies, Supass says. Half thecompanies of 100 employees or less that Supass sees don’t have establishedpolicies and procedures describing criteria for new hires. “If you don’thave a policy that says you won’t hire convicted felons, then on what basiscan’t you hire them?” he asks. 

What’s next: e-testing
   Cormack says that pre-employmenttesting, like other aspects of business, is being revolutionized by theInternet. The emerging “e-testing” trend involves multi-site testing on theWeb. “If you’re a retailer with 50 locations across the Midwest, applicantscan take the tests on-site 300 miles away from corporate headquarters,”Cormack says. The HR director, who in the past would have been forced to travelto each individual location, can download results from her office. Half ofPersonnel Systems Corp.’s new clients use e-testing, he says. 

Workforce,October 2000, Vol. 79, No. 10, pp. 71-78 SubscribeNow!

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