Monday, January 27, 2014

What Do Car Platforms and Employment Assessments Have In Common? Systemic Risk

A major manufacturing trend in the automotive industry has been the focus on global platform-based vehicle design and manufacturing. One of the trade publications predicts that by 2017 VW will build over 40 models on its MQB platform (Audi A3, VW Golf, etc.) totaling over 4 million vehicles worldwide. All of the global car makers will be above 2 million vehicles per year with their major platforms.

The savings from faster vehicle development time, lower tooling costs and more advantageous supply contracts (by leveraging higher volumes) could arguably add up to billions of dollars in savings. Suppliers also benefit as they service larger, more stable supply contracts that support broad-based utilization of their global manufacturing facilities.

And the risks? The same global scale that can yield big savings benefits could drive huge costs and reputation damage if a product defect or manufacturing quality issue surfaces. Instead of the defect being confined to a single plant, single model or even a single vehicle segment, the potential exists for the defect to be multiplied across thousands of vehicles around the world in a very short amount of time.

Employers and assessment companies face analogous risks. For many applicants, especially those applying for entry-level positions in retail and food service, employment assessments offer a standardized experience for job applicant. While this "one size fits all" approach helps to reduce an employer's costs and may reduce the impact of overtly biased or discriminatory behavior on the part of one or more recruiters, the inclusion of one or more potentially "defective components" in the assessments means that employers face the risk that a finding of bias or discrimination in one of the assessments will put all tests at risk. Please see When the First Domino Falls: Consequences to Employers of Embracing Workforce Assessment Solutions.

These "defective components" in assessments may be either design defects (i.e., the adoption and use of the five-factor model of personality) or manufacturing defects (i.e., coding errors in the assessment software). The latter is analogous to the coding error at 23andMe that resulted in notices going out to some customers informing them that they had a chronic and life-shortening condition - limb-girdle muscular dystrophy - when they did not. Please see On Not Dying Young: Fatal Illness or Flawed Algorithm?

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