Workforce
Oct, 2000

Screen and Glean.(screening of prospective employees)

Author/s: Gilbert Nicholson
 

Good screening and background checks help make the right match for every open position

The retailer was fed up with ditching job applicants he liked in interviews just because they scored poorly on integrity tests. So he quit testing. And the horror story that followed that decision illustrates the importance of pre-employment testing and background checks.

Thomas Cormack, director of operations at a Chicago-based human resource assessment, evaluation, and development company, had just returned from overseas when he called to check on his disillusioned retailer-client.

"He asked if I had read in the paper about the guy who kidnapped his ex-wife and raped her. It was the last guy he hired," 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 hiring a troubled or troublesome employee. Tests range from evaluating cognitive skills to identifying personality traits, and can help employers avoid bad apples and match good ones to the right jobs. But how do you determine what to test? Where can tests be found? Do you have to hire expensive consultants or can you do it yourself?

While Fortune 500 companies can afford to hire HR personnel trained in "psychometrics" (measurement of cognitive and psychological traits), many small and medium-sized businesses don't have the financial resources.

HR professionals can, however, rest assured that there are plenty of experts, research, and resources to help even the smallest company navigate these waters. American businesses are prolific pre-employment testers. A recent American Management Association survey showed that 43 percent of its responding members assess applicants with basic math and/or literacy tests; 60 percent required specific job-skill testing of applicants; and 31 percent use psychological tests.

When to test

"The question is not, 'Can we do better than we're doing now?' but 'Do we need to do better?"' suggests Dr. Barbara Plake, director of the Buros Institute of Mental Measurements at the University of Nebraska, which arranges annual critiques of hundreds of tests and publishes the results. "Maybe your workforce is humming along and you don't recognize any real problem. The old adage is, 'If it's not broke don't fix it,"' she says.

Plake, however, suggests that companies conduct 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 in the right jobs. Conversely, "If you're bottom line, blacker than black, you might not realize a meaningful gain from an assessment program," she says. An example is customer-service call centers, which typically have a turnover rate between 30 and 60 percent, according to Tampa-based HR Directions. When a fourth of new hires are leaving in the first year, making the decision to test becomes easier given that it costs $8,000 to $12,000 per employee for advertising, recruiting, interviewing, and training expenses.

"Obviously, many things make up the hiring or screening process, like reference checks, background checks, and work history," says Cormack. "But to really gain true insight on a person, you need to do some testing."

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

"Our managers have noticed that once people come on line after taking the pre-employment tests, they tend to be better performers and show up for work," says Linda Sawin, manager of assessment services in Boeing's human resources department.

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

"It's just a small piece of the recruitment puzzle, but it really levels the playing field," Sawin says. The test neutralizes the old nepotistic adage of, "Your father worked here so you can have a job here too," she says. "It really makes everyone equal. Some will do better than others, but that's how you identify people who will perform better on the job."

Too costly not to test

"We're increasingly seeing cases of negligent 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 law with the Washington, D.C. firm of Thelen, Reid and Priest. Integrity testing, for example, works well in states where criminal records aren't easily accessible, Schmidt says.

"Testing provides probative evidence that the employer met its duty to reasonably investigate an applicant's fitness," which can reduce exposure to negligent hiring claims, Schmidt wrote in an article, "Personality Testing in Employment," co-authored with attorney David Shaffer. The piece appears on the firm's Web site (www.thelenreid.com/articles).

"The cost of testing is minimal compared 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 of the annual salary of the employee," with management and highly skilled talent costing one to two times the annual salary of the employee being replaced, Brannick notes. "How to Implement an Effective Testing Program in Your Organization" is on her Web site, www.brannickhr.com.

Choosing the right test

Pre-employment assessments generally include qualifying (eligibility) and disqualifying tests, says Wendy Bliss, principal of Bliss and Associates, a Colorado Springs HR consulting firm. Also called "screen-in tests," qualifying instruments include basic skills tests, cognitive ability and aptitude tests, physical ability tests and personality test indicators, all to determine if applicants are qualified for the job.

"Go back and look at the job description and find the tasks and duties and other characteristics you're looking to measure," she says. Next, determine administrative aspects, such as whether 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 which tests are available, and the legal ramifications of a particular test.

"Several thousands of tests are available to employers," Bliss says. "But employers shouldn't rush out and take the first thing that seems like it will work."

Buros Institute

One of the best resources for finding the right test, Bliss says, is the Buros Institute at the University of Nebraska-Lincoln (www.unl.edu/buros/). The organization's Tests in Print lists more than 2,900 commercially-available tests, including 560 vocational and 676 personality tests.

In Buros's Mental Measurements Yearbook, published every two and a half years, descriptions and reviews are provided for some 400 new and revised tests. Two experts each independently evaluate every test, in part, to verify the test publishers' claims.

A supplement is published to the yearbook between editions.

"We're the Consumer Reports for testing," quips Plake, the institute's director. In addition, the institute can tailor test searches for several criteria, such as highlights of a test's strengths and weaknesses. But "we're careful about not recommending tests," she says.

Buros's information can be retrieved for a fee through the Silver Platter Web site. Even then, Plake recommends that companies seek expert advice in choosing tests that deal with complex or highly technical material. "When in doubt, get a consultant," she says. "I wouldn't want to be on the defense when the prosecution says, 'It says right there in Yearbook the test has these particular properties that are invalid for your use.'" It's hard to wiggle out of it by saying, "I didn't understand that," Plake says.

Homegrown vs. commercial

Employers who choose to do their own testing have two options, says Plake: Create your own test or buy one on the commercial market. "Some companies are so specialized, it makes sense to tailor their own instrument to the unique features of their organization," she says. "But that usually requires a company with a human-relations team skilled in test development." Without such a team, consultants should be called in to design a test, and that can be expensive, Plake says. "Many times, a test developed that way ends up on the commercial market because the development costs are so huge that the company will sell the rights to a professional company to recover some of the costs." Brannick, the HR consultant, also warns companies to avoid developing their own tests unless they have someone experienced in test development and validation, the process by which a test is linked to job performance. The other option, Plake says, is for an HR department to cherry-pick existing tests on the commercial market. That's whe re the Buros Institute comes in. In Tests in Print, comprehensive indexes can help you select tests germane to a particular vocation or desired measurement and direct you to the descriptions of individual tests appropriate to your needs. In the Mental Measurements Yearbook, independent experts provide test reviews, including evaluations of a test's reliability and validity as well as critiques of claims from test publishers.

Some companies, however, choose the consultant route, where employee testing has evolved from mere test development and administration to strategic, comprehensive turnkey approaches that go far beyond pre-employment assessment.

One of the nation's leading test companies is Wonderlic, based in Libertyville, Illinois. Charles F. Wonderlic Jr., whose grandfather founded the company in 1937, says his company's HRMetrics program goes past traditional benchmarking. HRMetrics includes assessments and recommendations establishing new performance levels, as well as training and workforce realignment. "Development, validation and delivery of a test is only part of the answer," Wonderlic says. "It makes sense to put it all together in one integrated platform."

While large corporations have the resources for such an approach, smaller companies usually don't, Wonderlic says. "Consultants are only part of the equation," he says. "What smaller companies are looking for is a system by which you have a group come in and quickly give them a solid picture of the organization." Of Wonderlic's 45,000 clients, perhaps the most intriguing is the National Football League, which uses the company for intelligence testing of rookie players.

Cormack, whose retailer-client prematurely pulled the plug on testing, says his company, offers integrated testing of what he describes as the ABCs of employee screening: ability, behavior, and character. One of the linchpins of the process, Cormack says, is the PASS III Net Survey, a $10 test of 100 yes-no questions that takes 10 to 15 minutes to complete. The test evaluates work ethic, reliability, honesty, and drug and alcohol use.

Background checks

While pre-employment testing can be complex, background check results are black and white, says Dean Supass, president and CEO of Avert, a Fort Collins, Colorado-based background information provider and pre-employment screening consulting firm. "With testing, you're trying to predict the future, while background checks say the past is an indicator of the future," Supass says. Background checks generally include criminal, driving, credit, and past employment history. Of the 1 million annual checks Avert conducts, 53 percent look at criminal records. Since the company was founded in 1986, Avert has experienced only three lawsuits challenging background checks. Two were dropped and one was thrown out by a judge, Supass says.

One reason is that background checks are considered consumer reports, which fall under the Fair Credit Reporting Act. Applicants sign a release approving the background check, and the employer agrees to abide by terms of the act before Avert provides information, Supass says. Even if the information is wrong, as long as it's not used to unfairly deny an applicant a job, Avert and the employer cannot be held responsible for incorrect information, as long as human error in reporting was to blame and action was taken to correct the misinformation, Supass says.

No policy

Supass sees two mistakes that companies make: inconsistent hiring policies at multi-location companies, and failure of small companies to write specific hiring criteria. "You may have 150 distribution sites around the country, and one site will interpret the same result of a background check differently than another," he says. That can invite litigation. The solution is to have a centralized computer system grade results to eliminate discrepancies, Supass says. Half the companies of 100 employees or less that Supass sees don't have established policies and procedures describing criteria for new hires. "If you don't have a policy that says you won't hire convicted felons, then on what basis can't you hire them?" he asks.

What's next: e-testing

Cormack says that pre-employment testing, like other aspects of business, is being revolutionized by the Internet. The emerging "e-testing" trend involves multi-site testing on the Web. "If you're a retailer with 50 locations across the Midwest, applicants can 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 travel to each individual location, can download results from her office. Half of Personnel Systems Corp.'s new clients use e-testing, he says.

Gilbert Nicholson is a business writer in Birmingham, Alabama.

Tests and the Law

Gilbert Nicholson

Pre-employment testing generally carries with it legal liabilities on two fronts. The first is lawsuits from rejected applicants who claim a test wasn't job-related or that it unfairly discriminated against a protected minority group, violating federal civil rights laws. The second is negligence-in-hiring lawsuits filed by victims of employee misbehavior or incompetence.

But, based on case histories, the prospects of employers losing on either count are not daunting, especially if common-sense precautions are taken, says Ronald A. Schmidt, an employment attorney with Thelen, Reid and Priest in Washington, D.C.

There's more good news, he said: pre-emptive legal advice from an employment attorney can be relatively inexpensive and quickly obtained,

Schmidt says that the situation to avoid is the "adverse impact" that tests can have on a protected class, such as Hispanics or African-Americans. An easy solution is to ensure that tests for a particular position are job-related and given across the board.

"An example is giving a typing test for a job that didn't require typing," Schmidt says. Background checks must also be job-related. In most cases, for example, a person convicted of DUI can't be rejected for a job on that basis if the position doesn't require driving.

Under federal law and court rulings, plaintiffs must prove that a specific employment practice caused adverse impact on a protected group by showing that the disparity is too broad to have occurred by chance, Schmidt says.

Once adverse impact has been established, the burden then shifts to the employer to prove that the test is job-related and consistent with business necessity.

"Integrity tests may have the best record of any selection technique in demonstrating freedom from adverse impact," according to the piece. "Records show few [legal] challenges--probably less than 50--for the millions of tests that have been administered."

Meanwhile, cognitive ability tests have been shown to have an adverse impact against blacks and Hispanics because of what some say are differing educational levels, compared to whites, for those two groups, Schmidt says. "We know cognitive ability is one of the best predictors of job performance across the board for a variety of jobs," Schmidt says. "But that's the difficult decision companies have to make: balance the productivity increase they might get versus the possibility of a legal challenge to prove the test is job-related."

The costs can be staggering. "You're looking at $500,000 to defend" in such cases, Schmidt says. "This is very sophisticated stuff that requires a fair number of lawyers and experts."

But, says Thomas Cormack, director of operations for Chicago-based Personnel Systems Corp., "With any reputable test publisher, their tools will be extensively validated." Validation is the process by which a test is deemed relevant to job performance.

Schmidt says that while there's risk in testing, there's also risk in not testing.

"With the tort of negligent hiring now recognized in a majority of the states, employers have been forced to defend a growing number of suits seeking redress for crimes committed by employees, usually thefts or assaults that victimize customers or co-workers," Schmidt and Shaffer wrote.

Whether you are protecting against negligence or avoiding adverse impact, Schmidt recommends getting advice from attorneys who specializes in employment law.

"If you know how to use them, it shouldn't be that expensive," he says. "You can avoid some serious mistakes in just a five-minute phone call. The important thing is to get sophisticated advice and get it early. At the pace things are changing, you can't even turn to the [law] books to find what's going on. You need someone who deals with this stuff all the time."