Tuesday, August 13, 2013

Top 10 Dangers of Using Employment Personality Tests and Other Workforce Analytics

Job applicants are required to take personality tests and submit personal data before any contact with a real person at an employer. One problem is that the personality tests and data analyses are illegally screening out certain classes of job seekers, including blacks, Hispanics, LGBTs, new mothers and veterans. 

A second problem is that personality tests and workforce analytics have failed to address the issues of employee turnover and lost productivity. Some 60% of American workers earn hourly wages. Of these, about half change jobs each year. The cost to U.S. business of worker attrition and lost productivity is $350 billion annually.

Set out below are the top ten dangers of using personality tests and other workforce analytics:


Employment personality tests discriminate against applicants with mental illness. These applicants are ready, willing and able to work, but are being illegally screened out from employment consideration by personality tests that use a non-validated stereotype of the capabilities of persons with mental illness. Please see What Are The Issues, ADA, FFM and DSM, and Employment Assessments Are Designed to Reveal an Impairment.


Employment discrimination on the basis of mental illness affects all demographic groups. Mental illness is no respecter of age, gender, geography, income, occupation, military status, race, religion or sexual orientation. Persons with mental illness include military veterans returning to the civilian workforce, new and expectant mothers, LGBTs and young adults. An estimated 26.2% of Americans ages 18 and older - about one in four adults - suffer from a diagnosable mental disorder in a given year. Please see Tests Discriminate Against Returning Veterans, Tests Discriminate Against New and Expectant Mothers and Employment Tests Discriminate Against LGBTs.


The illegal screening out of applicants with mental illness has come at a cost of tens of billions of dollars to taxpayers and the U.S. Treasury.  The prevalence of mental disorders has generally remained unchanged over the past 15 years and substantially increased rates of treatment should have resulted in a decline in the percentage of persons receiving disability awards who are diagnosed with mental illness. Sadly, no. People with psychiatric impairments constitute the largest and most rapidly growing subgroup of income support program awards (SSDI, SSI). Please see Costing Taxpayers Billions of Dollars Each Year.


Every year since 1999, more Americans have killed themselves than the year before, making suicide the nation’s greatest untamed cause of death. Being unemployed is associated with a 2-3X increase in the relative risk of death by suicide, compared with being employed. Given that more than 90% of persons who attempt suicide have mental illnesses, a tool like personality testing that illegally excludes persons with mental illness from employment consideration leads to an increase both in perceived burdensomeness and thwarted belongingness/social alienation, two critical elements tied to the risk of suicide. Please see Does the Rising Use of Employment Personality Tests Contribute to An Increase in Suicides?


The validity of personality measures to predict job performance is disappointingly low.  If you took all the personality factors, measured well, you corrected for everything using the most optimistic corrections you could possibly get, you could account for about 15% of the variance in performance between projected and actual performance. You are saying that if you take normal personality tests, putting everything together in an optimal fashion and being as optimistic as possible, you’ll leave 85% of the performance variance unaccounted for. Please see Science or Snake Oil?


Correlation is not causation.  The existence of a correlation between A and B does not mean A caused B. Instead, B could cause A, A and B could be caused by C.  According to Kenexa, the correlation between (A) persons who move and (B) shorter job tenure is that A causes B. However, a 2011 study by the Center of Public Housing showing that more than 76% of involuntary moves were a result of job loss. Kenexa’s insight of A causing B, which is factored into their assessment scoring, may well be completely wrong – B, instead, may cause A.  Also, Kenexa’s assessment makes no inquiry into the individual circumstances of an applicant; thus, a person who has moved to escape an abusive relationship or a person who has moved to get their child into a better school will be penalized for those actions in the hiring assessment process. Please see Big Data and Employment Testing: Corrrelation is Not Causation and Workforce Science: A Critical Look at Big Data and the Selection and Management of Employees.


Workforce science insights discriminate against low-income applicants, including blacks, Hispanics and persons with mental illness. Assessment companies, like Evolv and Kenexa, provide insight to their employer customers that employees who live closer to the job or have shorter commutes will have greater longevity. Thus, distance from the job site/commute time is a factor in determining whether to interview, let alone hire, an applicant. Are there any groups of people who might live farther from the job site or who may have longer commutes? Yes, lower-income persons, disproportionately black, Hispanic and the mentally ill. They can't afford to live where the jobs are and public transportation is unavailable or unreliable. This insight, in effect, electronically redlines certain protected classes from hiring consideration. Please see Workforce Science: A Critical Look at Big Data and the Selection and Management of Employees.


For employers, assessment testing litigation will have many parallels with asbestos and FLSA litigation, but on an even larger scale because: (i) there are potentially tens of millions of plaintiffs (any person who takes an assessment, if the assessment is determined to be a medical examination will be a plaintiff); (ii) there are potentially hundreds of thousands of employer defendants – any company that utilizes pre-employment assessments; (iii) there are potentially hundreds of thousands of claims against assessment companies, both by the applicants and by the employers (seeking indemnification); and, (iv) there are potentially hundreds of thousands of claims against insurers who underwrote policies for employers and testing companies.  Costs to employers, testing companies and their insurers will be in the tens (if not hundreds) of billions of dollars, including: (A) defense transaction costs, including the costs of outside counsel, internal management and employee time, public relations, lobbying, etc.; (B) gross compensation, including awards to applicants and payment of costs and fees (i.e., counsel, expert witnesses, e-discovery); and,  (C) reputational damage costs, including lost/reduced sales and brand damage. Please see The Next Asbestos? The Next FLSA?


A similarly material risk to employers arises from the potential classification of personality assessments as being illegal “medical examinations” under the Americans with Disabilities Act. In such case, most of the information collected from the applicant, including test responses,  would be confidential medical information and subject to a variety of safeguards and severely limited use restrictions (including no disclosure to third parties or use for any other reasons by the employer). Employers and testing companies have freely passed this information back and forth among themselves. In a sense, the information is a “virus” that has “infected” many databases, systems and solutions of employers and assessment companies.  If the information is confidential medial information, there will be massive business restructuring and/or “disinfectant” costs, as companies are forced to “scrub” their systems. Please see Risks to Employers - Damages, Reputational Harm and Federal Lawsuits and Damages and Indemnification Challenges for Employers.


Employers who continue to use assessments and data analytics to illegally screen out persons with mental illness and other disabilities risk losing the significant revenue opportunity associate with the largest “niche” market in the U.S., as: (i) there are more than 37.3 million persons with disabilities; (ii) 58 percent of persons with disabilities own their own homes; and (iii) there are more than 20 million families in the United States that have a member with a disability. As an example, psychiatric medications are among the most widely prescribed and biggest-selling class of drugs in the U.S. In 2011, Americans spent $18.2 billion on antipsychotics to treat depression, bipolar disorder and schizophrenia, $11.0 billion on antidepressants and $7.9 billion on treatment for ADHD. These three categories of prescription drug sales accounted for approximately 11.6% of all prescription drug sales in the U.S. for 2011. Persons with mental illness, their family members and other loved ones provide a material percentage of the companies' overall revenue each year. How do some of these companies repay this customer loyalty? By utilizing an unlawful pre-employment assessment to screen out persons with mental illness from consideration for employment. Why should persons with mental illness, their family members and other loved ones continue to shop at their stores? Good question. Please see Welcomed as Customers; Rejected as Employees.

In terms of human resources, the corporate diversity initiatives that opened the doors to many minorities have largely excluded the applicant with a disability. The consumer recognition that kicked in after the civil rights battle over the right to work was won never materialized for people with disabilities – at least not yet. … [D]iscrimination rooted in fear has subverted what mechanisms are in place to advance the prospects of workers with disabilities. … Decades ago the barriers hampering women and racial minorities were broken down through legal and political activism. Fearing the stick of lawsuits, fines, and boycotts, corporations complied with the laws generated in the sixties. The secondary wave of thinking on diversity has long since been apparent: profits are reaped by tapping minority markets. Once the carrot of sales joins the stick of regulation, the business case for [disability] diversity is solidly made.
 Disability and Business: Best Practices and Strategies for Inclusion
Charles A. Riley, II, 2 (2006)

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