Background checks are a must

Story 1: When he was a middle school principal, James Baughman was jailed for stealing student funds. He also lied about having a Ph.D. from Stanford, and ended up climbing to the position of recruiting director at Lucent.

Story Two: Al Dunlap was fired after only seven weeks at the Max Philips & Son Company. Three years later, he was fired by Nitec Paper for financial fraud, and the company soon went bankrupt. Twenty years later, he resurfaced as chairman and CEO of Sunbeam.

Neither Lucent nor Sunbeam realized that when they hired these people, they were hiring people with bad behavior and no integrity. But the mistakes could have been avoided if these companies had taken the time to do background checks.

Open the job pages of major newspapers and you'll often see that when companies recruit for positions such as front desk, delivery driver, and sales representative, they all require applicants to provide proof of background checks. Instead, when it comes to recruiting top executives, companies are taking only one side of those candidates.

"You might take it for granted that when a company is hiring, the higher the position, the stricter the vetting process," says Les Rosen of Employment Screening Resource. "Not really. From what we've observed, recruiters' attitudes toward higher-level positions vary widely."

Douglas Hahn, a firm specializing in background checks ---HRplus- -- President, who agrees with Rosen, "In many companies, networking is important. Top executives like to hire their friends, and unfortunately, doing so can sometimes go wrong."

Some problems are quite serious. Low-level employees may steal warehouses and embezzle thousands of dollars. And people with high positions have great influence and power. If they don't follow the way of a gentleman, they may even push the company into the abyss of bankruptcy!

While it is impossible for a company to guarantee that it will not be affected by those acts that violate its integrity, a careful study of the background of employees can at least reduce the probability of malicious incidents. This means that companies must establish and improve the mechanism of employee background checks. In a sense, pay particular attention to background checks on senior employees.

Following intuition is costly

Even if lying is uncommon, background checks on employees are worthwhile. After all, a few people can bring a company down. Sometimes a single employee, if in the right position, is enough to cost the company a lot, and all this is often only discovered after the fact.

Are comprehensive background checks expensive? So let me ask you, is it expensive to spend an average of $2,000 to $10,000? Or is it costly to make arbitrary judgments based on feeling? A Toronto-based trucking company hired a woman as its treasurer without doing a prior background check on her. Two years later, she cannibalized $250,000 from the company and was sentenced to three years in prison. If the trucking company had hired the woman, a phone call to her former employer would have revealed that she had defrauded the former company of more than 100,000 yuan.

Conducting background checks is not an easy task, especially for businesses that haven't incorporated it into their company culture. But there are several principles worth considering.

First, integrity first. The human resources department of many companies can play a role in recruiting low-level personnel. The top executives have their own network of connections, and they are consistent in the hiring of high-level personnel. But if the company's top management team wants to foster an atmosphere of integrity in the company, then everyone should obey the principles of background checks.

For this reason, it is necessary to think about the serious financial consequences of not conducting a background check. Just imagine if Sunbeam had done some background checks on Dunlap, they wouldn't have hired him. Of course, it's hard to say that Sunbeam wouldn't have ended up going bankrupt without Dunlap's glaring misdeeds.

"If company executives insist on refusing to conduct background checks on hires, the company should make it clear that the executives are risking their own reputation," says one human resources expert.

2. Treat people fairly. All employees are subject to standard screening procedures, including checking driving records, criminal records, employment records, and occupational, academic and professional certifications, among others.

But Rosen also believes that it is perfectly acceptable to use different screening criteria for different levels of employees, but only if the process is fair. "There's no need for an assembly worker to hold the high-level standards," he said. "But no matter who it is, this step has to go. All you're doing is making it clear that the survey is appropriate for the role. Yes."

Integrity surveys are of high value

Rosen recommends that senior people go through a process he calls "integrity surveys" in addition to standard tests. "'Pre-employment Screening' is a low-cost risk management tool that focuses on verifiable, knowable factors." "Integrity investigations" are broader in scope, including whether a crime is suspected, whether a previous company financial credit status and when and why the person appeared in the local or national press.

Don't rely solely on referrals from previous employers. Now, many companies usually have only a cursory track record. Consequently, the information obtained from the previous company is incomplete. To investigate further, the three other sources provided by the candidate must be verified.

Headhunters are not enough. Case in point: Robert Half International recruited a temporary bookkeeper named T'Challa Ross for Fox Associates, a small advertising agency. Ross did so well that, thirty days later, Fox Associates decided to formally hire her. But she embezzled more than 70,000 yuan within a year. The headhunter didn't know when they picked the man that Ross had been convicted of stealing $192,873 from his previous employer, sentenced to four years' probation and fined 100 hours of community service.

The downside of relying on headhunters is that unless the people they recommend are hired, they don't get a Contingency fee (a fee paid after success). As a result, getting recommended people onboard as quickly as possible becomes their top priority. To urge recruiters to take the time to do background checks on referrals, Eric Archer, president of Spherion Professional Recruiting, recommends a payment method where two-thirds of a recruiter's compensation comes with a success fee , 1/3 depends on the retention deposit (Retainer, prepaid deposit).

"From the hiring side, it shows a sincerity; from the headhunter side, it's also a promise that they will do a more thorough investigation of the talent they recommend," says Archer. In this way, even if the hiring company finds that the talent recommended by the headhunter has a flawed background, the headhunter can get some compensation, after all, they also did the work.

Nowadays, people are highly guarded against terrorism and theft, and many companies conduct background checks on everyone who works for them. For example, in the six months after 9/11, Eli Lilly and Company surveyed more than 7,000 employees of its suppliers, including construction workers and fast food restaurant employees.

"This trend is obvious, and it is natural for companies to worry about employees' backgrounds," said a recruitment expert. "Companies are no longer just passively guarding against sloppy hiring, but keeping good entries at bay."

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Attractive employees think hard

Hahn has interviewed countless people throughout his career. His experience is that trusting intuition is not worth it. "I've been fooled a few times. At the grocery store, one of my charismatic managers stole things behind my back, and I didn't know anything about it."

Because of these lessons, in When recruiting, Hahn always conducts an interview and a background check, which has become a system. "People tend to be biased. When you're interviewing, if you like a certain candidate, you're asking different questions. You're supposed to do some background checks, and then you might find that the person has a problem. . But because of prejudice, you fool yourself into saying, 'There's nothing wrong with this guy, right?'" candidates should keep their eyes open. "Recently, we had an important vacancy in our firm. The company's executives recommended a candidate who thought she had great potential. Our team interviewed her and found her to be really good, with impressive qualifications She has a deep professional background, and she also has a professional certificate."

So, the company decided to give her the job if everything was satisfactory after the background check. "It turned out unexpectedly: everything she claimed was false. She had the guts to lie to a background check company."

In fact, few companies do detailed background checks on top executive candidates, so The chances of being deceived are greater. "Unless it's a merger or a joint venture, we don't usually do background checks on senior management," said Chris Mathers, vice president of KPMG Forensic. "When we start checking their backgrounds, we usually It's when these people are found to be misbehaving. We didn't do an investigation initially."

Mathers recently worked for an international company that hired a Harvard graduate who qualified" almost perfect". Soon after hiring the man, suspicions arose in the company: he always left the company late and behaved erratically. Later, it was discovered that he was stealing the company's software. "Before making the dismissal decision, we checked with three of his previous employers, and they all shared the man's scandals: he had abused his position, he had abused his wife, and he had been fired from the company for stealing."

A thorough investigation of a person does not guarantee that you will prevent him from committing acts that bring down companies like Enron, WorldCom, etc. But in terms of human behavior, some precautions always work.

Original text excerpted with permission from the November 2002 issue of Workforce, Copyright Crain Communication. Translated by Yang Tong.

Shari Caudron is a Contributing Editor for Workforce.