Hiring some new talent? Check them out properly first…
"Unfortunately it is a fact that organisations are exposed to certain financial and other employee-related risks, many of which occur within the procurement area. Risks to be seriously considered are ‘white-collar’ fraud, IT integrity and identity theft, workplace violence and unethical conduct in all its forms", Elaine Porteous, Branch Manager – Interim and Executive Search – of Tech-Pro Personnel, told SmartProcurement.
Fraud and corruption are of specific concern and with the current economic climate may be a deciding factor in 2009.
What is fraud?
Fraud is an illegal act involving the obtaining of something of value through willful misrepresentation. The majority of fraud is committed by managers and executive employees. In the UK the value of convicted fraud was 4 times higher in 2007 than in 2006, with 70 documented cases of procurement corruption. It is estimated that approximately 6% of annual revenue of organisations is lost annually due to some form of fraud.
Why is the screening of potential employees important?
"A poor hiring decision can have disastrous consequences for an organisation. The cost of recruitment and induction can total R250k per person each time, not including the additional cost and inconvenience generated by an employee who cannot do the job and/or goes on to commit fraud", Porteous continued.
More worrying is the threat to the reputation and integrity of the employer should losses be exposed and litigation be pursued. These issues, when made public, can lead to a downward spiral of diminishing trust and profitability.
How can organisations reduce their exposure to employee risk?
Performing some degree of due diligence when dealing with new employees is becoming a necessity. 96% of businesses now require some background checks to be done on job applicants. Although this is no guarantee that the person has no intentions of misbehaving, it highlights problem areas and acts as a deterrent. Some steps that can be followed are:
Step 1: Advise candidates that it is the organisation’s policy to carry out an in-depth screening prior to their appointment and obtain their written permission to carry out a series of background checks.
Step 2: Complete the most basic background checks:
- Identification verification;
- A criminal record check;
- Credit checks;
- Verbal enquiries with nominated referees; and
- Professional registrations.
Step 3: Verify all educational certificates with the issuing institution.
Step 4: Optional checks such as drivers license, gun license, visa/work permit.
Until recently some organisations have been conducting this process themselves, but it is expensive and time consuming. There has thus been a growth in the provision of these services by third party screening service companies which is now a $2 billion per annum industry in the UK alone.
Why use a professional employment screening provider?
"This is one area where outsourcing a service makes sense. Most third party screening services have a web-based user-friendly facility which enables the employer to get results within 48 hours for as little as R300 per person checked", Porteous explained. It is, however, important to understand the legislative and privacy requirements around what questions to ask/not to ask, e.g. medical history, etc.
Third party screening organisations can provide services which are difficult to achieve:
- Access to government and immigration databases;
- Drivers license records;
- Company office and bankruptcy records;
- Confirming academic records with educational institutions; and
- Verifying overseas qualifications and experience.
More advanced screening for senior executives could include:
- Directorship searches to ensure there are no potential conflicts of interest;
- Bankruptcy searches;
- Media searches on the candidate’s background;
- Overstatement of qualifications and embellishment of work history;
- Falsification of career achievements; and
- History of litigious behavior.
Since IT (Information Technology) is a particularly vulnerable area of potential losses, there are some specific behavioural tools that can be used to predict employee risk in this field as well.
Candidate CV’s: How accurate are they?
Not very! 30%-40% of Curriculum Vitae (CVs) have content errors, omissions or contain misleading information. Figuring out why and how job applicants lie on their CVs is thus a hot research topic, and new studies are warning organisations about the dangers of employing people who are economical with the truth. Two main areas where inconsistencies may occur are:
- Educational qualifications and training
Degree and diploma certificates are easily counterfeited using the new desktop publishing facilities. Do not rely on them! Candidates may list qualifications where they did not fully complete the course or where they actually did attend that institution but obtained a lesser degree or diploma. Look out for the small print that is not a lie, e.g. BCom (incomplete).
- Work experience
Candidates have a tendency to inflate the extent of their working experience. Good interviewers understand the technique of using competency-based techniques to drill-down into specific projects or work areas to establish to what extent the candidate has the in-depth practical experience.
The extensive use of buzz words extracted from generic job descriptions with no clear explanation of the person’s own experience of the application is a dead giveaway. These could be the steps in the strategic sourcing process, commodity management techniques, spend analysis, tender criteria, etc.
"Interviewers must also be on the look-out for time gaps and the fudging of dates. Be aware of experience gained at organisations that have closed/merged/been acquired where the referees are not contactable", Porteous concluded.
Why is pre-employee screening best practice?
There are so many reasons why this is necessary. For example:
- Hiring the best employees by validating qualifications and experience;
- Avoiding repetitive recruiting and induction costs;
- Better safeguarding of organisational assets;
- Protecting you from negligent hiring/retention litigation;
- Protecting the organisation’s reputation by keeping out of the bad news media; and
- Building trust and integrity within your organisation which benefits morale.
Whilst there is no guarantee that no problems will occur when taking this route, the use of some preventative measures will provide the reduction of some of the risks.
Article by Elaine Porteous, an independent procurement consultant and commentator on topical issues in the profession.
Elaine Porteous can be contacted at the details below:
Tel: +27 11 514 0463
Cell: +27 82 412 5831