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Human Resource Executive
By Carol Patton
Tired of soaring attrition rates, more employers are relying
on pre-employment testing to help them make smarter hiring
When Nancy West joined APAC Customer
Services Inc. several years ago as its vice president
of operations improvement, one of her chief tasks was
to find a way to slash the company's 250 percent annual
APAC, of Deerfield, Ill., which supports 13,000 employees
to operate call centers for large employers, was wasting
millions of dollars hiring the wrong people. Each year,
approximately 28,000 employees either quit within months
or were fired due to poor performance. She says recruiting
costs alone totaled $1,200 per hire.
With little to lose, the company tried an alternative
approach. Two years ago, it began pre-employment testing
for all customer-service and telephone-sales representatives.
Since then, the attrition rate has dropped in half and
the company is saving more than $14 million a year.
"In the past, if you were a warm body and could read
and write, you got hired," says West. "But they weren't
the right fit so we kept rehiring. The tests pay for
themselves because recruiting and training costs are
so high, which come right out of our pocket."
More employers are reaching that same conclusion. Fed
up with paying the high cost of high turnover, they're
giving applicants a battery of tests that measure everything
from their skill level to integrity.
So far, it seems to be working. HR executives say they're
making quality matches between people and positions
and creating more stable workforces while saving millions
Gathering the Pieces
Job seekers applying for entry-level jobs at APAC complete
four tests that usually take four hours, says West,
adding that Employment Technologies Corp. in Winter
Park, Fla., designed three of the tests and trained
APAC's employees on how to administer them.
The first test is a 45-minute simulation in which candidates
handle calls by making decisions from multiple-choice
questions. The test evaluates nine different skills,
including sales, building customer rapport and problem-solving.
If they pass, they move on to the next two tests, which
are behavioral interviews conducted by HR and operations.
They're asked eight different questions, such as, "Describe
a time when you needed to learn something different
or complex and how you applied it on the job."
In March, the company also began piloting a Web-based
personality test at two of its call centers. West says
the test reveals which applicants are a high, marginal
or low risk for turnover. Likewise, the combination
of tests also helps HR recruit or source in the right
places. Early on, West says, eight people had to be
tested before one passed. Now the ratio is three to
There's no doubt in West's mind that pre-employment
testing is effective. She points to one call center
that reduced its attrition rate from 250 percent to
70 percent. Still, more cost-cutting needs to be done.
"We're always searching for other tests," she says.
"The only gap I can't find a test for is if [applicants]
are going to be at work and come on time."
Likewise, Marty Scaminaci needed some way to measure
his staff's customer-service skills. As director of
financial services at Pepsi Americas, an independent
bottler of Pepsi in Rolling Meadows, Ill., his department
began pre-employment testing three years ago after the
company merged several financial areas into one department.
Among its goals was to become a value-added center for
internal field partners.
"We can teach someone how to pay bills or collect money,
but it was near impossible to teach someone how to relate
with another human being," he says. "We needed to identify
if we had that talent in our organization and ensure
that any talent we brought in had the personality traits
that would work in this kind of environment."
As a result, existing employees in entry-level positions
took two tests, which have since been administered to
new hires in nonsupervisory positions: a personality
test that identifies 16 different traits and five global
traits such as emotional resilience, sensitivity and
self-control. The second is in a cultural-gathering
environment designed to measure their natural reasoning
ability and leadership skills. Both tests were developed
and published by IPAT in Savoy, Ill.
The same scenario held true for the company's supervisors,
directors and managers, except they completed two additional
tests--a cognitive reasoning test that measures their
language and math skills and another that validates
the findings of the personality test. Scaminaci says
the battery of tests plus two job interviews take four
hours to complete.
Of the 40 applicants who've been tested, about 30 were
hired and only five have left their jobs due to external
factors such as spouse relocation. Scaminaci says the
tests have helped reduce turnover from 60 percent to
8 percent and have boosted customer service as well.
"We're three years into the process and our customer-service
level is the highest it's ever been, according to surveys
by our field partners," he says.
Studies show that the chance of finding the top performer
in a batch of candidates steadily increases with each
assessment used, says John Beck Jr., vice president
of the AssessmentCompany.com in Baton Rouge, La., which
provides online employee assessment services.
For example, he says, the hit rate for conducting interviews
is 14 percent or, for every seven people hired, only
one will make a good match. If performing background
checks, the number rises to about 26 percent. Add personality
assessments and the number jumps to 38 percent. Ability
testing increases it to 54 percent and interest testing
brings it to 56 percent.
Yet, instead of offering a battery of tests to clients,
his company condenses them into one 314-question assessment
measuring three critical areas: learning abilities,
occupational interests and behavioral traits.
Beck believes this is the new generation of testing.
More than 33,000 companies use it and, so far, sales
have increased by 56 percent over last year.
Right Management Consultants has also seen a jump in
sales. Over the past year, more than 100 employers have
contacted the organization for some type of selection
assistance for senior executive positions, says Maria
Raymond, client services consultant for the Philadelphia-based
company that offers career transition and organizational
While tests aren't perfect, they still provide employers
with more data points about candidates than interviews
alone. The more data points, she says, the more accurate
the hiring decision.
The company offers more than one dozen tests and customizes
behavioral exams for organizations. But not everyone
can afford them. Tests for a mid-management position,
for instance, can range between $5,000 and $18,000.
Still, employers aren't balking because mismatches can
cost up to five times an employee's annual compensation.
They're also not complaining because tests can minimize
employer liability. Testing programs document that companies
weren't negligent in hiring an employee that harms someone
due to dishonesty, violence or carelessness, says David
W. Arnold, vice president of development and professional
compliance at Pearson Reid London House in Chicago,
which provides recruitment, assessment and survey instruments.
"Pre-employment instruments are designed to help assess
and predict a multitude of work behaviors," he says.
"In today's litigious environment, many employers view
testing as a safe harbor."
Payback vs. Risks
In the last two years, Tim Liang has hired three presidents.
As vice president of JSJ Corp. in Grand Haven, Mich.,
which owns and manages 10 durable-goods manufacturers
and commercial printers, he was more than ready to try
a new selection process.
Last year, when one of those presidents retired, Liang
strayed from the company's traditional approach and
hired Right Management to develop and conduct a rigorous
series of pre-employment tests.
Six job candidates were quickly narrowed down to one.
The remaining applicant was tested over a two-day period
on his leadership style, work behavior, problem-solving
ability and reasoning skills. He was then asked to address
his past leadership experience in several multi-hour
The person was hired in April 2002 and is still on board.
Liang says his company's former approach would have
provided only one-third of the information he received
about the candidate through testing. Now, he has a broader
range of predictive indicators for how this individual
will serve as a president and leader, communicator,
problem-solver and strategist.
"If I had the budget to accommodate this, I'd do it
all the time," he says. "The process can be a little
intimidating, but the overall goal is to identify the
best likely successor for top positions. It's good insurance."
Dubois Regional Medical Center in DuBois, Pa., began
testing its leaders and physicians in 2001 for similar
reasons. Over the years, it's made several bad hiring
decisions by employing people who possessed the appropriate
clinical background but were cultural mismatches, says
Susan Grady, vice president of HR at the medical center,
which employs 1,400 people.
After several days of interviewing, candidates spend
another half-day completing written and verbal psychological
assessments, also developed by Right Management. The
tests focus on a candidate's work habits, interpersonal
style, social skills, emotional and motivational factors,
teamwork, integrity, credibility and leadership style.
All 10 people who went through the process were hired
and eight still remain on the job.
The tests also fast-tracked HR's ability to do succession
planning. "I understand these people without putting
in years to get to know them," says Grady. "I know what
they have the potential to contribute, where they're
coming from and how they deal with others."
What's more, testing eliminates interview bias and saves
hiring managers time, adds Dale Giovengo, HR director
at Giant Eagle Supermarkets, a Pittsburgh chain of 225
supermarkets that employs 35,000 employees in four states.
"Instead of bringing in 10 people and finding out that
five aren't qualified, now our HR managers interview
people who are qualified to begin with," he says.
The hiring process often starts over the phone, where
candidates are prescreened via an interactive voice
response system. It measures service orientation and
integrity and poses questions such as: "How much money
have you stolen from previous employers? $0, $1-$50,
$51-$100, over $100." It prompts them to enter their
responses on a touchtone phone. What the interviewers
chooses to do with affirmative responses is, of course,
up to them.
Giovengo explains that people don't always answer "0"
for two reasons: They only have a few seconds to respond
and are given several alternatives to choose from, which
encourages them to be more honest.
If they pass, the corporate office e-mails their names
to the supermarket closest to the their zip code. Before
any structured interviews are conducted, candidates
take three onsite Web-based tests that evaluate their
service standards and how long they're likely to stay
on the job. Based on their responses, the system also
suggests interview questions so HR can make smarter
Since the IVR system was introduced in 2000, the company
has received more than 72,000 calls. Nearly 68,000 people
completed the calls and about 500 finished the Webbased
tests. Turnover has since dropped from 60 percent to
the 30 percent range.
"We've had people admit to more than $500,000 in theft,"
he says, adding that Pearson Reid London House designed
the tests. "We're still going to make mistakes--there's
going to be bad hires. This vastly increases our percentage
of succeeding with people."