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HRM-1-0036 | June 30th 2015

HRS’ Employee Testing and Selection Solutions: Startups’

Problems?

“I am convinced that although training and development is important, recruiting and selection are much more important.”1

- Stephen R. Covey

n May 25th 2015, Sudhir Gupta and Priyanka Gupta (husband and wife), Founder-Owners of

O HRSolutions Pvt. Ltd. (HRS) were preparing to celebrate the 1st anniversary of their company
when they were startled by a phone call. It was a call from one of their clients to lodge a complaint.
The client informed HRS that they were terminating an employee recruited through HRS with immediate
effect as he had provided false information related to previous work experience. This was the first and formal
complaint that HRS had received in the last one year since its inception. To gauge the intensity of veracity of
the lurking problems with other clients, HRS sent out feedback forms to each one of its clients upon which
it received further complaints. The duo thought that these complaints were a question mark on HRS’
credibility. They were disturbed and were in a dilemma on how could things go wrong? What should be the
remedial measures?

HRSolutions Pvt. Ltd.

On May 27th 2014, Sudhir Gupta (Sudhir) and Priyanka Gupta (Priyanka) started HRS, their entrepreneurial
firm. Sudhir was a software engineer with 14 years’ experience in one of the leading IT companies of India.
Priyanka was a senior HR professional with nearly 10 years’ experience across three big Indian IT firms.
Having been convinced of the potential, confident of their abilities, and most importantly seeing many a
gaps in employee testing and selection, they embarked on their entrepreneurial journey with HRS.
HRS provided technologically-enabled employee testing and selection solutions for companies, startups in
particular. The company projected itself as an HR solutions provider to which startups could outsource their
hiring requirements. HRS enabled the right talent pool for the startup clients to choose from. Based on the
job description furnished by startups, HRS’ proprietary software identified the right talent from its database
and alerted all the suitable candidates (Exhibit I).
1
Stephen R. Covey, The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change, Simon & Schuster, 1989

This Case Study was written by Vandana Jayakumar and Dr. Nagendra V. Chowdary, ET CASES. It is intended to be used as the basis for classroom
discussion rather than to illustrate either effective or ineffective handling of a management situation. The case study is based on generalized experiences.
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No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission
of the copyright owner.

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 HRM-1-0036 | HRS’ Employee Testing and Selection Solutions: Startups’ Problems?
Exhibit I: Operating Model of HR Solutions Pvt. Ltd.
2
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HRS receives payment in three phases for every

candidate placed through HRS
Job-seekers
download
the HRS app HRS alerts
by paying HRS suitable
? `1000/- per candidates Startup
year, create Categorization of a job
their profile
Database clients
(HRS’ software posting,
Aspiring job of Job (Outsource their
and join the enables candidates Interested description
seekers hiring
pool of grouping and candidates to HRS
with HRS requirements)
candidates** categorizing of apply
profiles on the
basis of
various
parameters) HRS Shortlists
candidates
Candidates
take video-
Employment Tests interview with
conducted by HRS the company
**Candidates are alerted that if
on their smart
they furnish any false
phones Candidate gets
information which gets Candidates
revealed at any stage, they placed with the
shortlisted further
would be disqualified from the client
on the basis of test
system scores Selected
candidates’
background
check by
HRS

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HRS’ Employee Testing and Selection Solutions: Startups’ Problems? | HRM-1-0036

The database comprised of job-seekers registered with HRS through the HRS app on their smart phones.
Job seekers could download the HRS app for an annual fee of `1000 and create their profile. Thereafter, on
receiving an alert, the candidates could apply for the profiled job. HRS’ technological platform identified
the candidate with the right fit from amongst all the applicants. The shortlisted candidates were alerted and
were directed to take the relevant employment tests using the HRS app. The test scores were shared with the
company after which the shortlisted candidates could take video interviews with the company anytime
anywhere, using the HRS app.
Given that most of the hiring related processes – filtering and categorizing candidates, administering tests
and facilitating video interviews – were executed by HRS through its technological platform, final evaluation
of the candidate by the employer was faster. Moreover, its structured interviews (using the HRS app) helped
in consistent evaluation.
The company therefore came into picture only at the time of making the hiring decision. HRS then facilitated
background check of the selected candidates and the candidate was placed with the client. For final placements,
HRS charged a fee, for every candidate that was placed through HRS, which was equivalent to the candidate’s
one-month salary, from the respective startup.
Thus, HRS earned revenues through two streams – annual subscription fee of `1000/- per job seeker and
placement fee for every candidate placed. The placement fee – equivalent to candidate’s one-month salary
– was received in three instalments – 30% was received immediately after placement, 30% was received
after 3 months and the remaining 40% was received after 6 months of placement. The fee was received only
if the candidate did not leave the job in the given time frames.
Convinced with the benefits, several companies, startups in particular, started sourcing candidates through
HRS. Given its enterprise ready hiring solutions, HRS was also conferred with few awards such as ‘the most
promising technological startup’ from the Indian Chamber of Commerce and ‘preferred recruitment partner’
status from the Indian start-ups guild.
HRS’s technologically-enabled recruitment platform worked well for the startups and other young companies
as neither did they have the time nor the finances required to recruit the right candidates independently.
Gradually, HRS’ client base increased and it clocked modest revenues, making it break-even after 9 months
of its inception. While everything seemed shining and glowing, the first complaint call in May 2015 became
a spoke in the wheel.

Termination of an Employee for Furnishing False Information

In February 2015, Sanjeev Singh (Sanjeev) got a placement through HRS as Marketing Manager for a
start-up (Farmlands) that produced organically grown vegetables. The small-scale agricultural company operated
in the B2B space where it sold organically grown fruits and vegetables to local retail chains. Sanjeev had a
degree in horticulture and had worked in sales with one of the FMCG companies for 5 years. He was hired
as the Marketing Manager to liaise with leading retail stores in the city to develop the market for Farmlands’
products. Sanjeev’s salary expectations were on higher side considering the startup’s tight budgets. The company,
however, decided to hire him as he came across as an aggressive sales person with relevant experience. His
salary was traded-off with his potential sales.

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However, after nearly 3 months of Sanjeev’s hiring, the startup owners happened to meet one of the sales
persons from the FMCG Company where Sanjeev had previously worked. From the casual discussion, the
startup owners could gauge the salaries that the senior sales persons drew at the said FMCG Company. They
were alarmed as they were paying very high salary to Sanjeev as compared to the salary of the senior sales
people at the FMCG Company and it was a heavy burden for the startup. They wondered how they could
have agreed to pay him such a high salary when the policy was to set salaries on the basis of previously drawn
packages. Upon investigation, it was found that Sanjeev had forged documents related to previously drawn
salary. The startup management decided to terminate Sanjeev immediately on ethical grounds and informed
the same to HRS.
After receiving the phone call, Sudhir and Priyanka visited the client to take stock of the situation and tender
their apologies. They, however, could not believe that they had been duped as HRS had thorough background
check processes in place. It included verifying the data furnished by the candidate (Exhibit II). They wondered
that amidst such rigorous processes, how anything could have gone wrong.

Exhibit II: Parameters and Processes of Background Check at HRSolutions Pvt. Ltd.
Data Verified Verification documents Verification Process
Identity Photo ID proof and Address proof The copies are cross-examined with the originals

Details and Tenures of Prior Appointment letter and Relieving letter of previous two Telephonic background check with previous two
Employment employments employers and colleagues/references

Educational Qualifications Mark-sheets/ Certificates of (a) completion of schooling The copies are cross-examined with the originals
(b) Graduation (c) Post-graduation (d) any other additional
qualification

Compensation Last three months’ salary slips from previous employment The copies are cross-examined with the originals and
verified with the respective employers

Reference Check Contact details of two referees who were ex-colleagues The referees are required to answer a brief questionnaire
over phone or e-mail.

Prepared by the authors

After this episode, Sudhir and Priyanka swung into action to check for any such aberrant incident as reported
by Farmlands. To facilitate this, HRS created a feedback form which was sent to all the clients wherein
information on each of the candidate hired through HRS was sought (Exhibit III). HRS was keen to learn
if it had erred unknowingly and recruited a wrong candidate or a candidate who was not the perfect fit for
the job.

Exhibit III: Feedback Form - HRSolutions Pvt. Ltd.

Name of the Candidate:

Date of Hiring:

Does the candidate meet the employer’s requirement?

Were there any issues with the candidate post-hiring?

Does the candidate still work with the organization? If no, what were the reasons for him/her leaving the job?
_________________________________________________________________________________________________________ Were there any problems in

hiring through HRS?

Would the client want to hire through HRS again?

Prepared by the authors

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After receiving the feedback forms from all the 35 clients, HRS found that out of the 210 candidates that it
had placed so far, four more placements had been erroneous. HR executives from these four companies
shared their experiences at length.

A Writer, Not a Technical Writer

Prashant Rajput (Prashant) had a bachelor’s degree in communication. After completing education, he worked
with a KPO as a content writer for 3 years. After that, through HRS, he was placed as a technical writer at
a software startup company (LeVIT) which specialized in developing mobile apps. He joined the team of
technical writers and with him on board, there were 5 technical writers who worked closely with the software
developers. All the technical writers reported to Sunil Jain (Sunil) who was their Team Leader. The team of
technical writers developed user manuals and also managed the flow of information between various project
groups during software development and testing.
Over a period of time, Sunil noticed that Prashant was a good writer and he managed the flow of information
quite well, but was lacking in his core job of developing online user manuals. Sunil had to work a lot on
Prashant’s manuals to make them as per the requirement. Sunil however was patient in his dealings with
Prashant and instead of writing him off, decided to mentor him. Ironically, Prashant did not make any
progress even after five weeks of focused mentoring and close monitoring. His inability to develop manuals
independently started affecting the overall team performance. Gradually, it became apparent that no amount
of mentoring could help Prashant as he lacked the required technical writing skills. Prashant was 4-months
old in the organization and Sunil was in a dilemma – on one hand the team was losing time and on the other
Prashant was not progressing at all. After much deliberation Sunil asked the HR Department to replace
Prashant. The HR Department had in turn decided not to source candidates through HRS because of the
bad experience with Prashant. It was not until HRS requested for a feedback that it learnt that it had lost a
client already.

Project Manager at IT Services Company

Kishore Awasthi (Kishore) joined as a Project Manager at an IT services company through HRS. It was a
two-year old company with staff strength of 40 providing IT solutions to several customers in the US.
Kishore had been brought in to head a new project in the healthcare vertical. Kishore had relevant experience
as he had worked as an Assistant Project Manager in the healthcare vertical at one of the leading IT services
companies of India. He decided to change job as he wanted to work in a smaller company where his work
would be instrumental in the operations of the company and he would not be just another face in the
crowd. Kishore was a prized catch for the small IT services company.
Kishore proved his mettle in no time as he effortlessly handled the new project and was also instrumental in
the company winning two new clients in the healthcare vertical. Surprisingly, while the leadership was quite
happy with Kishore, his team members and fellow colleagues found it difficult to work with him. He spoke
very little, mingled rarely and did not explicitly share with the team the discussions that he had with the
clients. His conversations were short and crisp. Quite often, the team members could not understand what
he wanted. While initially the team tried it’s best to get along with Kishore, as the work became more
complex, they increasingly found it difficult to work with him. His introvert nature was mistaken to be
arrogance and he seemed unapproachable to his team members.

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It was not until the mid-year performance review that the problem was highlighted. All of Kishore’s team
members had written to HR that they would like to shift to some other project. On probing, it was
discovered that they had problem working with Kishore. What could HR do? Kishore was efficiently executing
what was expected of him. He had never had any unpleasant incident with anyone in the organization.
People in HR believed that given his personality type, he was a misfit in his role which required a lot of
interaction with fellow colleagues. The HR Department was still trying to find a solution to the problem
when HRS approached the company for feedback. They subtly conveyed to HRS that its employee testing
and selection was faulty as could be judged from Kishore’s team’s predicament.

Sales Professional at Financial Technology and Advisory Company

Another incident in recruiting an unsuitable sales professional at a financial technology and advisory startup
was reported. The company provided high-end financial technological products dealing with Anti-Money
Laundering, to banks and financial institutions. It operated in a niche market and required personnel with
niche talent – a mix of financial and technological knowledge. The company hired two sales
executives – Kiran and Pradeep – through HRS, on the basis of their financial and technological knowledge.
However, once on board, while Kiran did quite well, Pradeep stumbled often. Kiran started converting the
prospective customers while Pradeep struggled hard but could not achieve his monthly targets. When enquired,
Pradeep’s usual answer was that the prospective clients were not showing any interest in the startup’s product.
Suman, who headed the business team, wondered why one set of clients would not want the same product
which their competitors were eagerly adopting.
Suman started accompanying Pradeep for sales calls. During the first sales call itself Suman understood the
reason behind Pradeep’s poor performance. Quite surprisingly, while Pradeep excelled at his communication
and persuasion skills, he failed to explain the product details and he also failed to answer product-related
questions. Suman pitched in and clinched the deal.
On their way back to office, Suman clearly said to Pradeep, “I am sorry. But you really have to work very
hard on your financial and technological knowledge, especially about our products. How can you fare so
badly with all the training? It will be very difficult for you to survive in this job if you can’t pick up soon. I
wonder how you cleared the selection tests.”

Call Centre Executives at a Taxi Service Startup

In the initial days of HRS’s inception itself, one of the Taxi-Service start-up companies had recruited 100 call
centre executives through HRS, to be stationed at the four metro cities of India. The Taxi service provider
had shortlisted only fresh college pass-outs to fill the positions and remuneration was better than the industry
standards. The taxi-service provider was able to fill all the positions through HRS as several talented youngsters
were registered with HRS. The taxi service provider however was plagued with the problem of very high
attrition among the customer care executives and had to constantly find replacements.
Exit interviews had revealed that most of the youngsters did not want to bear the wrath of irate customers.
As competition picked up in the cab service provider space, the competitors had started doling out
unprecedented offers to lure the customers. The given taxi service provider also promised lucrative schemes
such as booking a cab just 10 minutes before travel time, minute by minute update on location of the cab,

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online bookings, etc. However, it was not able to honour nearly half of the commitments as systems and
processes were not mature enough to fulfil the swelling demand. Irate customers were a natural outcome
and youngsters failed to handle them, making the latter quit the well-paying job. Despite attrition being
common in the call centre industry, the Taxi service provider looked up to HRS to fix the problem.

Analysing the Feedback

Having received the feedback from its clients, HRS analysed the same to identify the possible errors in its
systems and processes and to find solutions for the same (Exhibit IV).

Exhibit IV: Analysis of Erroneous Employee Testing and Selection

Sl.No. Candidate Name Job profile Nature of the Company Complaint Possible Error

1. Sanjeev Singh Marketing Manager Organic foods producer and He forged salary related Background investigation was
supplier documents from the previous inadequate
employer

2. Prashant Rajput Technical Writer Software services He was a good writer but was not The selection tests lacked criterion
adept at technical writing skills validity. It was assumed that because
he had done well in the test, he
would do well in the job as well
which did not happen

3. Kishore Awasthi Project Manager IT Services company Kishore was good at his work The candidate’s cognitive abilities
but his fellow colleagues were tested but his personality and
were not comfortable working with interests were not assessed
him

4. Pradeep Sales Executive Financial technology and Pradeep was an able The achievement tests were
advisory start-up communicator but lacked easy as compared to the job
technical and financial requirement
knowledge

5. Call Centre Customer Care Taxi service start-up Youngsters could not handle the Unrealistic job previews
Executives irate customers

The analysis gave HRS insights on the need to streamline its HR processes in ‘testing and selection’ to make
its service offerings spot-on. Sudhir and Priyanka were in a dilemma if HRS should make changes to its
proprietary tools. How could HRS innovate to enable error-free employee testing and selection and continue
to be the preferred recruitment partner of startups? While Sudhir and Priyanka were grappling with this
dilemma, the HR Heads of the four companies facing issues with employees sourced through HRS were
contemplating whether to stop outsourcing such ‘important’ activities to an external agency.

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