Weekly Availability Calendar

Why is it so hard to vertically integrate employment testing?


Why is it so hard to vertically integrate employment testing?
March 2, 2020, 9:57:11 AM EST   By Mike Russiello

pancakesOver the last few decades the HR Tech industry has steadily achieved vertical integration across many functions. Employers - large and small - have benefited from the evolution of stovepipe applications that use separate database systems and that don't talk well to one another into an integrated suite of applications that share a common platform.

However, one application has been largely resistant to vertical integration: pre-employment testing.

When my partners and I started our first employment testing business in 1998, we dreamed of integrating our assessments with job postings on the biggest job websites, such as Monster.com, HotJobs, and Careerbuilder.com. Wouldn't it be cool if the applicant could take a test at the same time they apply? Even better, wouldn't it be great if they could test once and use those test results to apply to multiple jobs in multiple companies?

A few years later we succeeded in establishing a partnership with Monster.com in which they would promote our 400+ skills assessments and certification exams in exchange for a slice of the sales revenue. We also started working with several freelance websites who wanted to utilize assessments to pre-screen their consultants.

Bad Timing

By 2003 or 2004, these initiatives had largely failed. In postmortem discussions, we consoled ourselves with the traditional excuse for a failed initiative -- that the market was just not ready. Certainly the need for objective measurement in the hiring process was real. If only our timing were better.


HRIS Vertical Integration

For decades we have heard about the need for - and the inevitability of - vertical integration of HR technology. We've witnessed the rise of fully integrated HRIS, such as Oracle HRMS, SAP and Workday. These systems were built to deliver on the promise of seamless vertical integration - and they largely succeeded.

For instance, today you can draft a job requisition and post it to any number of job websites and other means of reaching candidates with a single click. Applications from these disparate sources are automatically routed back to your system, where a sophisticated workflow is initiated to execute your desired hiring process.

However, even in 2020, employment testing applications have eluded integration to the continued frustration of HR managers in many companies.

Sure, you can perform a custom integration of most assessments with these systems if you want. But it's almost never automatic.


To understand why assessments have eluded standardized integration, we need to consider these questions:

  1. Is it technically difficult?
  2. Is it too hard to standardize assessment integrations?
  3. Is there enough demand?
  4. Are there just too many vendors?

Is integration of employment assessments technically difficult? Of course not. Virtually all assessment companies have their own API, as does every applicant tracking application. To effect an integration, either side can take the initiative and marry up to the other entity's API. A typical integration can be accomplished in a couple of days.

Is it too hard to standardize assessment integrations? Not really. Virtually every assessment process uses the same steps: authorization, administration, reporting. Most HRIS systems have standardized - either formally or informally - the way in which an assessment vendor can integrate, and they are all closely related to one another.

Is there enough demand to justify the integration? Maybe not. Pre-employment testing represents about $1B of the $250B worldwide recruitment business, or about 0.4 percent. If you look at the entire HR Tech industry it's an even smaller percentage. This small piece of the pie means that, from the HRIS vendor's perspective, there's no huge gain to be had from bringing in an assessment vendor.

Are there too many assessment vendors? Probably. To active observers it feels like a new competitor appears every day. The reality is that there are few barriers to starting your own assessment company. Experts in industrial psychology can sort the good from the bad vendors, but HRIS systems vendors generally lack this kind of expertise.

Additionally, every test is different. Each one measures different competencies with different names and each uses different conventions to report scores. Without standardization, it's difficult to create interoperability.

Allowing too many assessment options creates noise for HRIS users. However, there is also a problem with having too few vendors. It turns out that companies tend to be quite loyal to their assessment vendor. Once they believe the test they are using is helping them make better hires, they don't want to change. Not having the assessment vendor of choice for a prospect integrated can hurt your chances for making a sale.

What's Happening: HRIS Vendors

From an HRIS provider's perspective, there is only a small amount of incremental revenue available from assessments, and there are too many vendors. Additionally, many customers insist on using the specific test vendor they want.

The solution adopted by many HRIS systems is to offer a robust API and let customers drive the process. An assessment provider can integrate once for a specific client and then re-use that integration for other clients. Having a pre-existing integration with a particular HRIS vendor reduces perceived risk for future clients. Assessment vendors unable to convince at least one client to integrate never get momentum and are weeded out.

The result is an ever-expanding galaxy of partially reusable, customer-specific integrations between assessment vendors and HRIS systems.

The problem, of course, is that the winners of this game are the assessment companies that have been around for a long time. The longer you have been in business, the more systems you have integrated with, and the higher chances you are already integrated with the HRIS your next prospect is using.

This is like a seniority-based performance management system. The longer you've been around, the bigger your bonus. It's not the best possible reward system, but that's how it works, at least for now.

What's Happening: Job Boards

Here the solution has been more Darwinian. Recruitment advertising is a huge percentage of the $250B recruitment market. It's enough to concentrate on getting as much as possible of that pool. Competition is fierce, and some believe the paid recruitment ad is in danger of extinction. All resources must remain focused on survival.

The key measure for job boards is the number of job applicants visiting the website on a daily basis. Employment assessments are useful only to the degree they support this metric. And, in general, they don't. From the applicant's perspective, assessments take time. They can also expose weaknesses you might rather wish to hide.

Our own failure in the early 2000's with Monster.com notwithstanding, there have been attempts to merge assessments and job boards. Most recently, Indeed.com introduced simple assessments candidates can complete as part of their application process. The results from these tests are made available to employers. They have even made this a differentiating factor in their advertising to both applicants and employers. But Indeed did not even attempt this until they were the undisputed leader in their space, and the results they are seeing are proprietary. Only time will tell.

Will more employers prefer to get their candidates from Indeed because they get some quantitative information about the applicant's skills? Maybe.

Summing Up

While great strides have been made to vertically integrate across HR and particularly recruitment functions, pre-employment testing has remained mostly outside the integrated ecosystem.

The large number of testing vendors and lack of standardization among testing products has made integration difficult for HRIS systems. Relatively small incremental revenue opportunity and a questionable contribution to critical business metrics (applicant volume) has had a similar negative effect on job boards. As a result, assessment providers continue to be the proverbial red-haired stepchild.

What does the future hold? In a space where innovation is the norm, it's only a matter of time before someone discovers a better way to integrate employment assessment into the broader recruitment and HR universe. But, alas ... not yet.

Follow HR Avatar
Follow Us Follow Us Follow Us

Follow Us
Follow Us LinkedIn LinkedIn
Follow Us Facebook Facebook
Follow Us Instagram
Subscribe to our Newsletter Tips & Updates
COPYRIGHT  ©  2024   HR Avatar, Inc.   |   Terms and Conditions   |   Privacy
Go to Home Page
This website uses cookies to ensure you get the best experience on our website. Learn More