Deloitte's Point of View On Pre-Hire Assessments

Deloittes POV on Pre-Hire Assessments
Deloittes Point of View

Pre-Hire Assessments
An overview of pre-hire assessments

By Deloitte
April 2015
Table of Contents
1.0 Foreword ....................................................................................................................................... 02
2.0 Introduction ................................................................................................................................... 03
3.0 Background on Pre-Hire Assessment ........................................................................................ 04

3.1 The Basics ............................................................................................................................... 04
3.2 History of Employment Testing ................................................................................................ 04
4.0 Purpose of Pre-Hire Assessment ............................................................................................... 05
4.1 To Make Good Decisions, and Avoid Bad Ones ..................................................................... 05
4.2 Why Should an Organization Use Pre-Hire Assessments? ..................................................... 05
4.3 Which Organizations Should Use Pre-Hire Assessments? ..................................................... 06
4.4 When Should a Pre-Hire Assessment be Used? ..................................................................... 07
5.0 Using Pre-Hire Assessment ........................................................................................................ 08
5.1 What Types of Pre-Hire Assessments are There, and Which One Should You Use? ............ 08
5.2 Administering Pre-Hire Assessments ...................................................................................... 09
5.3 Pre-Hire Assessment Trends ................................................................................................... 10
5.4 Leading Practices..................................................................................................................... 10
6.0 Legal Challenges and Resources ............................................................................................... 12
6.1 Good Intentions are Simply Not Good Enough ........................................................................ 12
7.0 Overview of the Pre-Hire Market ................................................................................................. 17
7.1 The Baby Elephant in the Room .............................................................................................. 17
7.2 Vendor Selection Criteria ......................................................................................................... 18
7.3 Deloittes Pre-Hire Assessment Services ................................................................................ 19
8.0 Key Contacts & Contributors ...................................................................................................... 20
9.0 Sources.......................................................................................................................................... 21
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Foreword
Imagine this: you are talking to the CHRO at one

of your clients. She is facing pressure to keep up
with the hiring demands of the business and
wants to know if Deloitte can help. During the
conversation the following question comes up,
Do you think we should be testing
candidates? She continues, If so, what type of
tests should we use? Are tests really any better
than the interviews we do today? Ive heard
some companies use assessments, but I have
also heard that the legal risks outweigh the
benefits? What do you think?
What do you say? Our Principals, Directors, and
Senior Managers are asked these questions
today more often than any time in the past.
Frequently the response is that Deloitte doesnt
provide advice related to pre-hire employment
testing. Or worse, the response leaves the client
with the impression that we dont know much
about this topicwhich hurts our chances of
selling a talent acquisition project. We want to
arm our Principals, Directors, and Senior
Managers with the information they need to
respond to these questions in a way that
demonstrates our credibility, reinforces our
brand, and helps us win that talent acquisition
project. This is the reason we wrote this paper.
Why the recent increase in questions related to
pre-hire assessments? Human Resources is not
immune to the explosion in analytics and those
who take an analytical approach to decision
making eventually ask the questioncan we
improve hiring decisions with data? If so, how?
Many dont know the answer, so they seek out
someone who does.
That is where I come in, because they often end
up connecting to me. My name is CorDell
Larkin and Im the Employee Assessment
Service Offering Lead for the Talent Strategies
Community of Practice for Deloitte Consulting
LLP. Prior to Deloitte, I worked for a leading

global provider of employee assessment
solutions. And, as an executive search
consultant, I conducted over 100 executive
searches and personally assessed over 300
executives.
Here is what I would tell that CHRO. Yes, you
should be assessing candidates. But, I dont
think you should use assessments for every
position because the value gained in the
decision-making process does not always
outweigh the cost. What type of assessments
you use depends on the position and what
factors contribute the most to high
performance. Interviews are assessments, but if
your interviewers are not properly trained then
they are about as effective as flipping a coin:
No, the risks do not outweigh the benefits! Of
course, I would then ask if they would like me
to help them identify the positions they should
be using assessments for, what assessments
they should use, and how to implement them?
The good news is that you dont have to just
take my word for it. We assembled a team, read
the research, interviewed experts, and wrote
this paperall to provide you with an
independent Point of View (POV) on this topic.
We want you to have more than just an
opinion. We want you to be fully informed, with
all the information necessary to provide sound,
objective advice to your clientand dont
forget the would you like our help? part.
Thank you,
CorDell Larkin
Human Capital Employee Assessment Service

Offering Lead
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Introduction
Background of this Paper
Pre-hire assessments are a hot topic within

human resources and are often part of the
discussion with clients who are interested in our
Talent Acquisition solutions. In order to better
equip our client service leadership for
discussions on pre-hire assessments, we have
developed this body of knowledge to answer
key questions about the purpose, selection, and
use of pre-hire assessments.
Objectives of this Paper
Define pre-hire assessments

Clarify why pre-hire assessments are used, as
well as their potential benefits and risks

Define when, what, and how pre-hire
assessment should be used
Answer frequently asked questions (FAQs)
related to the use and selection of pre-hire
assessment
Provide an overview of current trends in prehire assessment needs, solutions, and leading
practices
Provide an overview of vendors who offer
pre-hire assessment content, solution
platforms, or other related services
The Internet has made prehire assessment

more accessible than ever, accelerating its
adoption and making it easier for
companies to realize its benefits.
- Bersin by Deloitte, Deloitte Consulting LLP
The Prehire Assessment Primer (2012)
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Background on Pre-Hire Assessment

The Basics
Deloitte Consulting LLPs Bersin by Deloitte

defines pre-hire assessment as any method
used to provide data/information about a
candidates qualifications and potential for
performing a specific job or his/her ability to fit
and develop a career within the organization in
which the job will be performed. 1
Pre-hire assessments are primarily focused on

skill level (i.e., whether someone can do a
specific work task) and work style (i.e., how
they are likely to do a specific work task). The
goal of the assessment is to determine how
likely a candidate is to perform a work task well
or at an acceptable level. In theory, the better a
candidate scores the better the performance
rating they should receive. Pre-hire assessments
are distinctly different from post-hire
assessments, which are most often meant to
identify development needs or opportunities.
Pre-hire assessments may include:
Measures of cognitive (mental) ability
Measures of work skills
Measures of physical and motor abilities
Tests on specific knowledge areas
Personality indicators
Language proficiency
Ethics/integrity indicators
History of Employment
Testing
Employee testing dates back to the

early 1900s2
After World War I, Germany involved

psychologists in military personnel affairs to
1
Handler & Lamoureux, 2012 (presented by Bersin by

Deloitte)
evaluate the overall leadership skills of officers.

These practices were carried over to the United
States and applied to industry by a number of
forefathers including Hugo Munsterberg and
Walter Bingham. Munsterberg was a GermanAmerican psychologist acclaimed for his works
Vocation and Learning (1912) and Psychology
and Industrial Efficiency (1913) that advocated
hiring workers who had personalities and
mental abilities that best fit selected vocations.
Bingham is best known for his contributions to
personnel selection, interviewing techniques,
and psychological testing, including Aptitudes
and Aptitude Testing (1937).
Prehire assessment has been around in

various forms since the second
world war.
- Bersin by Deloitte, Deloitte Consulting LLP
The Prehire Assessment Primer (2012)
In the 1960s, assessments became more
popular with businesses. For example, the
works of Douglass Bray adapted multiple
assessment procedures to business
organizations and through his work,
Management Process Study (1964), he
documented the validity of psychological
assessment to predict management career
advancement. Over the past few decades,
employee assessments have continued to grow
in popularity and have been adapted to a
multitude of organizational and personal areas
of activity.
See Jenneret & Silzer, 1998, for an expanded discussion

on the history of psychological assessment for predicting fit
and performance
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Purpose of Pre-Hire Assessment
To Make Good Decisions, and

Avoid Bad Ones
Hiring new employees is a tricky business. Many

argue that employees are an organizations
most valuable asset, and that hiring mistakes
are very costly. We tend to agree. But, there are
demonstrated tools and techniques that can
help organizations identify good hires and avoid
bad onescollectively we call these pre-hire
assessments. Why dont more organizations use
them? Perhaps because most dont know the
answer to one fundamental question. What is
the purpose of pre-hire assessment? Typically it
is to make money. Let us explain.
Why Should an Organization

Use Pre-Hire Assessments?
Executives Who Fit (2009), estimated the net

cost of losing a CEO after 18 months at $12
million to $50 million in the United States. 4
The second reason most organizations use prehire assessments is to maintain or (even better)
improve workforce performance. The speed
and dynamic nature of todays business has
compressed the ramp-up time (i.e., the time
it takes a new hire to reach full productivity) for
employees at all levels. Organizations need new
hires to be productive immediately, oftentimes
just to maintain their current sales and margins.
To help improve sales and margins they need
more productive employees. One way to do this
is to use valid pre-hire assessments, so you can
predict likely performance before you hire.
There are two main reasons most organizations

use pre-hire assessments. The first is cost
avoidance. Most often the goal is to avoid the
costs associated with a bad hire, or replacement
costs. The direct financial costs for sourcing,
recruiting, onboarding, and training a new
employee can be upwards of 60% of the
positions compensation. However, the indirect
costs can be upwards of 200% of the positions
compensation. 3 Indirect costs include loss of
productive time as a new employee is sourced,
hired, and onboarded, but can also include
reduced sales, lost customers, and lower
employee morale and engagement. For
example, bad hires into customer service roles
can lead to erosion of customer confidence,
higher customer attrition, and lack of follow-on
sales. For senior level positions, the costs can
skyrocket. In a 2008 article in Chief Executive
magazine, Nat Stoddard and Claire Wyckoff,
authors of The Right Leader: Selecting
Take the following example. Internal metrics at

a consumer products company that sells luxury
goods confirm a strong association between
new product advertising/merchandising and the
respective products performance in the
market. Historically, the company annually
budgeted millions of dollars for advertising
agencies to develop compelling ad campaigns.
Although there is a significant payoff from this
investment, ad agency fees eat into product
margins. More recently, the company has
started to redirect funds that were traditionally
budgeted for ad agencies and instead is buying
talent (i.e., hiring for skills and fit) to vertically
integrate marketing capabilities for its tier two
products (these products are designed and
priced for a slightly broader market appeal than
the companys premier lines). To support tier
two performance, the company is leveraging
pre-hire assessments that measure creativity,
collaboration, and customer orientation, all
characteristics linked to advertising job
performance. Over half of the campaigns
staffed with these newly hired associates are
Allen, 2008 (presented by SHRM Foundation)
Stoddard & Wyckoff, 2008

5|P a g e
found to meet or beat the performance of

premier product lines in three key areas: time
to market, customer loyalty, and most
importantly, ROI on advertising dollars.
You dont have to just take our word on this.
Jac Fitz-enz, founder of the Saratoga Institute
(acquired by PwC in 2013), pioneered modern
human capital benchmarking and performance
assessment. Fitz-enz developed multiple
methods for measuring the value of human
capital, one of which he called HCROI. Through
research and examples, Fitz-enz demonstrated
the close relationship between human capital
and organizational productivity and
profitability. 5 Valid pre-hire assessments can
improve quality of hire, which directly links to
the HCROI measures that Fitz-enz developed.
So, if an organization is experiencing negative
impacts from employee turnover, is looking for
ways to improve workforce productivity, or
both, then pre-hire assessment is likely one of
the solutions it should be exploring.
Which Organizations Should

Use Pre-Hire Assessments?
Nearly every organization has the potential to

benefit from pre-hire assessments. But, for
some small organizations pre-hire assessments
may not make sense. This is not because
assessments are not effective for small
companies, but because the cost of the
assessment may exceed the potential benefit.
Organizations should use only validated pre-hire
assessments, and validation can be costly.
Validating for small and large organizations
costs about the same, but larger organizations
tend to hire more people, so they stand to
benefit more. This is why pre-hire assessments
may not make sense for small organizations.
every job, rather for the most critical and

riskiest ones. These are typically the positions
that have the greatest opportunity to impact
company performance, positively or negatively,
and positions that are key to effectively
executing an organizations business strategy.
Why? Again, this comes back to cost vs. benefit.
In most cases, identifying critical positions that
warrant the use of pre-hire assessments is
intuitive. Executives can have a large impact on
whether or not the business strategy is
executed successfully. Salespeople can have a
large impact on the attainment of revenue
targets, as can customer service personnel. But,
sometimes critical positions are not so intuitive.
For example, some workforce segments that do
not have big impacts on revenues or strategy
execution can still have big impacts on costs.
Those involved in the operation of heavy
equipment (e.g., airplane pilots or crane
operators), protection of the public (e.g., police
officers or food and water safety inspectors), or
health care delivery (e.g., doctors or nurses) can
create significant costs in the form of
equipment damage, property damage, or
personal injury if they perform poorly.
Another less intuitive example comes from
large homogeneous workforce segments. Retail
store associates are a great example of this.
While better service from any one store
associate may not make a big difference,
multiply better service over a store associate
workforce of 10,000 or 20,000 and you could
have a huge impact.
In summary, medium and large organizations
should consider using pre-hire assessments.
But, in most cases, they should only consider
using pre-hire assessments for critical, risky,
and large volume positions.
Even if a company is large enough, pre-hire

assessments should not necessarily be used for
5
Fitz-enz, 2009
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When Should a Pre-Hire

Assessment be Used?
Once the decision to use a pre-hire assessment

has been made (i.e., its determined that the
anticipated benefits outweigh the costs), the
next decision is when in the recruiting process
to use it. This should be based on applicant
volumes and whether the pre-hire assessment
is used to screen out vs. identify the best fit.
If applicant volumes are high, a screen-out
approach can be used early in the process,
specifically right after resume or application
submission. This can help the organization
minimize the time and money spent dealing
with applicants that are unlikely to get hired.
Using a pre-hire assessment at this stage also
can help reduce resume spamming as only
applicants with high enough interest in the job
are likely to complete the assessment.
Case in Point
Mountain States Health Alliance (MSHA) is a
locally owned and managed healthcare system
based in Tennessee. MSHA uses pre-hire
assessments to improve recruiting. During the
first eight months of the fiscal year starting July
1, 2010, the organization onboarded 1,105 new
hires. In preparation for the rapid pace of hiring,
HR leaders took a hard look at their recruiting
processes. In many cases, managers had
misjudged a candidates fit for a role, leading to
30 percent turnover among new hires in the
first 12 months. In an effort to reduce new-hire
attrition, HR leaders implemented a new
recruiting process, utilizing a pre-hire
assessment tool. The new assessment tool
saved them a great deal of time and resources
in the recruiting process. The 12-month
turnover rate among new hires was cut by a
halffrom 33 percent to 15 percentleading
to substantial savings in recruiting, onboarding,
and development costs.
If applicant volumes are low an organization

may benefit more from an identify-the-best-fit
approach to pre-hire assessments. Here, using
the pre-hire assessment later in the process,
before the last round of interviews, is likely
most effective. This is because at this point the
hiring organization and candidate are likely to
have established enough mutual interest to
invest in a more comprehensive and timeconsuming assessment. This also helps build
confidence that the organization has objectively
chosen a person who is the best fit for the job.
Roles that require substantial experience (e.g.,
senior leadership) or an extensive depth of
knowledge or education (e.g., research and
development) are banner examples of this.
Consider an R&D role for a Senior Research
Chemist at a diversified material sciences
company with end markets in military
applications, the automotive industry, and
extreme sports. The role requires an advanced
degree in chemistry or biochemistry with a
minimum of a thesis bearing masters degree or
a Ph.D.the latter strongly preferred. There are
likely to be few available candidates meeting
this criteria, allowing for better use of pre-hire
assessments towards the end of the review.
Given the scholarly aspects of the role, a
cognitive assessment focused on knowledge of
chemistry, statistics, and research methods may
be in order. Additionally, an assessment of
organizational fit for long-term independent
research and a security clearance for federal
contracts can be loaded on the tail-end of the
assessment process.
In summary, if applicant volumes are high
and/or the pre-hire assessment is being used in
a screen-out manner, consider using the
assessment early in the process. This can reduce
unnecessary time and money spent on poorly
qualified applicants. If applicant volumes are
low and/or the pre-hire assessment is being
used in an identify-the-best-fit manner, it may
be most effective to use it near the end of the
process.
7|P a g e
Using Pre-Hire Assessment

What Types of Pre-Hire
Assessments are there, and
Which One Should You Use?
There are a variety of different types of pre-hire

assessments. The Corporate Executive Board
conducted a global survey in 2013 to determine
assessment usage and found the most popular
assessments to be skill or knowledge tests (91%
usage), personality tests (84% usage), and
cognitive ability or general problem solving
tests (84% usage). 6 These assessments measure
job-related factors ranging from reading or
language abilities, math skills, or even the
ability to lift a certain amount of weight or type
a set number of words per minute. An effective
assessment is tied to the technical knowledge,
skills, abilities, and other characteristics (KSAOs)
for a specific role and can provide valid
inferences for performance outcomes.
We will define each of the assessment types
and discuss when they should be administered. 7
Skill/Knowledge Tests
A skills test evaluates an individuals level of

proficiency with performing a specific action,
whereas a knowledge test evaluates the
persons level of familiarity or understanding of
a given topic area. These assessments focus on
a persons depth of ability or knowledge.
Skill or knowledge assessments should be used
where there is a direct correlation between the
factor(s) being assessed and the factors impact
on the roles day-to-day performance. For
example, a stenographer may be required to
take a typing test prior to hire where the
6
7
Fallaw & Kantrowitz, 2013 (presented by CEB)
Also see Pulakos (2005), presented by SHRM Foundation,

for more coverage on selection assessment methods,
greater degree of typing speed and accuracy is

directly correlated to on-the-job performance.
Similarly, a candidate applying for a computer
help desk position may be required to pass a
computer knowledge test on the most common
problems the help desk experiences to
determine if they have the required baseline
computer understanding to perform the role.
These types of assessments may require
frequent updates if the role requirements
change regularly. Additionally, skill or
knowledge tests may not be as valuable for
roles where knowledge transfer can occur in a
short period of time.
Personality Assessments
These types of assessments measure a persons

work-related behavioral traits and attempt to
infer their role and/or cultural fit. For example,
an organization may feel that employees in its
sales roles may be more successful with
extraverted traits and may get along better with
the sales team if they have a competitive
mindset. An organization may also feel that its
customer service staff would need to have a
higher tolerance for frustration and the ability
to handle difficult customers patiently and
courteously. To measure these traits,
organizations may use a personality assessment
to determine the degree to which a candidate
exhibits each characteristic.
Personality assessments should be used when a
particular behavioral trait is highly desired for
the role and linked to on-the-job performance
and organizational fit. However, these types of
assessments rely on interpretation and should
be used in combination with other assessments
or inputs, rather than as a stand-alone when
making hiring decisions.
including their comparative validity, adverse impact, costs,
and applicant reactions
8|P a g e
selection process will help to filter out

candidates for high application volume
roles. Using pre-hire assessments later
in the selection process will allow the
assessment to provide added context to
information gained from interviews.
Cognitive Ability or General Problem

Solving Assessments
Cognitive testing assesses applicants aptitude

for learning, logical thinking, reading
comprehension, and other mental capabilities
that are required for success on the job.
Delivery Method Assessment

mediums will vary by type. Many can be
done online and remotely by the
candidate, but this may provide
opportunities for candidates to fake or
cheat (e.g., allowing candidates to have
someone else complete the assessment
on their behalf, or the inability to
control candidates' access to third party
information during the assessment).
Alternatively, onsite assessments may
require the employer to provide travel
costs, set aside a suitable testing
environment, monitor the test, or pay a
third party to manage the process.
Technology Integration Depending on

the type of assessment and how it is
configured, pre-hire assessment results
can be integrated into post-hire talent
management inputs for ongoing
development. The value of having an
integrated technology platform for
talent assessment depends on the
organizations overall pre and post-hire
talent strategy, the degree to which
talent is a key performance driver for
the business (versus proprietary
processes or technology), and the
organizations ability to transform data
into actionable insights.
For example, a candidate for a marketing

associate role may be presented with a
description of a product and asked a series of
multiple choice questions related to the role,
such as who would be the target audience for
the described product. Another example may
be the use of the Criteria Cognitive Aptitude
Test, a 15-minute assessment used to measure
an individuals ability to solve problems, learn
new skills, and think critically.
Cognitive ability or general problem solving
assessments tend to be used for roles that
require a greater degree of independent
decision making.
Administering Pre-Hire
Assessment
Pre-hire assessments can bring significant value

to employee selection efforts by directly tying
an individuals potential to success within a new
role and organizational culture. However, there
are a number of considerations that should be
taken into account for the administration of
pre-hire assessments.
Selection Process Integration

Considerations
One Assessment or Several The use

of a battery of assessments will provide
a more well-rounded view, but this
approach may add cost and time to the
selection process.
Early or Late in the Selection Process
Using pre-hire assessments early in the
Validity & Reliability Considerations
To ensure accuracy and legal compliance, prehire assessments must be valid and reliable.
Validity The assessment measures the

specific items that it targets and these
are linked to job performance
9|P a g e
Reliability The assessment results are

consistent when taken at different
times
In addition to these two factors, the process for

using pre-hire assessment should not be
discriminatory towards a specific group. For
example, using an assessment for one
candidate of a particular ethnicity or gender
and deciding not to use the same type of
assessment for a candidate of a different
ethnicity or gender who is applying for the same
role may falsely screen out qualified candidates
and lead to legal risk (see more on this topic in
the next section, Legal Challenges and Risks).
To control validity and reliability, organizations
should weigh their options for developing a prehire assessment versus licensing or using thirdparty assessments. Licensing or third-party
options can be a preferred choice because they
can save organizations the time and cost of
assessment development and validity testing.
Organizations should also be cautioned against
extensive customization that may undermine
the validity and reliability of assessments.
Pre-Hire Assessment Trends
In established economies, employers use of

pre-hire assessments is greater than post-hire
assessmentsand it is growing. As stated earlier,
skills/knowledge tests, personality tests, and
cognitive ability tests are the leading pre-hire
assessments used by companies. 8 In a 2013
study most respondents (90% or more)
reported that they used or planned to use
resume reviews, structured interview guides,
and/or background checks as part of their hiring
process. Furthermore, 80% reported using
application forms, pre-screen questions,
reference checks, and/or phone screens. By
comparison, 60% reported using assessments
for internal hiring (promotions included), but
only 38% had a structured promotion process in
place for their leaders. Almost a third of the
8
respondents did not have plans for using

assessments as a means to guide training and
development. 9
Usage of pre-hire assessments is also shifting
towards an off-the-shelf assessment delivery
model. This is likely primarily due to the costs
associated with developing a custom pre-hire
assessment and the cost of validation studies.
There may be less legal risk in using off-theshelf assessments from vendors that have
validation studies documented, but its
important for organizations to be careful with
this. The vendors validation evidence is likely
only for a specific knowledge, skill, ability, or
other domain. The burden for tying those
specific KSAOs to the position the pre-hire
assessment is to be used for still falls on the
organization.
Another common practice with pre-hire
assessments is to not share the results with
applicants, or else the process can become
compromised or seen as unfair. Generally, prehire assessment participants should only be
informed as to whether or not they are moving
forward in the process, unless otherwise
required by law. Note, several European
countries require that results be shared with
the assessment participants. That said, the
assessment process and any required
employment data (e.g., resumes, references,
etc.) should be explained in detail to each
applicant to prevent any ambiguity about what
is considered when making a hiring decision.
This, as well as any pre-hire assessment
development, methodology, and validation,
should be rigorously documented as a
precaution in case of any legal action.
Leading Practices
The utilization of pre-hire assessments is an

evolving field that will continue to change with
time and technological advances. Some leading
practices for administering and managing
9

10 | P a g e
assessments have been identified below.

However, the use of pre-hire assessments may
be considered a leading practice by itself.
Before an organization can effectively evolve its
assessment capabilities, it must establish
standardized assessment processes. This
typically means defining the purpose and order
of assessment activities, clarifying roles in the
process (i.e., who should be involved and why),
adhering to basic legal requirements, and
executing the process in the same way with
each candidate every time. To help enhance the
value of leveraging any formal pre-hire
assessments, the above foundational elements
should be in place. 10 The organization can then
turn its focus to maximizing that value by
applying the following leading practices.
Being Open and Upfront
When using pre-hire assessments do not shy

away from informing the candidate about the
nature and purpose of the assessment and how
it will impact their candidacy for a role. Let
them know what details will be shared with
them from the assessment outcome, if any, and
the privacy of any data collected. This, along
with other demonstrations of respect for the
applicant (e.g., procedural fairness), helps
promote positive applicant reactions to the
assessment process. In turn the candidate is
likely encouraged to more readily accept an
10
Bersin by Deloitte offers detailed maturity models covering

all stages of the talent lifecycle, from talent acquisition, to
talent management, through leadership development, and
succession management. Pre-hire assessment, and talent
assessment in general, are value drivers for each phase of
the talent lifecycle. The data enables analytics-based
insights about applicants and an organizations talent for
better decision-making in each phase.
offer of employment from the organization (if

presented), refer the employer to others,
refrain from potential legal action as a result of
the assessment process, and be a more
engaged employee if hired. 11
Using Multiple Assessments
Consider using a combination of

complementary pre-hire assessments. Multiple
assessments measuring different aspects of job
performance can increase the level of predictive
accuracy while reducing the reliance on any
single assessment. 12 For example, administering
a cognitive assessment alongside one or more
personality assessments that map to different
attributes (e.g., conscientiousness and
empathy), in addition to structured interviews,
work samples, and background checks, will yield
a more complete and accurate picture of the
candidatepresuming the assessment hurdles
are validated and relevant to the target job.
Fostering Talent Analytics
Data from pre-hire assessments can be

combined with data collected throughout the
talent management lifecycle to provide new
levels of insight on talent practices. The
integrated data can be analyzed to determine
trends and relationships that can provide
insight into the hiring process and its impacts
on broader business outcomes.
11
Hausknecht, 2004 (presented by Cornell University ILR

School); Bauer, McCarthy, Anderson, Truxillo, & Salgado,
2012 (presented by SIOP)
12
Handler & Lamoureux, 2012 (presented by Bersin by

Deloitte)
11 | P a g e
Legal Challenges and Resources

Good Intentions are Simply
Not Good Enough
Get Rid of Faulty Thinking
Fear operates as a natural self-protecting

mechanism, but it can also irrationally inhibit
participation in otherwise safe and
organizationally vital activities. Fear and
misunderstanding are what can keep many
employers from pursuing the demonstrated
benefits of well-designed and properly
administered pre-hire assessments. Incidentally,
inaction resulting from fear and
misunderstanding (especially of legal risks) may
lead to the very outcome employers aim to
avoidemployment discrimination.
It is true that the use of pre-hire assessments
can violate federal anti-discrimination laws if an
employer intentionally, or unintentionally, uses
such tools to discriminate based on race, color,
sex, national origin, religion, disability, or age. It
is also true that the potential benefits of prehire assessments can outweigh the costs to the
organization. No employer wants to suffer the
potential financial loss or the looming brand
damage associated with an employment
discrimination lawsuit. However, inaction is not
a safe harbor. Step 1 of 3 in getting rid of this
faulty thinking is to get smart on the
employment laws for your location.
The price of doing the same old thing is far
"The price
of doing the same old thing is
higher than the price of change."
13
far higher
than the price of change.
- William J. Clinton
Presidential Address to the Nation
(February 15, 1993)13
13
Office of the Federal Register, 1994
Step 1: Get Smart on Local

Employment Laws
Ignorance of the law is no excuse! In the US, the

Equal Employment Opportunity Commission
(EEOC) is responsible for investigating claims of
employment discrimination. The EEOC can also
file claims on behalf of impacted parties and
pursue monetary compensation for
employment discrimination. Although there are
multiple laws and amendments designed to
protect applicants and employees at all stages
of the employment lifecycle, the following four
laws have shaped much of the concern for
equal employment opportunity in the US, as
summarized below. 14
Civil Rights Act (CRA, 1964/1991)

The CRA defines two forms of employment
discriminationdisparate treatment and
disparate impact. The former refers to
intentional discrimination, while disparate (i.e.,
adverse) impact permits a claim to prevail
without showing that the employer intended to
discriminate (unless the assessment is
documented as a valid predictor of job
performance and it is a business necessity).
For example, administering a cognitive
assessment to all female applicants for an
aeronautical engineering job, and not screening
male applicants with the same assessment for
the given job, is a form of disparate treatment
(i.e., discrimination) based on sex. However, if
both female and male applicants received the
same cognitive assessment, but female
applicants (meeting the minimum job
qualifications) were determined to score
significantly lower than their male counterparts,
the assessment may be found to have disparate
impact for females. If the test is documented to
14
Heneman & Judge, 2006; US EEOC, n.d.; both sources

are references for all legislation highlighted in this section
12 | P a g e
successfully and necessarily indicate an

applicants future success in the job, then the
assessment is allowed (i.e., legal) even though it
has disparate impact on female applicants.
Equal Pay Act (EPA, 1963)
Many employers define salary ranges for their
jobs. The information gained through the prehire assessment process helps employers to
place a candidate in the low, middle, or high
end of the range. However, in the absence of
valid and reliable predictors of job
performance, employers are left to fill in the
blanks with a best guess. This can enable
personal biases to enter the hiring decision,
such as whether or not an otherwise qualified
woman is capable of doing as well of a job as a
man. Such biases may lead an employer to offer
a woman less pay than would be offered to a
man for equal or comparable work under the
same or similar conditions. The Equal Pay Act
provides protection against such behaviors. A
strong connection between the assessment
process and on-the-job performance helps
mitigate biased judgments and misguided pay
inequalities.
Age Discrimination in Employment Act
(ADEA, 1967)
The ADEA prohibits discrimination based on age
(40 and over) with respect to any term,
condition, or privilege of employment. For
example, employers may not select individuals
for hiring, promotion, or reductions in force in a
way that unlawfully discriminates on the basis
of age (an exception may be a character in a
film who is written as a young man or woman).
Americans with Disabilities Act (ADA, 1990)
Two issues most commonly focused on within
the ADA statute are: 1) Whether a test should
be administered prior to or after a conditional
offer of employment; and 2) The application of
reasonable accommodation in testing and
performance on the job. With respect to timing
15
Hawks-Ladd, 2007; also see EEOC, 2008
16
Hawks-Ladd, 2007
of tests, the primary concern is whether the

assessment can be viewed as a form of preemployment medical examination, which is
expressly prohibited by the ADA. 15 For example,
an applicant for a nurse role may be required to
take a psychological examination as part of the
assessment process. Impulse control and stress
management are possible areas of evaluation.
However, if the applicant has a mental disability
that may at times impair control of bodily
functions or emotional responses, the
psychological exam may inadvertently uncover
this impairment and be viewed as medical
examination. While a law enforcement position
may easily demonstrate the business necessity
(i.e., job relevance) of the aforementioned
performance areas, a hospital may be at greater
risk of employment discrimination under ADA,
especially if the exam is administered and
reviewed by a health care professional. 16
Regarding reasonable accommodation during
the pre-hire process, modifications to materials,
provision of readers and interpreters, allowance
of more time, and other similar adjustments are
deemed appropriate on a case by case basis. 17
For example, an applicant for a journalist
position at a major news outlet may be asked to
type a timed response to a randomly assigned
topic or prompt. If the applicant reveals he/she
has a physical disability in his non-dominant
hand that impairs the ability to type, the
employer may adjust the conditions of the test
by allowing the applicant to use his/her
dominant hand to write a response to the
prompt and extending the time allowance.
Step 2: Identify Legal Risks in the

Planned Assessment Process
The second step in helping dispel faulty thinking

about pre-hire assessments is to identify the
key risks associated with the organizations
assessment approach. Most of these risks
should tie back to the applicable anti17
Reiter, 2010 (presented by Cornell University ILR School)
13 | P a g e
discrimination laws. The following areas of

concern are just a few points for consideration.
Employers are encouraged to seek legal counsel
for additional guidance on any nuances or
specific mandates for their operating locations.
Invasion of Privacy
Privacy rights have a high degree of variability in
their content and application. Invasion of
privacy is an issue that is understandably raised
when job applicants are required to undergo
invasive testing. The most commonly
challenged type of testing is drug testing, but
medical examinations and clinical personality
tests can raise privacy issues as well.
Use of Third Parties
If the hiring organization uses an external
screening service or recruitment agency, it is
important to clarify how their services fit into
the overall assessment processes, standards,
and legal guidelines. Seek to understand
whether the business is conducting part or all of
the checks for each applicant. Where a third
party is being asked to make judgments, check
that these follow agreed upon decision-making
guidelines. However, it is ultimately the
responsibility of the employer to make any final
decisions that will impact its business.
employment decisions. At a minimum, the

organizations legal counsel and head of HR
should be able to confidently and favorably
answer these questions. Hiring managers and
any others involved in the assessment process
should be made aware of these answers. The
alternative can put the organization at
significant risk if there is ever legal action as a
result of the candidate experience.
Case in Point
In 2005 and 2006, the Office of Federal Contract
Compliance Programs (OFCCP) performed a
review of Perdue Chicken's employment
practices as a result of a discrimination claim.
The OFCCP found that Perdue failed to properly
document its hiring and assessment processes,
resulting in a payout of $800,000 in back wages
and interest to 750 discriminated women and
minorities. Although Perdue maintains the
fairness of its employment practices during the
period in question, the fact remains that the
company lacked sufficient documentation to
adequately defend its assessment process or
hiring decisions. 18
Interesting Fact
Poor or Outdated Documentation Practices

Where are the policies and procedures for the
assessment process stored? Of course this
assumes they even exist. What about
documentation that explains why the process is
the way it is, or that demonstrates the
effectiveness of the current assessment and
selection process? What happens to interviewer
notes or the final consolidated review of a
candidate and his/her qualifications after the
assessment is done? How long is this material
kept on record? All of these questions touch on
the due diligence of the organization to
properly document, store, and make accessible
the information that protects an organizations
The number of discrimination charges in the US

that raised issues of employment testing, and
exclusions based on criminal background
checks, credit reports, and other selection
procedures, reached a high point in 2007 at 304
charges. 19 Even though this is a substantial
increase from prior years, it may be considered
insignificant given there are about 55 million
hires per year in the US. 20
18
As cited in DiBianca, 2008
20
19
US EEOC, 2010
While the number of discrimination charges as

a percent of hires is extremely low, the costs
associated with being charged can vary.
US Department of Labor, Bureau of Labor Statistics [BLS],
2014
14 | P a g e
In 2011, Kate Williams conducted a study which

analyzed the data provided by the Bureau of
National Affairs on the nature and outcome of
legal proceedings involving the EEOC and the
OFCCP. 21 A total of 224 complaints were
identified out of which 109 were settled out of
court and 78 went to trial. The complaints cover
a span of 12 years, for an average of 19 cases
per year. The study reveals the following
findings:
Law Suit Stats
Selection Measures:
Of the 52 complaints about a selection

instrument, slightly more than half (52%)
were settled before trial.
Interviews:
No cases involving complaints about

interviews were settled out of court. For
complaints over interviews, 13% of the
structured types and 50% of the unstructured
types were ruled discriminatory.
Testing:
Cases that are settled for the plaintiff almost

always relate to a failure to demonstrate the
job relatedness of a test that demonstrates
adverse impact.
the plaintiff cost organizations an average of

$13,306,346.
This data shows that settling out of court
tends to be a much cheaper option for an
organization when faced with a challenge to a
selection process or tool.
Step 3: Implement Actions to Mitigate

Potential Negative Impacts
Applying UGESP Guidelines on Validity

Originally published in 1978, the Uniform
Guidelines on Employee Selection Procedures
(UGESP) provides guidance for employers on
how to determine if employment tests and
selection procedures are lawful. 22 UGESP
outlines three different ways employers can
show their employment tests and other
selection criteria are job related and consistent
with business necessity:
1. Criterion Validity - The degree to which a
test has been shown to be predictive of
actual job performance
2.
Content Validity - The degree to which the

content of a test represents the content of
the job
3.
Construct Validity - The degree to which a

test measures specific psychological
attributes (e.g., confidence, intelligence,
etc.) related to job performance
Process Issues:
While selection devices are a common source

of litigation, this study shows the legality of
the selection process is a much more
important factor. A whopping 91% of all
inconsistent process cases were found to be
discriminatory.
Cost of Discrimination Claims:
Settling out of court resulted in average fees

per case of $590,266 for EEOC cases,
$668,785 for OFCCP cases, and $12,292,492
for individual plaintiffs. In comparison, cases
that went to trial and were found in favor of
21
As cited in Handler, 2011
Tying Assessment Strategy to Business

Objectives
Confirm short, mid, and long-term business
objectives with leadership, then identify key
capabilities required to support and drive that
agenda. Determine whether those capabilities
already exist within the organization, then
evaluate the options for closing any gaps (e.g.,
build/develop, buy/recruit, or lease/contract
the talent). If talent is to be sourced externally,
you have just established a clear line of sight for
what you need and why you need it. The next
22
Uniform Guidelines on Employee Selection Procedures,

2014
15 | P a g e
steps are to identify who has the capabilities

and how you intend to actually attract and
assess the target audience.
Checking for Invasion of Privacy:
Before conducting any selection tests the
employer should ask the following questions
regarding invasion of privacy:
1. Would a reasonable person consider any
part of the selection process or tool to be
an inappropriate probe into personal
matters that are not job related? If not,
reconfirm with a test population that is
similar to the target population. If yes, see
the next question below.
2.
Is there legally defensible justification for

the invasive practice? If not, change the
process or tool. If yes, still consider the next
question below.
3.
Is there a less invasive alternative available

for use that can produce a comparable
result? If yes, consider using the alternative!
If not, prepare candidates in advance of the
assessment for the nature of the process
and clearly explain how the candidates
personal information will be used and
protected.
Checking for Disparate Impact:

Before conducting any selection tests the
employer should ask the following questions
regarding disparate impact:
1. Is there a particular employment practice
that has a disproportionate adverse effect
on the members of a race, color, religion,
sex, or national origin? If not, reconfirm
with legal counsel. If yes, see the next
question below.
2.
Can it be shown that the selection

procedure is job related and consistent with
business necessity? If not, change the
process or tool. If yes, still consider the next
question below.
3.
Is there a less discriminatory alternative

available with comparable validity that can
be used? If yes, consider using the
alternative! If not, focus on delivering a
positive candidate experience and keep
supporting legal documentation for the
assessment process or tool safely stored
away.
Wrap Up on Legal
When it comes to pre-hire assessment, good

intentions are simply not good enough since
there is still a risk of unintentional adverse
impacts. We often hear that employers opt to
forego the implementation of a more rigorous,
and potentially more predictive, pre-hire
assessment process and tools due to fear and
misunderstanding of the legal implications
involved. There is always some level of risk in
doing business. However, the chance of being
charged with an employment discrimination
complaint is relatively slim, making the decision
to employ pre-hire assessments a calculated
and sound business decision, especially when
applying validated, documented, and necessary
business practices. Employers can further help
protect their interests and eliminate faulty
assumptions when considering a more robust
pre-hire assessment process by reviewing the
three steps below:
1. Get smart on local employment laws
2.
Identify legal risks in the planned

assessment process
3.
Implement actions to mitigate any

negative legal risks
Refer to the Uniform Guidelines on Employee

Selection Procedures for further direction on
navigating legal concerns.
16 | P a g e
Overview of the Pre-Hire Market

The Baby Elephant in the
Room
Market Size
The global market for pre-hire assessment has

been estimated to be $2B with a 7% growth
rate. 23 Some more conservative estimates size
the market closer to $1B. 24 Regardless of the
direction you lean, we cant help but notice a
baby elephant moving in the room. With just
over 55 million hires per year in the US, and
growing, employers are increasingly challenged
to identify means for efficiently and confidently
selecting the right talent for the right roles. 25
This issue is further compounded during periods
of widespread unemployment, such as the
2007-2009 recession, when employers are
inundated with applicants. Why is this apparent
need so easily overlooked? Simply put, the baby
elephant (i.e., the pre-hire market), has not fully
matured and there is larger game in town.
"fewer than 40% of organizations

[surveyed] use pre-hire assessment for
new hires."
- Josh Bersin (2013)26
fewer than 40% of organizations use pre-hire
assessment for new hires. 26
Types of Assessment Providers
Vendors for pre-hire assessment services can

generally be categorized in at least one of three
major buckets: content providers, solution
23
Bisbee, Hansen, & Kim, 2014, pp.14-15 (presented by

RBC Capital Markets)
24
Bersin, 2013; John Wiley & Sons, 2014
25
BLS, 2014
providers, or data collectors. Content providers

tend to focus attention on test development
and validation. They identify the criteria needed
to assess specific performance dimensions and
personal characteristics then develop methods
to measure those items. Solution providers are
often more descriptively referred to as software
or technology vendors within the pre-hire
assessment space. They primarily create the
delivery platforms for assessment content, but
some also cross over into content development.
Finally, data collectors are typically companies
that leverage assessment content or technology
to source information about a candidate or
target group. This work is often fee-based, such
as the case with pre-employment drug
screening and background checks. However,
this work may also be completed independently
for the purpose of building a database of prescreened candidates or benchmarking data,
such as with career websites, executive search
firms, and member-based advisory companies.
These categories account for a handful of visible

players and hundreds of boutique companies
serving niches in the market for specific
industries, job types, talent segments, and
geographies. Subgroups of pre-hire assessment
service providers may also operate as resellers
and/or brokers of content and solutions from
other providers, which can be observed in the
consulting services industry (consulting firms
may also develop customized assessment
content and solutions for clients, whereby the
consideration for legal risks should be revisited).
The fragmented status of vendors in the prehire market is likely in part due to the evolving
HR technology space and cloud services,
enabling varied assessment services and giving
smaller players the scale needed to support
26
Bersin, 2013, para. 10; also see Fallaw & Kantrowitz, 2013
(presented by CEB); SIOP, n.d. (see under How Many US
Companies Use Employment Tests?)
17 | P a g e
larger clients. In addition, the particular

environments in which assessments are applied,
covering the scope of niche markets previously
noted, enables for ample opportunities for new
vendors to develop and deploy assessment
content, solutions, and data with a narrow field
of application.
ADP
Assess Systems
Caliper
Corporate Executive Board
CPP
Criteria Corp.
DDI
First Advantage 28
HireRight
Hogan Assessment Systems
Infor 29
IntelliCorp
Kenexa (IBM) 30
Logi-Serve
Oracle 31
PAN
PDI Ninth House
(Korn/Ferry) 32
Profiles International
(Wiley) 33
Prometric (ETS) 34
Select International
TalentWise
Wonderlic
Vendor Pricing
Although the cost of an assessment can largely
depend on the assessment type and the
expected volume of hires/participants, publicly
available data shows a range starting at $8 per
assessment and upwards of $50 or more,
excluding any one-time setup fees and annual
licensing fees. 27 Our research reveals an
average expected cost per assessment of $20.
Visible Players in the Market
Bersin by Deloitte maintains profiles on over

100 providers in the pre-hire assessment space,
which are available to subscribers of the
WhatWorks membership program (for more
information about Bersin by Deloitte services,
visit http://www.bersin.com/membership). The
list of assessment vendors below is a sample of
approximately 20 players with high visibility in
the market. The list includes content providers,
solution providers, and data collectors, with
most of the providers offering services in more
than one category. This list is not intended to be
an endorsement of any provider shown, but
rather a quick view to facilitate awareness.
27
Grameen Foundation, 2013; Rafter, 2009; RightHire, 2014
28
First Advantage, a subsidiary of Symphony Technology

Group (STG), acquired LexisNexis people screening
business in 2013
29
Infor acquired PeopleAnswers in 2014
30
Kenexa was acquired by IBM in 2012
31
Oracle acquired Taleo in 2012, but only maintains the

Taleo brand as a cloud software service
Data
Solution
Provider
Content
Sample List of Assessment Providers
Vendor Selection Criteria
With so many assessment providers to choose

from, what factors can help identify the right
vendor for the given need? The following
vendor selection criteria is distilled from several
sources and is primarily focused on
solution/technology providers with some
applicability to content providers. 35 Although no
set of vendor selection criteria is universal,
32
PDI Ninth House was acquired by Korn/Ferry in 2013
33
Profiles International was acquired by Wiley in 2014
34
Prometric was acquired by Educational Testing Services

(ETS) in 2007
35
Baynes & Kinney, 2010; Handler, 2013; Jones, 2014

(presented by Bersin by Deloitte); RightHire, 2014; SIOP,
n.d. (see under Information to Consider When Creating or
Purchasing an Employment Test)
18 | P a g e
there is general agreement on six core areas of

interest for companies exploring the market:
1. Evidence of Predictability
Research-based content/tool
Legal defensibility (especially criterion validity
and business necessity)
Control for candidate faking/cheating
2. Ease of Implementation
Setup time and resource needs
Ability to tailor content/tool without
impacting validity
Product road map and process for upgrades
or replacements
3. Ease of Administration
Product/service scalability
Data management and reporting capabilities
(pre-defined and ad-hoc)
Integration with other HR systems and
processes (e.g., applicant tracking, talent
management, and development)
4. Cost of Product/Service
Transparency and simplicity of costs

Demonstrated return on investment
Competitive rates based on similar products
or services in the market
5. Vendor Service Orientation
Training resources
Technical support and accessibility
Business partnership, including staff size and
objectives and to account for areas of interest

not already covered. A rating scale should then
be developed to guide the rating/scoring for
each category, allowing for ease of comparison
across multiple vendors.
Deloittes Pre-Hire
Assessment Services
Deloittes Talent Acquisition and Employee

Assessment Service Offering Teams can help
clients tailor a pre-hire assessment vendor
selection process to their organizations
broader business objectives and overall talent
assessment strategy. Furthermore, Deloitte can
assist with identifying and evaluating potential
vendors, then lead the implementation of a
strategically aligned and legally defensible
assessment solution.
With regard to administering assessments,
Deloitte does not operate in the space of
developing and validating pre-hire assessment
content, nor is it an assessment solution (i.e.,
technology) provider, or data collector. We
offer services in three areas that enable the
administration of assessments:
1. Identification of jobs that tend to
benefit most from the use of
assessments
2.
Overall design of the assessment

process to enhance hiring decisions and
help maximize the organizations return
on investment in the process
3.
Integration of the components of prehire assessment with other talent

processes to build a holistic view of an
organizations talent and capabilities
flexibility
6. Vendor Experience/History
Knowledge of client industry, talent and job
domains, and markets of operation
Length of time in business (i.e., stability)

Business reputation, including current and
past lawsuits
To create an actual vendor selection tool from

the above criteria, weights may be applied to
each of the categories in accordance with the
organizations needs. Additional criteria can be
added as appropriate to align with strategic
Please refer to the key contacts on the next

page for further information on, or client
service assistance with, any of the
aforementioned offerings.
19 | P a g e
Key Contacts
Josh Bersin
Principal
Bersin by Deloitte
Deloitte Consulting LLP
jbersin@deloitte.com
Nathan Sloan
Principal
National Talent Strategies Lead
nsloan@deloitte.com
CorDell Larkin
Senior Manager
Employee Assessment Service Offering Lead
corlarkin@deloitte.com
Adrien Green
Senior Consultant
Employee Assessment Service Offering Deputy
adgreen@deloitte.com
Contributors
Zack Toof
Senior Consultant
ztoof@deloitte.com
Ishita Gupta
Consultant
isgupta@deloitte.com
Rahat Dhir
Analyst
rdhir@deloitte.com
Jeremy Dunn
Analyst
jerdunn@deloitte.com
20 | P a g e
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