Employee theft, fraud, and other counterproductive work behaviors (CWB) pose a serious challenge to organizational profitability and workplace function. These behaviors range from minor time theft and unauthorized use of company resources to sophisticated financial fraud and inventory loss. Specialized psychological assessments help employers predict a candidate’s propensity for these detrimental actions, offering a proactive measure to mitigate future risk.
The Business Case for Integrity Screening
The scope of employee dishonesty presents a substantial financial drain on businesses. Organizations globally lose an estimated 5% of their annual revenue to occupational fraud. In the United States, employee theft alone costs businesses approximately $50 billion each year, creating an incentive for employers to find effective prevention strategies.
Time theft—such as excessive breaks or misuse of paid time—affects around 75% of US businesses and can cost up to seven percent of a company’s gross payroll. Pre-employment screening tools are necessary to safeguard organizational assets, reduce inventory shrinkage, and protect the ethical environment of the workplace. Identifying candidates less likely to engage in CWB is a strategic measure for protecting the bottom line.
What Are Pre-Employment Integrity Tests?
Integrity tests are standardized psychological assessments designed to measure an applicant’s tendency toward honesty, reliability, and trustworthiness. These instruments function as a specific type of personality test, gauging an individual’s ethical disposition and predicting future behavioral reliability on the job. They are constructed to measure a candidate’s attitudes toward dishonest behavior, admissions of past rule-breaking, and belief system regarding workplace rules.
The underlying assumption is that applicants with a history of or positive attitude toward dishonesty are more likely to engage in counterproductive behavior. Integrity tests help screen out applicants whose ethical framework suggests they may pose a risk to the organization. Organizations use these results as one data point in the selection process to identify individuals who exhibit low conscientiousness or irresponsibility, traits associated with CWB.
Two Primary Types of Integrity Assessments
The field of integrity screening uses two distinct methodological approaches to assess a candidate’s likelihood of engaging in theft or other counterproductive behaviors. Both test types aim to predict the same outcome but use different question styles.
Overt Integrity Tests
Overt integrity tests use a direct and transparent questioning format, making the assessment’s purpose clear to the applicant. These assessments typically contain two main sections: admissions of past illegal or unethical activities, and explicit attitudes toward theft and rule-breaking. For instance, a test might ask directly about previous instances of stealing or the appropriate punishment for minor infractions.
The direct nature of these questions gauges the applicant’s acceptance of workplace deviance and history of misconduct. While transparent, these tests are susceptible to faking, as applicants can easily identify the socially desirable answer. Test developers often incorporate mechanisms to detect attempts by the applicant to appear overly honest or inconsistent.
Personality-Based Integrity Tests
Personality-based integrity tests, sometimes called covert tests, use an indirect approach to measure underlying psychological traits that correlate with counterproductive behavior. These assessments resemble standard personality inventories but are scored specifically to predict integrity risks. They measure characteristics such as low conscientiousness, irresponsibility, impulsivity, or thrill-seeking, rather than asking directly about theft.
These tests might use hypothetical scenarios or measure aspects of dependability and work ethic. By assessing these broad personality dimensions, the test creates a profile of the candidate’s general behavioral reliability to infer their risk for future dishonesty. These tests are less transparent than overt tests and are therefore less prone to intentional distortion by applicants.
Measuring Validity and Effectiveness
The utility of integrity tests is determined by their psychometric properties: validity and reliability. Validity refers to the degree to which a test measures what it claims to measure and predicts a job-related outcome. Reliability concerns the consistency of the results over time or across different versions of the test. Research consistently shows that integrity tests are effective predictors of Counterproductive Work Behavior (CWB).
Meta-analytic studies demonstrate that integrity tests have predictive power for CWB, with validity estimates falling within a moderate range for both overt and personality-oriented tests. When used in combination with cognitive ability tests, integrity tests substantially increase the prediction of overall job performance. This incremental validity suggests that integrity is strongly related to conscientiousness, which is a strong predictor of job success.
Legal and Regulatory Compliance
Employers must navigate specific legal boundaries when incorporating integrity tests into their hiring process. The primary federal law governing this area is the Employee Polygraph Protection Act (EPPA) of 1988. The EPPA broadly prohibits most private employers from requiring an applicant or employee to take a polygraph test for pre-employment screening. However, the EPPA specifically exempts written or computerized honesty tests from its definition of a “lie detector.”
Employers must also ensure compliance with Equal Employment Opportunity Commission (EEOC) guidelines, which prohibit discrimination based on protected characteristics like race, color, or sex. Employers must ensure the tests do not create a “disparate impact.” If a test has a disproportionate effect, the employer must prove that the test is job-related and consistent with business necessity under Title VII of the Civil Rights Act.
Best Practices for Comprehensive Candidate Screening
Relying solely on an integrity test score is insufficient for managing candidate theft risk. A holistic approach integrates integrity assessment results with other validated screening methods to create a comprehensive risk profile. Structured behavioral interviews ask candidates to describe how they handled specific past situations, providing context that standardized tests cannot capture.
Thorough background checks are an indispensable component of comprehensive screening. When using a third-party, employers must adhere to the Fair Credit Reporting Act (FCRA), which governs the use of consumer reports for employment purposes. FCRA compliance mandates that employers provide written disclosure and obtain applicant consent before running a background check. This layered strategy, combining psychological assessment, behavioral data, and legally compliant background checks, offers the most robust defense against employee theft and misconduct.