This post discusses at a high level the need for pre-employment background screening verification of new candidates and the methodology to be adopted for the same. If an organization does not have a formal process for the same, it is highly recommended to develop a policy and implement the same. The verification can be done by internal sources or can be outsourced, depending on the requirements of the organization.
What is Pre-employment Background Screening?
A background screening process establishes the true identity of the person and verifies the information provided in the resume. The process enables the organization to minimize the risk of frauds, thefts, industrial espionage, operation disruptions, property destruction, reputation damage. Most importantly it facilitates the organization in providing a safe and secure work environment.
Why is it required?
Employees are the most valuable assets of the organization. The organizations are focused on hiring the best candidates to achieve growth, turnover and competitive advantage. While hiring attention is on selecting candidates with the required soft and technical skills, there is very limited emphasis on knowing the prospective employee’s background and determining the true identity of the person.
Given the backdrop that terrorists, financial crime groups, narcotics dealers etc. are implanting their resources within the organization for the purpose of obtaining sensitive information or providing their resources a discrete cover, it becomes critical for organization to have proper screening processes.
Secondly, various reports issued by consultancy companies indicate that at a minimum, 25% of candidates submit false or inaccurate resumes. The inaccuracies normally are relating to salary, job title and duties, education etc. Considering this, the honest candidate looses out on the job and a dishonest candidate is selected since reliance is primarily placed on the resume.
The pre-employment background screening process also helps in complying with some of the country and industry specific regulations and laws.
An incorrect hire can result in financial, legal, operation and reputation loss and damage. Additionally the organization incurs the cost of hiring, training, etc. If a serious offence is done by the employee there is significant reputation damage and employee morale loss. A well-developed and implemented policy can substantially mitigate these risks and resultant losses.
A few examples of incorrect hire are:
- A financial crime group based in London implanted an employee in the outsourcing unit of the bank in India in the call center process. The employee provided critical customer information by accessing the database to the financial crime group. The group conducted account takeover frauds in London for over $500,000 in a span of two months. The employee had submitted false employment records which could have been detected at the time of hiring.
- An employee joined an organization which relied on the education and employment checks done by the previous employer. The employee had falsified the information with the previous employer which had remained undetected. Subsequently, the employee was suspected to be involved in terrorist activities.
- A senior manager was hired from another country without conducting the required due diligence. It was determined at a later date that the senior manager had falsely stated his technical qualifications.
- An organization outsourced the transport of its employees to a vendor. A cab driver with previous history of sexual assault was hired without verification for commuting female employees at night. The cab driver raped one female employee when she was alone in his cab.
What is the current situation?
Presently, the organizations are focused towards finding a good fit for the job description in respect to technical and soft skills. The line managers are normally involved in conducting the technical interviews and the human resource managers are normally involved in checking the cultural fit and discussing the salary packages etc
In the normal course, reference checks are done prior to the issue of job offer/ appointment letter. The complete background screening is done after issue of the appoint letter and/or after the employee has joined the organization. The primary reasons for this is, first that the organizations are normally want the candidate to join in a short notice and secondly complete documentation is not collected at the resume submission and interview stage. Hence, the required screening cannot be conducted prior to the employee joining the organization.
However, for right hiring the background screening process should commence at the resume appraisal stage itself.
Policies, Procedures & Systems
The management needs to establish the policy for pre-employment background screening which should be an integral part of the recruitment procedures.
To introduce a background screening process human resources, corporate security, compliance and legal department should for a committee. The committee would be responsible for:
- Establishing the policy for background screening which would include the overall scope, methodology and approach of the process.
- Implementing the procedure for background screening which would include nature of forms, data collection from candidates, method of appraising the information, evaluation criteria for considering discrepancies and action required for discrepancies.
The policies and procedures should be documented and implemented uniformly throughout the organization.
The key aspects while implementing the policies and procedures which need to be considered are:
1. What needs to be checked?
The checks which need to be conducted depend on the job role, industry and country regulations. However, the main focus is on the following:
- Criminal background
- Credit rating
Care should be taken that the checks do not contravene any Labor Union & Labor laws requirements. In addition and where applicable, it should be ensured that no conflicts exist between union agreements and the employer’s screening policies.
The period of checking also needs to be established. For example, should the checks be done from the last two employers or the full employment history should be verified.
The application form should be designed to obtain the relevant information and documents from the candidates need to be collected on the period to be checked. The documents which should ideally be collected are:
- Proof of identity – passport, voters cards, social security numbers, drivers license etc.
- Address – Address details including permanent and correspondence
- Education – Copies of certificates
- Employment – Appointment letters, salary statements, resignation letter, full and final settlement clearance letter. For international work experience work permits, tax certificates may also be collected.
- Criminal background – Information on local and federal cases
- Credit rating – Bank and credit card statements
A proper authorization is required from the candidate/ employee for conducting the checks, since it requires accessing personal information. The application form should contain a note regarding the employers intention to conduct background screening and the method by which results will be analyzed. The authorization to conduct background screening can be obtained on the application form itself from the candidate.
The key components of the practices and procedures should identify the use of employment applications and resumes, forms, and letters used including disclosure forms, waivers, a conditional job offer, and job denial. In addition, the procedures should address both internal and external alternatives, including measures used to outsource any screening to be performed by a third-party.
2. Result analysis and decision-making
The critical aspect is the method to be adopted for reviewing and analyzing the information received. A method needs to be established as to how the discrepancies/ inaccuracies between resume and results of the screening process will be addressed. Normally, the segregation of discrepancies can be done as minor and major discrepancies. A few examples of discrepancies noticed during background screening are given below:
- False identity of the candidate social security number does not match government records
- Education the candidate’s name does not appear in the university records
- Employment the period of employment differs from that stated in the resume
- Criminal record – the records show an ongoing case of theft
- Credit rating – the candidate has regularly defaulted on credit card payments
As a process, the applicant should be informed regarding the discrepancy and given an opportunity to explain the reasons for the same. If the organization is satisfied with the explanation, the candidate may be offered the position. However, if the organization is not satisfied with the explanation, a letter should be sent stating the reason for the adverse action.
Adverse action notice If a candidate is being refused employment based on the adverse comments of an external verification agency, the contact number details etc. should be provided in the notice to provide the candidate an opportunity to challenge the information and safeguard the company.
If a person is found with criminal record, action needs to be determined regarding involvement of police authorities
All documentation collected from the candidate, received from organizations for purposes of background screening and the adverse action notices should be retained for a specific period as per the legal requirements of the country. The reason being the candidate can possibly dispute the organizations decision, and the documentation would help justify the organization’s stance.
A thorough implementation of policy safeguards the organization from incorrect, fraudulent and criminal hires, thereby mitigating the legal, operational and reputation risks which would have resulted with these hires. It is the organization’s responsibility to hire candidates with high ethics, integrity and personal values.
The Business Enterprise Magazine published this article in November 2011 issue.