Transcript Si Lamm American Tescor-Hire your Way to Lower costs

Hire your Way to Higher Earnings
With Pre-Employment Screening
Presented by:
Si Lamm CPCU, Managing Director
American Tescor LLC, a division of Merchants Information Solutions, Inc.
Screening Tools Used by
Fortune 1000
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Criminal Records Checks
Employment Verification
Drug Screening
Education Verification
Verification of Professional Licenses
MVR Checks
Credit History
Integrity Testing
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88%
86%
78%
74%
59%
50%
39%
7%
Background Information
American Tescor, LLC
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Founded - 1979 by Dr. Peter Bullard
Headquarters – Phoenix, Arizona
Service Area – North America
Testing Volume – 40,000+ Applicants Weekly
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Tescor’s Electronic Behavioral
Assessment
• 73 Questions about Theft, Drug Abuse, Violence &
Lying.
• Identifies Applicants with “Entitlement Mentality”.
• 5th Grade Reading Level. Takes 20 Minutes.
Confidential
Tescor’s Electronic Behavioral
Assessment
• English plus 21 Foreign Language Versions. Audio
Versions in English & Spanish.
• In Compliance with all State and Federal Hiring
Guidelines.
• All Electronic Screening & Immediate Results 24/7/365
with/without Internet.
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Benefits of Tescor Screening
The Tescor Survey has proven to be a powerful tool in improving
productivity, employee morale, and earnings. This is
accomplished by Reducing:
Turnover
Employee Theft (Shrinkage)
Workplace Violence
Negligent Hiring Suits
Disciplinary Actions
Terminations for Cause
Unemployment Insurance
FMLA Utilization
Sick Leave Utilization
EAP Utilization
Workers’ Comp Losses
STD Losses
LTD Losses
Group Medical Costs
Auto Liability
EPL Claims
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Measuring Tescor’s Impact In
Reducing Workers’ Comp Losses
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Controlled studies cover over 428,000 workers
Time Frame – 1996 to 2009
# of Companies In Studies – 17
Average Claim Frequency Reduction – 54%
Average Claim Severity Reduction – 21%
Overall Average Loss Rate Reduction – 63%
Tescor Produced
A 15% Improvement in Turnover
Data From A National Rental Company
Study Period-24 Months
Table 1.
Status
Total Workers
Terminated
Active
Turnover
Tescor Screened
Workers
2,213
1,185
1,026
54%
Unscreened
Workers
599
373
226
62%
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Tescor’s Effect on Unemployment
Tescor Produced 87% Fewer Unemployment Claims & 89% Less Expensive Claims.
• National Rental Company
• Unemployment Claims Study Period 24 Months
Screening
Status
No. of
Workers
Claim
Frequency
No. of Claims
Total Claims
Cost
Average
Claim Cost
Unscreened
“Veterans”
6,347
3.43%
221
$469,658
$2,125
New Hires
With Tescor
2,213
0.45%
10
$2,037
$231
Totals
8,650
231
$471,965
Difference
87%
Confidential
89%
Short Term Disability (STD)
Study Period 12 Months
STD Claims Per 100 Employees
7.3
8
7.5
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6.5
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5.5
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
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5.2
Unscreened Workers
Tescor Screened Workers
In the study, 6,800 applicants were screened with the Tescor
Survey. The Unscreened group had a claim frequency rate 40%
higher than the Tescor Screened group.
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Sample Industries Served By
American Tescor
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Hospitality –Huntington Hotel Group, Hospitality Management Corp
Food Processors – National Beef
Car Rental Agencies - Hertz
Long-Term Care – Kisco, Delta Healthcare, AccentCare
Commercial Laundries – American Linen Supply (ALSCO)
Staffing – TrueBlue, Inc., Joulé Staffing Services
Transportation – KKW Trucking
Manufacturers & Assemblers – Technicolor, Thor Industries
Retail & Distribution – U-Haul, Johnstone Supply, Weis Markets
Building Maintenance and Security – Levy Security, Pacific Building Care,
American Building Maintenance
• Oil & Gas – Precision Drilling, Diamond Offshore
• Construction-Jaynes Corp, CLP Resources, Eplica Corp Cajun Industries
Confidential
Electronic Delivery Systems
Tescor on the Internet
All Tescor systems provide instant results.
Confidential
Internet: HR Magnet
Sample Results
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Tescor Scales
Theft Scale
Sample Question:
Excluding minor office supplies (pads, pens, etc.),
what would you guess is the value of things you
have secretly taken from work in the past 2 years?
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B.
C.
D.
None
$5 - $25
$26 - $500
$501 or more
– Serious and recent theft only.
– Excludes all amounts below $5.
Confidential
Drug and Alcohol Scale
Sample Question:
Excluding pills you got from a doctor (prescriptions),
which of the following drugs do you use?
A.
B.
C.
D.
Cocaine, Coke, Snow, Crack
LSD, Acid, Mescaline, Peyote
Heroin, Opium
None
– Only “current use” drug inquiries.
– Only job-related alcohol inquiries.
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Hostility/Violence Scale
Sample Question:
Suppose you were insulted. Would you hit the
person who insulted you?
A. Definitely would not
B. Probably would not
C. Probably would
D. Definitely would
– Hostile individuals often interview well.
– Hostility often comes out in hidden ways.
– 99% of all applicants pass this scale.
Confidential
Faking Scale
Sample Question:
Since age 16, how often have you told a lie?
A.
B.
C.
D.
Frequently
Occasionally
Rarely
Never
– More than 90% of all applicants pass this scale.
Confidential
The Science Behind Tescor
Individuals engaging in aberrant behaviors
tend to rationalize their behaviors as normal.
Otherwise, they suffer from “cognitive
dissonance,” an anxiety provoking state
where one’s behaviors are in conflict with
their values.
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Scoring the Tescor Survey
An individual who scores HIGH in any risk category
(Theft, Drugs, Faking and/or Hostility) is considered a
NONQUALIFIED applicant.
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Validation Research
National Sample - 1,152,358 Applicants
Overall Risk
Score
High
Moderate
Low
Totals
Number of Applicants
356,371
195,873
600,114
1,152,358
Confidential
Percent of Applicants
31%
17%
52%
100%
Passing Rates for
Theft Scale
Score
High
Low
Totals
Number of Applicants
199,579
952,779
1,152,358
Confidential
Percent of Applicants
17%
83%
100%
Passing Rates for
Drug Scale
Score
High
Low
Totals
Number of Applicants
150,610
1,001,748
1,152,358
Confidential
Percent of Applicants
13%
87%
100%
Passing Rates for
Hostility Scale
Score
High
Moderate
Low
Totals
Number of Applicants
18,987
75,734
1,057,637
1,152,358
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Percent of Applicants
1%
7%
92%
100%
Passing Rates for
Faking Scale
Score
High
Moderate
Low
Totals
Number of Applicants
84,597
193,158
876,609
1,152,358
Confidential
Percent of Applicants
7%
17%
76%
100%
Theft Behaviors
Would Fake Time Card if Never Checked
Would Knowingly Buy Stolen Merchandise
Would Give Friend Unauthorized Discount
Would Steal if Had Low Pay
Would Steal if Had Opportunity
Would Steal if Angry
Would Help Friend Steal
Shoplifted in Past Year
0%
1%
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2%
3%
4%
Drug Admissions
Valium
Amphetamines
Morphine
Opium
LSD
Cocaine
PCP
Inhalants
Hashish
Sedatives
Methamphetamine
Hallucinogens
0.00%
0.20%
0.40%
0.60%
0.80%
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1.00%
1.20%
1.40%
1.60%
1.80%
Drug and Alcohol Use
Used drugs in past 3 weeks
Alcohol impairs work
Drinks at work
Drugs impair work
Arrives under effect of substances
Would fail urinalysis
Pot at work
Regular drug use
0.00%
1.50%
Confidential
3.00%
4.50%
Comparing Screening Tools
Criminal Background Checks
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Only convictions are reported.
Limited in geographic scope – by county or state.
Not all states have statewide databases
There are 3,380 counties in U.S.
25 states have automated less than 60% of their felony
convictions.
• Most employee theft is never caught or reported.
• Identity theft will not be caught.
• Capture Rate: 6%
Cost: $25 to $150.
Confidential
Comparing Screening Tools
Urinalysis Limitations
• Most drugs (except marijuana) clear a user’s system in less
than 72 hours.
• Web sites like “urineluck.com” sell clean powdered urine
with 200% guarantee.
• Subject to legal challenges through faulty lab work, sample
mix-ups, or chain of custody.
• Capture Rate: 5%
Cost: $10 to $50
Confidential
False Negative Study
Midwest Based Staffing Company
Study Background
This Midwest based staffing company primarily
serves the light industrial sector. They conducted
urinalysis screening on all applicants who passed the
Tescor Survey. All those who passed the urinalysis
were then subject to criminal background checks.
Confidential
False Negative Study
Midwest Based Staffing Company
Study Period: 24 months
25,003 Workers Screened by Tescor
19,901 Workers Passed Tescor
80% Tescor Passing Rate
– Prior to implementing Tescor 5% Failed Urinalysis and
– 5% Failed for Adverse Background Check
After Implementing Tescor:
142 (.7%)
Passed Tescor and Failed Urinalysis
59 (.3%)
Passed Tescor and Failed Background Check
201 (1%)
Total Tescor False Negatives
Confidential
The Cost of High Risk
Employees
• Thirty-eight percent to 50% of all workers’ compensation
claims are related to the abuse of alcohol or drugs in the
workplace.
-U.S. Department of Labor
• Drug-using employees are five times more likely to file a
workers’ compensation claim.
-National Institute on Drug Abuse
• Drug and alcohol abuse in the workplace cause 65% of
on-the-job accidents.
-Department of Labor
Confidential
The Cost of High Risk
Employees Cont.
• Studies show that alcohol and other drug users use three
times as many sick days.
-National Council on Alcoholism & Drug Dependence
• Drug users are absent from work an average of five days
per month due to drug use.
-U.S. Department of Labor
• Substance abusers are 10 times more likely to steal from
the company or from other employees.
-U.S. Department of Labor
Confidential
The Cost of High Risk
Employees Cont.
The U.S. Department of Commerce reported
that the annual losses generated by poor hires,
absenteeism, drug abuse and theft amount to
$75 billion per year; and 30% of business
failures are due to poor hiring practices.
Confidential
Legal Compliance
• Tescor has been “litigation free” throughout 30+ year
history.
• Screening tools must be either validated or nondiscriminatory – Tescor is both.
• Federal and State guidelines require protected
classes to pass at a rate that is 80% or better,
compared to the relevant class.
Confidential
Passing Rates of
Protected Classes
By Race, Sex and Age
White
80% Rule
Non-White
Male
80% Rule
Female
Under 40
80% Rule
Over 40
0.0%
20.0% Rate (percent)
40.0%
Passing
Confidential
60.0%
80.0%
Tescor’s Effects on
Workers’ Compensation
Common Denominators
In Expensive Comp Claims
• History of Absenteeism
• History of Disciplinary Action
• History of Prior Claims
• History of Drug Abuse
Confidential
Cornell University Findings
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Screened employees are less likely to file a claim.
The screened employees’ average claim was smaller than the
average claim filed by an unscreened employee.
The screened employees’ claim variance was smaller than the
unscreened employees’ claim variance.
The average claim cost of all screened employees is less than
average claim cost of all unscreened employees.
The screened employees are less likely to file large claims (i.e.,
> $2000) than unscreened employees.
Confidential
Overall Projected Workers’
Comp Loss Reduction
Turnover
5%
10%
20%
25%
33%
50%
75%
100%
200%
300%
400%
Year 1
2%
5%
8%
10%
12%
17%
21%
25%
33%
38%
40%
Year 2
5%
9%
17%
20%
25%
33%
43%
50%
50%
50%
50%
Year 3
7%
14%
25%
30%
37%
50%
50%
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Year 4
10%
18%
33%
40%
50%
Year 5
12%
23%
42%
50%
Year 6
14%
27%
50%
The Essence of Business
“The first duty of business is to
survive and the guiding
principle of business
economics is not the
maximization of profit – it is
the avoidance of loss.”
-Peter Drucker
Confidential
Hiring the Right People
"In looking for people to hire, you look for three qualities:
integrity, intelligence, and energy. And if they don't have the
first, the other two will kill you.”
- Warren Buffet
Confidential
Tescor Screening Improves
Earnings, Safety & Productivity
• Tescor Electronic Screening:
• Highly Effective
• Easy to Administer
• Generates Very High ROIs
Confidential
Tescor’s integrity test is a highly effective tool in reducing the costs associated with employees’ high
risk behaviors.
After using the Tescor Survey for a two year period, we conducted a comp benchmarking study for our
California operations. Our projected saving was more than $10,000,000 in direct cost alone and
greater than a 20 to 1 ROI.
Using Tescor’s screening on new job applicants allows us to hire a higher quality employee which also
means less turnover, employee theft, and hostile incidents in the workplace.
Chris Burger
Director of Operations
Pacesetter Personnel Services
Confidential
Workers’ Compensation
24 Month Study of Skilled & Unskilled Labor: Results Based on Incurred Losses
Claim
Total
Average
Screening
No. of
No. of
Frequency per
Incurred
Incurred
Status
Employees Claims
100 workers
Losses
Claim Cost
Non-Tescor
26,595
846
3.2%
$5,578,805
$6,594
Tescor
97,437
1652
1.7%
$9,933,722
$6,013
Total
124,032
2498
% Difference
46.9%
9%
The Tescor Group’s frequency was 47% lower.
The Tescor Group’s severity was 9% lower.
24 Month Study of Skilled & Unskilled Labor: Projected Savings Based on Incurred Losses.
Screening
No. of
Status
Employees
Without
Tescor
Tescor
Difference
No. of
Claims
Claim
Frequency per
100 workers
Average
Incurred
Claim Cost
Total
Incurred
Losses
97,437
3,118
3.2%
$6,594 $20,560,989
97,437
1,652
1.7%
$6,013
The combined savings was 52% on an Incurred basis.
Confidential
$9,933,722
$10,627,267
Percentage
100.0%
48.3%
51.7%
The Cost of Loss
On average INDIRECT costs outweigh the DIRECT costs
by a 4:1 ratio.
Direct Costs (Hard Costs)
• Medical Treatment
• Compensation
• Legal Cost
Indirect Cost (Soft Costs from Cash)
• Time for Completing Reports
• Loss of Productivity
• Missed Schedules
• Seeking Medical Treatment
• Paid Time for Treatment
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Investigation Time
Increased Work for Others
Loss of Worker
Cost of Replacement
Confidential
Workers’ Compensation
Closed Claim Study
Study Period 48 Months
Worker Status
Unscreened
Tescor Screened
% Difference
No. of
Workers
8,322
62,114
No. of
Claims
248
1,027
Confidential
Average
Age of
Closed
Claims
(days)
Average
Incurred
Claim
Cost
195
131
33%
$9,089
$5,478
40%
The Jaynes Companies
• Regional General Building Contractors
• Five Companies – Six Area Offices
• New Mexico
• Colorado
• Nevada
• California
• Texas, Arizona & Utah
• Union & Non-Union Employees
• Average 450 employees 2006 - 2010
• Implemented Tescor January 2006
Affected Applicants
Tescor currently administered to all new hire
positions in all companies & locations
Tescor currently administered to rehired
employees
Stage of Hiring Process
• Tescor administered immediately after
application completed
Non-Qualified Results
• 2006 @ 24.94% Non-Qualified Results
• 2007 @ 23.12% Non-Qualified Results
• 2008 @ 17.00% Non-Qualified Results
• 2009 @ 18.75% Non-Qualified Results
• 2010 @ 18.29% Non-Qualified Results
Failure Category Results
2006 - 2010
• Theft Scale @ 11%
• Drugs Scale @ 8%
• Faking Scale @ 5%
• Hostility Scale @ 0%
OSHA Recordable Incident Rates
Days Away, Restricted, Transfer (DART)
• 2006 @ 5.58
• 2007 @ 3.89
• 2008 @ 4.43
• 2009 @ 1.87
• 2010 @ 1.46
OSHA Recordable Incident Rates
Total OSHA Recordables
• 2006 @ 7.85
• 2007 @ 5.33
• 2008 @ 6.36
• 2009 @ 3.12
• 2010 @ 2.62
Workers’ Comp Costs
• 2006 @ $0.37 / Man-hour
• 2007 @ $0.05 / Man-hour
• 2008 @ $0.26 / Man-hour
• 2009 @ $0.15 / Man-hour
• 2010 @ $0.13 / Man-hour
Attorney Representation
2006 - 2010
• Non-Tescored Injured Employees
• 4 out of 90 = 4.44%
• Tescored Injured Employees
• 1 out of 94 = 1.06%
Questions & Answers
Si Lamm, CPCU, Managing Director
Phone: 503.697.6551
[email protected]
www.americantescor.com
American Tescor LLC, a division of Merchants Information Solutions, Inc.