PDS, which likes to call itself “a project support company” because the company’s buyers generally hire its technical workers for specific projects, annually provides more than 7,500 contractors to companies, with nearly 15 percent being skilled trades people. Since these workers are PDS employees, the firm is responsible for paying the workers’ compensation claims in addition to their healthcare costs.
PDS, the fourth largest engineering and IT staffing company in the U.S., has always insisted on safe working conditions for its 7,500 employees. But even with its emphasis on safety, workers’ comp claims still reached $3 million a year. Its HR outsourcer, TALX, suggested instituting a pre-employment assessment that could weed out the risk takers.
“We were incredulous. Our manufacturing clients were skeptical,” recalls Cash Nickerson, president and CFO.
Determined to at least test the hypothesis that it could lower workers’ comp costs by changing its hiring practices, PDS issued an RFP. It assessed several service providers but selected TALX based on their past history and TALX’s pan assessment division.
The TALX assessment division focused on two issues:
- Productivity (this included attendance, a perennial issue)
“We wanted to know who would show up and not do something dangerous on the job,” recalls Nickerson.
Creating the assessment tool
The service provider sat down with PDS executives for an intensive job analysis. The sole goal: “to determine the specific traits that make an employee more productive and safer,” he recalls.
Once TALX knew what was important, its team turned to its catalog of content to put together a series of assessment tests. (TALX built the catalog based on how 3,600 clients have utilized it over time.) Then the provider tested the various assessments on PDS incumbents. TALX selected two specific assessments “that were the most predictive,” says Doug Cole, senior vice president and general manager of pan.
Companies can order an assessment off-the-shelf from TALX or they can outsource the job to TALX. But PDS wanted to administer the test itself and private brand it on its site.
Initial internal resistance
PDS, which is based in Irving, Texas, has 31 offices nationwide; 50 percent of its employees are recruiters who are paid primarily on commission. “Many of our branch managers and recruiters wanted us to stop using the assessment test,” Nickerson says. Why? Because so many of their candidates failed. Some recruiters had employees they had used for years who now failed the test. Today, the failure rate remains 20 percent.
“It was a battle at first,” the president recalls.
One branch manager was especially resistant about the test. So the PDS leadership asked him to take it. He failed! It turned out he had formerly been a skilled trades worker. A supervisor at a client asked him to go to an unlighted area to do a critical job. He got hurt because he couldn’t see what he was doing and fell off a ladder. So he became a recruiter instead. Nickerson pointed out the test ferrets out individuals like this who have a propensity to take risks.
The firm did make some alterations to the test over time. In certain cases management agreed to waive the productivity piece for long-term employees. But it never waived the safety piece “because there it is our nickel,” say Nickerson.
PDS began the TALX assessments in 2005 when it had 115 workers’ comp claims. In 2006 claims fell to 82; Nickerson says the company saved almost $1 million. Last year it had just 18 claims with a total claims cost of $765,000. Absenteeism fell accordingly, he adds.
“We saved money by only hiring people who possessed a low statistical probability of demonstrating low production and/or unsafe behaviors,” the president says.
PDS is no tyro when it comes to outsourcing. It outsources most HR functions to TALX; there are just two people in the company’s HR department. “We want to stay lean, and we can do that through outsourcing,” says Nickerson.