Honestly, Can We Trust You?

By Christine Gorman

Each year U.S. businesses lose as much as $40 billion to employees who steal. To protect their profit margins, many hard-hit companies have resorted to routine polygraph screening of workers and job applicants. But the scientific validity of these devices has never been proved, and the tests have sometimes caused harm to people who are falsely implicated. Such is the case of Shama Holleman, a college student who took a job in 1987 as a part-time cashier for Alexander's department-store chain in New York City. After a month as a model employee, she was fired because a polygraph test indicated that she might be a drug dealer and might have served a prison sentence. Neither was true. Holleman sued Alexander's, and they reached an out-of-court settlement.

In response to incidents like this, Congress has banned employers' use of polygraph tests, voice-stress analysis and other electronic methods to screen current or prospective workers. The law, which went into effect Dec. 27, exempts government agencies and such workers as armored-car guards and employees who have access to restricted drugs.

The prohibition is a huge setback for the polygraph industry, which is expected to lose about 85% of its $100 million in annual revenues. But the new law is a boon for firms that offer two other character tests: pencil-and-paper quizzes and graphology, or handwriting analysis. Says Eric Zorn, senior vice president of the Jamesway discount-store chain: "I'm very unhappy about the new law, but I'm thankful we can still use written tests."

The honesty exams, which were given to 3.5 million job applicants last year at a cost of $5 to $15 each, can be surprisingly straightforward. A questionnaire published by Reid Psychological Systems of Chicago asks test takers to mark whether or not they recently "overcharged a customer for personal gain" or "took something from a store without paying for it." Many job applicants freely reveal their transgressions. "People put things on written tests they wouldn't tell their mothers," says Larry Audler, vice president of personnel for the New Orleans-based D.H. Holmes department-store chain.

The written surveys usually include a few ringers (example: "Do you always tell the truth?") to determine whether a job seeker is being candid. No single answer brands a person as a liar or thief, but those who administer the test watch for ominous patterns. Observes Arthur Le Blanc, a California psychologist who helped screen new employees hired for the 1984 Olympic Games in Los Angeles: "If you score in a certain range, you're more likely to be dishonest."

For $100 to $500 per employee, handwriting analysts will assess at least 20 different cursive characteristics and advise the prospective employer about the chances of a person's being a future embezzler or goldbrick. Ruth Brayer, president of Graphological Services International of New York, sees signs of dishonesty in illegible handwriting and retraced lines. Brayer, who counts Citibank among her clients, also hears warning bells "when a signature looks different from the rest of a person's handwriting."

Yet the exams and handwriting tests have a wide margin for error, which means that some people are inaccurately labeled as dishonest. James Walls, co- founder and executive vice president of Stanton Corp. in Charlotte, N.C., which sells 1 million written honesty tests a year, admits that his questionnaires are only 88% reliable. Employers should use a written test only to supplement interviews and background checks, Walls points out. Critics of the tests contend that many managers are lazy when it comes to hiring. "They want quick answers to the question 'Will a person be honest?' " explains Jon Bauer, a law professor at the University of Connecticut. "Honesty tests have the look and feel of something scientific."

As pencil-and-paper tests proliferate, they could run into as much opposition as the electronic variety. Massachusetts has explicitly banned written character tests, and other states have laws that may curb their use. The House Education and Labor Committee has asked the Office of Technology Assessment to determine whether such tests are dependable gauges of integrity. "There's a tremendous disagreement about whether you can even measure honesty," says Wayne Camara, who develops testing standards for the American Psychological Association. But no one disputes that when honesty is lacking, the effect on business can be extremely expensive.

With reporting by Wendy Cole/New York and Michael Mason/Atlanta