Automated Assessments for Better Hires - companies automate process of employee testing - Statistical Data Included

Workforce, Dec, 2000 by Gilbert Nicholson

Automated pre-employment screening tests provide a variety of efficiencies, saving time and money in comparison to the traditional pencil-and-paper route. They can also reduce the expense of high turnover by helping to determine who will do well in a particular job on the front end of the interviewing process. The assessment capabilities can be used as well to size up the existing workforce for the purposes of team-building.

The large company in our case study, Capital One (more than 17,000 employees), moved to online testing mostly in response to the logistical demands of staffing its 8,000 call-center operator positions.

For the small company, City Garage (under 500), and the medium one, New Horizons Computer Learning Centers, the main benefit is analyzing applicants to make smarter hires, (Typically, a medium-sized company is categorized as 500 to 5,000 employees. We fudged a little with New Horizons: it has 7,000 employees worldwide, with 1,109 in the United States.)

Large company

Credit card and financial services giant Capital One, which has 25 million customers and $4 billion in revenue, prides itself on being an innovator, on the cutting edge of technology. The company wondered, then, why it was using pencil-and-paper tests for pre-employment screening for call-center operators, says spokesman Hamilton Holloway.

Last year, the company switched to automated online testing, with stunning results. Overall cost-per-hire dropped 45 percent, while the pass rate increased by 30 percent. With this success, Capital One has embarked on an ambitious new online testing program, planned for implementation in the second quarter of 2001 and predicted to save $3.7 million next year.

The problem

Capital One found itself in the midst of rapid growth in 1996, with the need for customer-service reps growing 30 to 40 percent each year, says Laura Lorenzen, director of global recruiting. Three pencil-and-paper tests were used for pre-employment screening: a cognitive skills test; a math test; and a "bio-data" job-history test, used to predict future job stability.

"In Tampa, we were having to process several thousand people a month just to hire 100," Lorenzen says. Administering the test and grading by hand was time-consuming. If timing of the test-giver was off just a little, comparative results of other tests were skewed. "It was cumbersome and inefficient," she says.

The traditional method caused another dilemma. "If candidates didn't get a certain minimum on any of the three tests, they weren't passed on" to the next level of interviews, Lorenzen says. "What you end up doing is turning people down who may have been successful. We wanted to score the tests together in one holistic picture so we can get a much more powerful pass rate while keeping our standards high."

Another motivation was the traditionally high turnover of customer-service representatives. "In late 1997, we decided we had to do something very different," Lorenzen says.

The solution

Using its in-house cadre of IT people, along with a combination of off-the-shelf online software testing programs, Capital One set out to reinvent its pre-employment testing during 1998. An internal validation study was conducted, in which call-center reps took a test and the results were used to build scoring models around the performances of sales rates, dollars collected per hour, and other criteria.

From that data, an algorithm was build into the new online testing system. "The computer can then take the performance on any given item on any particular test and run it on the models," Lorenzen explains. "The models in the system are built around the most powerful predictors of the job. It combines a lot of somebody's performance over a number of different items. It's a much more stable indication of performance based on multiple indicators."

Capital One's new online system, rolled out in the fourth quarter of last year after nine months of work, includes the application itself and upgraded math and bio-data tests, drops the cognitive skills test, and has a new feature: a role-playing call simulation. Applicants don a headset, and the CD-ROM program plays seven different customer situations. Applicants role-play as operators and answer multiple-choice questions online as to how they would respond. The application and test results are graded by the algorithm via an overnight batch process. The next day, Capital One has a list of who passed and is ready to move to the next stage of the process. "Our pass rate increased by 30 percent, and we can hire 30 percent more people and still meet our high standards," Lorenzen says. Online testing allowed 22 HR employees to be redeployed in the company, and it gives Capital One the flexibility to assign personnel according to the ebb and flow of testing.

The future

While Capital One has experienced great gains with the new system, the company has been expanding to the United Kingdom and France, and is already in the process of revamping its online testing to accommodate growth both here and abroad. Lorenzen says that new features are being developed simultaneously with new technical designs to accommodate overseas nuances. The company is broadening its call-center pre-employment testing to match applicants with other Capital One jobs in areas such as administration and quality assurance.