In 2009, the US Supreme Court issued a landmark employment discrimination ruling in the case of Ricci of Ricci v. DeStefano. The City of New Haven Connecticut had given a promotion test to it’s firefighters, but threw the test out when no black firefighters scored well enough to advance. White firefighters filed suit claiming they had been discriminated against. Judge Sotomayor (now a US Supreme Court Justice) sitting in the 2nd Circuit had agreed with the City, but the Supreme Court in a 5 to 4 ruling overturned the decision and ruled in favor of 19 White and one Hispanic firefighter who had passed the exam. There are a number of issues in the case, including reverse discrimination, but the point for today’s blog post is that the Court validated employee testing in the work place, in a hotly disputed decision [see http://online.wsj.com/article /SB124640398926076441.html].
Businesses are faced with many challenges today and are recognizing more and more the hidden costs of making uninformed or wrong decisions. The labor force of most businesses is a critical component of the business and essential to its success, but hiring the wrong person for a job or having people in jobs they are not well suited for can be a very costly mistake. Many businesses are trying to reduce the risks by testing applicants and employees, both as part of the hiring process and in connection with job performance and promotions. Jim Collins in his seminal book Good To Great talks not only about hiring the right people, but having the right people in the right seats on the bus. Businesses are turning to a number of carefully developed tests to improve the process of determining who fits into the business culture and then making sure that the employee is working to their strengths.
The assessment of business risk is a very multifaceted area and should include a comprehensive plan for identifying, minimizing and avoiding business risks. Having a process to select and best use the workforce is a central element of such planning. Risk can be reduced across the board by deploying systems and processes intended specifically to reduce risk.