Inside Human Resources Blog

Qualified Employees Still Tough to Find

Forty-four percent of resumes presented to hiring managers are submitted by unqualified applicants, according to a study of 501 hiring managers by Robert Half and CareerBuilder. The 2009 EDGE Report also found that 47 percent of hiring managers cited under-qualified applicants as their most common hiring challenge.

About 61 percent said they are willing to pay for qualified candidates and would negotiate higher compensation if that meant getting the right person for the job.

Employer survey: Talent still hard to find - Charlotte Business Journal:.

Employee Theft is Increasing

According to a report just released by i4cp Inc., twenty-seven percent of respondents in large companies said theft in the workplace has risen during the current economic crisis, while 15 percent, regardless of company size, reported that it stayed the same.

"Employers are hot targets for theft because workers know their systems, controls and weaknesses, and they can bide their time waiting for the right opportunity," according to a Dec. 11, 2008, Wall Street Journal article.

U.S. organizations lose about 7 percent of their annual revenues due to fraud, according to the Association of Certified Fraud Examiners, which attributes most of that fraud to accounting departments and upper management.

Indeed, the U.S. Chamber of Commerce estimates that employee theft may cost American businesses as much as $50 billion on an annual basis. The Chamber has also reported that 30 percent of small business failure is caused by employee theft and estimates that 75 percent of all employees steal once, and one-half of those steal a second time.

The things that employees steal generally falls into two categories -- tangibles and intangibles -- and employees generally steal one of three ways: directly, by manipulation or by siphoning.

Tangibles includes both the company's inventory -- for example, the widgets and the parts or resources that go into making the widgets -- and the items the employer keeps on hand to help it conduct its business, from postage stamps and envelopes to telephones and gasoline fueling company cars.

Intangibles include money, time and information. These intangibles are often stolen electronically. Commonly understood as embezzlement, the employee manipulates company data in order to steal money indirectly.

For example, the payroll manager places a "ghost" employee on the payroll and keeps the money herself; the sales clerk takes the employer's customer's credit-card information to make purchases for himself; or the AP/AR clerk creates fake vendor invoices and then prepares checks to pay the invoices, and keeps the money for himself.

Theft of time is another form of intangible theft. This form of theft is accomplished by siphoning or slowly wasting the employer's assets over time.

For example, employees take long or frequent paid cigarette breaks; spend excessive time on non-work related internet activities such as Facebook (which may be considered both theft of company time and misuse of company property); or engage in work off the books for another employer while on paid workers' compensation leave for a workplace injury.

In industries in which client names are particularly valuable, such as financial services, employees may misappropriate client lists or clients' personal information.

Other intangibles include client lists and personal information, and intellectual property about processes, strategy, and research.

Employers need to proactively respond to the issue of employee theft, or they risk becoming a statistic.

One of the most effective ways human resource leaders can play an influential role in by make sure the organization is hiring the right employees. A good start is by using pre-employment tests specifically designed to predict and forecast potential theft problems, performing criminal-conviction checks, drug screenings and reference checks in an attempt to minimize employee theft. Performing thorough and effective background checks is critical too.

Another way of reducing, if not eliminating, employee theft is for the employer to create a perception of detection. Generally speaking, employees who fear they will be caught stealing are less likely to steal. Internal controls and procedures, audits, job rotations, and employee education are additional ways employers are taking a proactive approach.

Excerpt from Curbing Employee Theft. Read the full article.

Would You HIRE Ted Kennedy?

You've narrowed your search down to your final candidate.  You're ready to extend a job offer and begin calling a few references and searching on the Internet.  You discover your top candidate: 

1.  was accused but not convicted of murder.

2.  was kicked out of school for cheating.

3.  only worked in his family business or got jobs because of his family.

4.  has been seen partying often on his Facebook page.

I imagine your answer would be a resounding NO. 

But my early morning review of my favorite blogs today posed a challenging question: Would You HIRE Ted Kennedy?

I sense that my colleague Dr. Mercer is not a fan of Ted Kennedy from the tone of his questions.  But unless you've been living in a cave for the past days, you can't ignore the admiration and even veneration that tens of millions of people feel for this man and his accomplishments.  Despite his incredible history of potentially career-ending character flaws even his harshest critics were awed by many of his skills, most notably his gift of negotiation and building collaboration, or commonly describe in this Beltway euphemism: "reaching across the aisle."

So I ask you:  Confronted with an opportunity to hire an individual with Ted Kennedy's unique gifts, could you overcome the gut-wrenching and value-challenging emotional decision to ignore his character flaws?  Before you answer....I implore you to think because I know many of you have hired or retained employees despite convictions for embezzlement, theft, sexual harassment, hostility, and drug abuse. You've likely hired people who have had questionable attendance records and harsh criticism from previous employers. But still you hire or retain them because you want to give them a second chance. Other times you may believe the benefits they bring to your organization outweigh the risks that the questionable character brings to your organization. You believe that this time could be different - it's a different time and different place.  Your caulk up these indiscretions to youth, immaturity, and stress.

What happens when an individual brings along a legacy-like track record of accomplishments and achievements? When can or should you overlook a negative work history and offer an individual a second chance or take the chance that this time will be different when their potential for good can outweigh the risks?

As an aside: Dr. Mercer's post goes onto suggest how pre-employment testing can help expose character or attitude flaws that if for no other reason (if you choose to ignore the results) will give you advance warning of potential problems. As he writes in his blog description, "Pre-employment tests and other methods help you avoid hiring connivers, scoundrels, and people with character flaws you never want in your company." 

I concur with his recommendation and found his question about hiring an individual with an impressive track record but only in a family business an intriguing one. What do you think?

Read more about Pre-Employment Testing & Hiring by Dr. Mercer: Would You HIRE Ted Kennedy?.

Courts Confirm #1 Factor in Selecting Best Pre-employment Test

Bob Brady, BLR Founder and CEO, in a recent post offers the best summary (even if I disagree with his conclusion) that I’ve read concerning the recent Supreme Court ruling on pre-employment testing, Ricci v. DeStefano. The Supreme Court decided Ricci v. DeStefano only a few weeks ago, and it has sparked debate about its impact on employment testing.

Bob wrote,

Several years ago, the HR department of the city of New Haven, Connecticut, was presented with a very difficult choice: It could accept the results of a recent promotion exam and risk the ire of the majority of city residents, or ignore them and risk a lawsuit by the firefighters who would be denied promotions…..In the end, prodded by public opinion and politics, the city decided to throw out the results of the test.

 

The city actually did things right in designing a test for promotion.  It hired a well-known, highly qualified firm to develop a pre-employment test, paying them $100,000. Both the test developer and the city followed a rigorous protocol designed to ensure that the test was good and that it was not compromised.

 

The test was administered and, when the results came back, no African Americans—and only one Hispanic—made it into the top of the list, though they were heavily represented in the rank and file. It wasn’t that a good number didn’t pass the test, demonstrating considerable competence. However, under the rules, only the highest-scoring individuals made it into the hiring pool.

 

This put city administrators in a very precarious position: Use the test scores and face a very unhappy minority community and probably a lawsuit on the basis of "adverse impact," or ignore the scores and face a lawsuit because of "reverse discrimination."

 

The City of New Haven chose to avoid the adverse impact lawsuit but was then slapped with a lawsuit anyway. In what is now being called the “Ricci” case, the top scorers were predominantly white. Despite the employer attempting to the right thing, including retaining an outside consultant, the City of New Haven decided not to certify the results of the examination because it feared a disparate impact discrimination lawsuit from the minority test takers.

 

The Supreme Court however decided that this was illegal reverse discrimination because the City could not demonstrate a “strong basis in evidence that, had it not taken the action, it would have been liable” for disparate impact discrimination against the minority candidates.   While the test did discriminate, the basis was job related and therefore it disqualified candidates based on qualifications, not race, ethnicity, or gender.  The city was held liable for disparate treatment discrimination against the “white” non-minority firefighters for deciding not to certify the test results.  In other words, employers who rank test scorers must be able to demonstrate that a higher score correlates with better job performance.  

 

Ironically, the ruling confirmed that a test can discriminate against minorities if the employer can prove job-relatedness. In a post on the Nixon Peabody site, attorney Philip Berkowitz wrote, “If a test is shown to have a disparate impact, an employer can defend using the test results by producing evidence there is a business justification for the selection method.”

 

This ruling essentially shoots down how many human resources and hiring managers evaluate an assessment.  While concerns about cost, convenience, and adverse impact are essential factors, the ultimate question in choosing and using a pre-employment test should be based on its ability to predict job-related abilities, then evaluate the impact it has on minorities.  The Ricci case seems to uphold the rights of a business to disqualify a minority candidate if they are not qualified. (Vice versa, Title VII protects minorities from being arbitrarily disqualified when they are qualified.)   

 

A New York federal district court found that the employment testing conducted by the Fire Department of New York (“FDNY”) had a disparate impact on minority candidates. A class of would-be minority firefighters prevailed in showing the tests to become a firefighter resulted in an unlawful disparate impact on black and Hispanic applicants. The court held that the test, was “poorly constructed” and “arbitrarily rank[ed]” the firefighter candidates.

In defending the claim of adverse impact discrimination, the City of New York was unable to prove a “business justification” for the test. The court found the FDNY pre-employment tests did not actually test the abilities purported to be tested. The job analysis and test construction were deficient, and the record showed the FDNY did not use independent experts to write the tests, but instead relied on panels of firefighters to write the questions. The content of the tests was not directly related to the job requirements. The test was not representative of the content or the procedures required of the job. Finally, the court found the cutoff scores selected for the tests and method of rank-ordering test takers were inappropriately selected. The court carefully reviewed each step of the testing process, finding the FDNY failed to observe sound practices in its pre-employment testing.

While the Internet is now filled with blogs and commentary about the value and risks of pre-employment testing, nothing has really changed.  Pre-employment testing continues to be a valid and reliable tool when hiring and promoting candidates.  Assuming a test has been properly constructed and validated, the risk associated with using it is not related to the test itself but how and when it is used.  These recent court rulings just confirmed a few things for managers to consider when choosing pre-employment tests or any assessment used in the hiring or promotion of employees:

1.    People can sue for anything.  Being sued doesn’t mean your actions aren’t defensible.  While intentional discrimination against minorities should be prosecuted to the fullest extent, this Ricci ruling seems to support businesses who are intent on hiring the most qualified candidate for the job, regardless of race, ethnicity, religion, or gender.

2.    Selecting a test on price or convenience alone will not be a reliable defense if an employee ever contests the results. And as the Fire Department of New York discovered, “home-grown” tests expose the organization to a huge liability.

3.    No testing isn’t a viable solution either.  A selection process subject to the biases and various skill levels of interviewers raises just as many red flags if not more than pre-employment tests.

4.    Arbitrarily setting cut-offs has always been wrong and the courts just confirmed it.  Cut-offs or knock-out scores must be based on performance, not gut instinct or superficial criteria or personal bias.

5.    The best approach for employers implementing a workforce reduction is to identify job-related criteria that are neutral and properly reflect legitimate business considerations.

 

The end of resumes?

Eliminate the in-person interview and just rely on a pre-employment assessment test? I don't think so. Even though the bread-and-butter of my business is providing pre-employment and other employee tests to businesses, even I can't agree with the recommendation offered in this article.  While the resume and interview are certainly suspects in poor hiring scenarios, pre-employment testing only provides part of the solution in predicting good job fit.

What do you think?  What has been your experience?

The End of Resumes?.

Sales Quiz | Company Activities & Management > Company Structures & Ownership from AllBusiness.com

In what is still another version of the four-style behavior model, most commonly called DISC,   I was just sent an online quiz to find out if my selling style is that of a Peacock, Eagle, Owl, or Dove. After reading the descriptions of each bird, it's apparent that calling behavioral styles by bird species names has much more appeal than identifying individuals as D-I-S-C.

Nonetheless - that doesn't change the result.  While understanding your style (or bird type) increases your awareness about how others might see you, it's not at all predictive at how capable a person is or will be at selling.  Like all DISC type assessments, they are highly predictable for selling style but not selling skill.  In other words, using an employee assessment like this for hiring might predict that they look like they can soar like an eagle but may in fact fly like a dove.

DISC in its many variations is an excellent tool for helping sales (as well as all employees) understand how other people see them and how they can adapt to improve relationship.  It should not be used to assess skills, potential, or competence.

Read more about the Sales Quiz

Specific baseline objectives help defend a discrimination charge

While sitting with a client reviewing resumes and pre-employment test results, the manager turned to me and said, "this guy looks pretty good."  After glancing at the resume, I pointed out that his highest completed level of education was high school.  The manager responded, " but that's okay as long as he has the experience." 

"But I thought you said a '4-year degree' was required," challenging him.

"Yes, but..."

I can't tell you how many times I hear the "yes, but..." from managers.  The 4-year degree requirement is not really a requirement at all but a preference.  This seemingly innocuous difference can have grave ramifications if a business is ever put in the position of defending a discrimination charge, according to a recent ruling, Makky v. Chertoff, in the Third Circuit Court of Appeals.

A recent post on the PA Labor and Employment Blog offers an excellent piece of advice:

When a position requires a baseline objective qualification, like a license or degree, make sure it is expressly stated in all hiring materials including: (1) job advertisements; (2) position descriptions; and (3) application materials. Notably, if the degree or license it is merely the company's "preference" for someone in the position, it is important to consider whether making the "preference" appear as a "qualification" may lead to problems in the future. For example, suppose that Company X states that a sales position requires a Bachelor's Degree. When Company X interviews its two top choices, however, the female candidate who possess a Bachelor's Degree has the personality of dry toast, while the male candidate who has waitered all his life and does not have a Bachelor's Degree has a dynamic sales personality and will surely do well with Company X. If Company X believes that the male applicant is better suited for the position than the female applicant, should the Bachelor's Degree have been a required qualification in the first place? Probably not. Accordingly, it is important to have a process in place to review your company's job advertisements and position descriptions before posting for openings. While certain baseline objective qualifications can often be beneficial in refuting a prima facie discrimination claim, turning a mere "preference" into a "qualification" can have the opposite result because it may be used as evidence of a discriminatory motive.

Read more.

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The "Inside Human Resources Blog" is moving to the Perfect Labor Storm 2.0 blog.

As many of you know, I've published the second edition of my Perfect Labor Storm book in the fall of 2007.  I first coined the phrase "Perfect Labor Storm" in 2000 and like a "bad penny" I kept writing and writing......and writing about impending worker shortages and how workforce trends will change the way employers do business. 

A milestone date was 2008.  Back in 2000 this year seemed far away.  But now it's here and everyday I receive dozens of emails and alerts warning me about trends that are changing the ways employers will do business.

I've therefore decided to focus on updating the Perfect Labor Storm 2.0 blog.  I hope you will take a few minutes to visit the blog and subscribe by email or RSS feed to Perfect Labor Storm updates.

Thank you for subscribing and reading the Inside Human Resources blog and please join me on the Perfect Labor Storm 2.0 blog.

More Sorry Stats about Stealing and other Criminal Activities

The following Perfect Labor Storm stat just arrived in my inbox:

The U.S Department of Justice reports that 1 in every 32 adults has a criminal record, so the typical company of 500 employees would, on average, have at least 15 convicted criminals on their payroll.

This follows on the heels about my last post about teen attitudes related to theft, cheating, and lying.