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Tests and technology Featured

8:36am EDT December 27, 2005
David Pfenninger says the problem with most online human resource testing engines is that they’re too heavy on the IT and too light on the psychology.

Not that Pfenninger, CEO of Performance Assessment Network Inc., has anything against technology. An early fan of the Internet and the potential he saw in it for offering employers online testing, Pfenninger has leveraged his experience in business and psychology to create a leading provider of testing and assessment services.

A clinical psychologist who spent time in administration in academia and the health care industry, Pfenninger launched Performance Assessment Network as a provider of online tests and assessments from multiple content providers to small clients, mostly consultants and human resources departments. He soon realized, however, that his company’s platform could offer large organizations with complex testing and assessment needs a wider choice of products as well as integration with their own HR systems.

His hunch was verified when Procter & Gamble agreed to hand over its online testing to Performance Assessment Network. That breakthrough was followed by a contract with the U.S. Transportation Security Administration to test candidates for airport screener positions. The company now serves 12,000 test administrators and assessment professionals in 32 countries, from individual consultants to large multinationals.

Smart Business spoke with Pfenninger about how Performance Assessment Network broke from the pack to lead the field.

How did you get the company started?
Initially, I got into administration with the Department of Veterans Affairs to try to get that fix met — that need to operate a P&L statement and supervise people and work with budgets. I really got my business chops through health care administration.

When it was time to form Performance Assessment Network, I simply went to these longstanding friends and colleagues and, first of all, I shook them down for money and then I persuaded them to quit their jobs and join me in this radical enterprise. The original core group was six people. All of them are still with us.

We founded the company in 2000, really went live with our first product set in 2001. We went from six people to 80 people in four, four-and-a-half years.

What have been the most important factors in your success?
The care we have taken in the selection of personnel is the key factor in our growth. I explicitly look for people who are very bright, driven, hungry for accomplishment and innovation and get the same kind of thrill as I do by doing things that haven’t been done before.

I’d say overall, we’ve done an outstanding job of finding really high-impact performers. We assess people before we hire them. We use our own tools and make sure we’re clear about what we want and that the measurements verify that the candidate is bringing to the table the competencies that we require for excellence.

How did you determine that there was a need for the service that Performance Assessment Network offers?
We thought that if we just introduced good, solid business customer service relationship practices, we would stand out from the herd in our industry, and after a year or two, that would start to get around among the client base.

That’s why we never lost a single customer who signed on to do business with us. The other thing is, we never pretended to know it all. We know what we know very well. I would argue we’re the world expert in online testing, but there’s an enormous degree of variability on the customer side about what their needs or configuration requirements are for products like ours.

We went in with our ears wide open to customers like P&G and the TSA, and we learned an enormous amount of information, methodology, procedure, science, and then we would turn around and integrate those lessons into our offerings for both those clients as well as to new clients.

How were you able to compete with the large companies in the testing and assessment industry?
The sad fact for those large testing companies was they were asleep, too big, too wedded to their 1970s’ kind of technology investments. I think they were leery of the Internet, so they were waiting around to see what the smaller companies were going to do before they made commitments.

We came out of the gate as the proof of concept group, and we were able to get many of these larger testing companies to do business with us. We became a distributor online for their testing content, and that continues to this day. The large testing companies do not, in fact, have a viable online engine, even as late as 2005.

What they do is use Performance Assessment Network, or there’s a handful of other companies out there like Performance Assessment Network now that offer similar solutions. They tend to use us or the other providers because we’re specialists.

What was your original customer focus of the business?
We started out more oriented toward small consulting groups, the mid-sized company offering transaction-based access to standardized assessments, credit card transactions. So somebody like me, an industrial psychologist working inside companies or consulting to companies, could escape from the paper-and-pencil inferno and the inefficiencies around that old model and basically make more money by doing the same testing programs online.

We now have over 12,000 test administrators and assessment professionals in 32 countries that rely on our transactional model for accessing standardized assessments.

How did you capture the large clients?
What we learned also was we could compete for enterprise work, and we were lucky enough to secure an alpha client, Procter & Gamble, in early 2002. P&G said, ‘We love your testing software but we need it to talk to our other human resource information systems.’

This was the early days of XML. Dot-net wasn’t even on the market yet but we rigorously embraced that approach to database and Internet integration on behalf of P&G, learned how to do it and transformed our company on the basis of that success.

And what we’ve become is a manager of hiring processes, selections systems and talent management solutions for enterprise customers.

How did that change the course of Performance Assessment Network?
It changed everything. They were very pleased with our delivery, so they became — and still are — one of the go-to references for us when we’ve constructing proposals or looking for other business.

The other watershed was on the content side. We had initially signed up smaller content providers with excellent products and very good reputations, but then around 2001, we signed up Harcourt ... which owns some of the largest testing and assessment companies in the world.

They took a risk on this small, Indiana-based company as their Web-based provider for their assessments. Once we got them into our portfolio, we were able to get any content provider in the world that we wanted.

How has your role changed as the company has grown?
I’ve adopted kind of the visionary role. I’m a little more relaxed than I was two or three years ago, when I had my hands in everything.

I think I’m being kind of nudged this way by the realities that we have professionals that can do things that I used to do, arguably better than I was doing them.

I do like the visionary piece. I still design products, I’m in charge of all of our research and development and work on product design and work with our marketing people and others on the branding and the sales preparation of new products. That’s my passion.

I also like to do high-end sales calls with my guys on the big accounts, where bringing in a senior executive can help either open the deal or close the deal, really accelerate the deal. I’m enjoying that immensely.

How to reach: Performance Assessment Network Inc., www.panpowered.com