EMPLOYERS lose $40 billion to $50 billion a year in stolen merchandise and cash register money, says Dan Dalton, a management professor at Indiana University.
Thirty-eight percent of this is taken by dishonest employees rather than shoplifters, according to a National Retail Federation survey. In addition, billions of dollars are lost on unreliable employees - those with unproductive behavior, high absenteeism, or who leave or are fired after a short time on the job.
To beat these problems, more than 5,000 United States firms turn to "integrity" or "honesty" tests to weed out undesirable job applicants. Between 2.5 million and 5 million pen-and-pencil tests are administered each year to screen prospective hires.
Though these written tests have been on the market for decades, use has boomed since 1988, when Congress declared the polygraph (lie detector) test illegal, says George Paajanen, vice president of PDI, a human resources consulting firm in Minneapolis.
Dr. Paajanen criticizes vendors of such tests, saying they "expect dishonest people to take this test and answer it honestly."
Gerald Borofsky, president and founder of Boston's Bay State Psychological Associates Inc., another consulting firm, agrees. He says firms have marketed these tests for 25 years, trying to convince employers that honesty is quantifiable, but it is not.
The tests examine a person's attitudes toward theft, as well as past activities. The results are used to predict future behavior. But "nothing suggests that we will continue to do what we have done in the past, especially if it is a questionable activity," Professor Dalton says.
Honesty tests are illegal in two states, Massachusetts and Rhode Island, and legislatures in other states are considering the issue.
Many businesses nationwide are using an alternative form of pre-employment test that tries to determine a person's potential productivity, job commitment, and dependability. These tests explore a person's background, opinions, and attitudes.
One such exam, PDI's Employment Inventory (EI) test, includes three sections of questions. Some examples of true-false questions:
* "At this time in your life, a job is a job, not a career."
* "You get up early in the morning even on the days you don't go to work or school."
* "You are more sensible than adventurous."
Different employee traits will be important to different industries. In the hotel or food industry, customer service is key. For a nuclear operating plant, dependability and attention to details is essential. Tests can be geared to the needs of the company by adjusting the weight given to various sections of the test.
Testing can produce a big savings, says Paajanen of PDI, which specializes in tests for managerial posts. One nationwide retailer which uses PDI's EI test went from a 9.5 percent to a 4.5 percent annual firing rate.
"Tests should never be used for making the hiring decision by themselves," Dr. Borofsky warns. "The strength of the test is that they offer an objective assessment of a person. The interview and reference check are still very important parts of the decision."
Dalton cautions: "The difficulty with any instrument that measures attitudes is that there is a difference between attitudes and behavior."
TESTS that attempt to measure integrity pose particular challenges. "These tests can tell prior propensities, but that is all. An admission of stealing when we were 16 is an admission of honesty - not guilt," says Dalton, author of a study on integrity tests to appear in the Journal on Law and Public Policy. "I do not believe there is a Pinocchio prognosticator."
"A cynical but honest person could fail the test simply by answering questions in such a way that showed they believed the majority of people stole from the company," says Paul Sackett of the University of Minnesota.
A 1990 inquiry by the Office of Technology Assessment, a research arm of Congress, said there is not enough data to determine if honesty tests are valid. Some experts criticized the OTA study for flawed methods and possible political influence in reaching its inconclusive verdict.
"The best employers can do is ask tough, hard questions of test developers on validity, research, and accuracy," Borofsky says.