Integrity Testing Explored: A powerful pre-hire screening tool to reduce Total Cost of Risk Western Carolina RIMS Chapter March 10, 2016 Presented by: Steve Watts Managing Partner/Co-founder Prevail LLC, Pinocchio LLC [email protected](404) 242-4720
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Integrity Testing Explored:A powerful pre-hire screening tool to reduce
"In looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don't have the first, the other two will kill you.”
- Warren Buffet
• 25% - 40% of all employees steal from their employers ($50 billion annually)
• 55% of theft perpetrators are in a management position
• Drug and alcohol abusers use three times as many sick days, are 4 times more likely to be in an accident, 5 times more likely to file for workers compensation, and 10 times more likely to steal
• 75% of adult illicit drug users are employed, representing 15% of the workforce
• 55% of all resumes or applications contain outright lies
• 35% of workers say they have felt bullied at work
• 2 million cases of workplace violence per year
• Workers compensation fraud accounts for 25% of all insurance fraud, or $7.2 billion annually
How often is our first priority a candidate who seems qualified
Are they really fit for a job… in any organization?
Later we discover they have:
Exaggerated insurance claims
Stolen from youAbused drugs & alcohol on the jobMade threats against employeesor the public
Overt Integrity Testing
Candidate Screening
Experience Skills Education Core Behaviors
• Criminal Records Checks 88%• Employment Verification 86%• Drug Screening 78%• Education Verification 74%• Verify Professional Licenses 59%• MVR Checks 50%• Credit History 39%• Integrity Testing 35%
Screening Tools Utilized - Fortune 1000
Overt Integrity Testing
A simple 10-minute,online pass-fail test
that truly weeds out the bad hires
Lying
Theft
Drug Use
Hostility
Overt and Covert Integrity Testing
• Obvious or overt• Questions are quite direct
“How much did you steal from your employer last year?”
• Disguised purpose• Indirect questions /
hypothetical situations
“What shape is your favorite: circle, triangle, or square?”
Do you speed?
Is it right?...NoIs it against the law?...YesWould I admit to it?...YesWould I hire someone who speeds?...Yes
Speeding…
Guess what…
25% of job applicants admit to what most employers consider high risk behaviors
Examples:• 4% admit to smoking pot at work• 3% admit to shoplifting in the past year• 3% admit “would fail urinalysis”• 2% admit drinking/alcohol impaired at work
Cognitive Dissonance: The science behind Integrity Testing
People with Cognitive Dissonance:• Rationalize their behaviors as normal, or they justify their behaviors when
their lifestyle is in conflict with their values• Feel “entitled” or deserving of some reward or benefit
Theft Scale
Sample Question:
• Excluding minor office supplies (pads, pens, etc.), what would you guess is the value of things you have secretly taken from work in the past 2 years?
A. NoneB. $5 - $25C. $26 - $500D. $501 or more
Note this question:
9 Inquires about recent theft only.9 Excludes all amounts below $5.
Sample Question:
• Have you ever pretended to have a work injury in order to collect Workers Compensation Insurance?
A. NeverB. Only OnceC. Only TwiceD. Several Times
Theft Scale
0% 1% 2% 3% 4%
Shoplifted in Past Year
Would Help Friend Steal
Would Steal if Angry
Would Steal if Had Opportunity
Would Steal if Had Low Pay
Would Give Friend Unauthorized Discount
Would Knowingly Buy Stolen Merchandise
Would Fake Time Card if Never Checked
Theft Behaviors
Sample Question:• Excluding pills you got from a doctor (prescriptions), which of
SHRM – HR Magazine (June-2011)• “Research has shown that Integrity Tests have the
highest validity for predicting undesirable behaviors at work”
Journal of Business and Psychology (April-2011)• “…Integrity Testing can result in substantial savings
across multiple industries”
• “…Integrity Tests can be a useful tool to assist employers in hiring individuals who are less inclined to engage in behaviors that are dangerous, aggressive or generally counterproductive”
Cornell University- (2009)• “…Integrity tests are a potentially highly useful
selection tool” “Do not create adverse impact” and "Produce ROI results of as much as 800+%“
Results Supported by Various Studies
• Two-year study by The University of Arizona (2010-2012)
• Screened employee population v non-screened employee population
• Claim data compared:FrequencySeverity
Silverado Assisted LivingCase Study: Impact on WC Claims
• # of Monthly Screens : 800• Average Claim Frequency Reduction – 60%• Average Claim Severity Reduction – 54%• Overall Average Loss Rate Reduction – 72%• Turnover Reduction – >35%
Measuring Impact In Reducing Workers Comp Losses & Turnover
Silverado Assisted LivingCase Study: Impact on WC Claims
11.30%
4.10%
Claims Filed
Non-Test Takers
Screened Employees
Screened employees were 3x less likely to file a claim than those who were not screened.
Silverado Assisted LivingCase Study: Impact on WC Claims
Incidence of a claim exceeding $5K was nearly 4x greater among non-test takers v. screened employees.2.20%
0.60%
Claims >$5,000
Non-Test Takers
Screened Employees
Silverado Assisted LivingCase Study: Impact on WC Claims
Incidence of a claim exceeding $20K is nearly 12x greater among non-test takers v. screened employees.1.20%
0.10% Claims >$20,000
Non-Test TakersScreened Employees
Industry Results Example:Foodservice Industry
Theft Scale
High Risk 8%
Low Risk 92%
Theft of Cash
Up to $25 48%Up to $500 26%$501 or More 26%
Top Admissions
Would Give Friend Unauthorized Discount 26%Would Fake Time Card if Not Checked 21%Shoplifted in Past Year 18%
Industry Results Example:Foodservice Industry
Drug Abuse Scale
High Risk 10%
Low Risk 90%
Top AdmissionsUses Pot Regularly 46%Would Fail Urinalysis Today 23%Used Illegal Drugs in the Past 3 Weeks 21%
Industry Results Example:Foodservice Industry
Faking Scale
High Risk 11%Moderate Risk 43%Low Risk 46%
High Risk 1%Moderate Risk 5%Low Risk 94%
Hostility Scale
Reduction in claim frequency
*54% *21%
Reduction inturnover
*30%
*Study of 18 clients from 1996-2013
Manufacturing
Food Processing
Hospitality
Construction
Healthcare
Staffing
Retail
Reduction in claim severity
• Cost• Reduced candidate pool• Disruption/slowdown of