Many companies in Asia still adhere to age-old practice of character reference checks with references provided by the candidates though the companies realise this is becoming a pointless exercise. Increasingly, companies have started to appreciate the value of a thorough background screening.
The biggest reasons companies opt in to conduct a thorough background screening on candidates and existing employees are:
1. Safety or Security
Employers have to provide a safe workplace and employing individuals with criminal related background who might have tendencies to, say, act violently, might pose a potential harm to the rest of the workforce. In the US, employers have a legal obligation to exercise due diligence in hiring. If a dangerous hire or misfit who can possibly cause harm was hired, the employer can be sued for negligence.
Situation can be more serious if the victims are partners or vendors or clients. This will affect the reputation of the company. Protecting the brand reputation is important. Aberdeen Group studies reveal 89% of screened applicants are retained in the first year versus just 58% not screened. Companies who adopt background screening as part of their Talent Acquisition strategy tend to hire top-ranked candidates and this further enhances the brand.
If an individual is hired for a finance-related role like cash management, a background check will reveal if the individual has a fraudulent history or theft. A 2014 Global Fraud Study by Association of Certified Fraud Examiners revealed the following fraud-related costs:
Approximately 77% of the frauds were committed by individuals working in one of seven departments: accounting, operations, sales, executive/upper management, customer service, purchasing and finance. A PricewaterhouseCoopers Global Economic Crime Survey 2014 reports that frauds committed by internal perpetrators account for 71% of frauds, depending on the industry.
The US Chambers of Commerce estimates that theft by employees costs American companies $20 billion to $40 billion a year. The Chamber also reports that an employee is 15 times more likely than a non-employee to steal from the employer.
Some case examples in Asia related to “security” related discrepancies:
Statistics show that more than 20% of CVs or resumes seem to have some form of discrepancies. Some Candidates pad up or exaggerate their CVs in terms of positions held, salaries earned, tenure with the company, reasons for leaving and even fabricate employment with a company they never really worked for. A much talked about case example below:
Another area where there’s integrity issue is educational qualifications. Some prominent examples where damage to brand equity potentially could have led to decline in shareholder earnings:
Asia’s obsession for academic titles can be reflected by these educational scandals. Unfortunately, this trend seems to be still ongoing. It doesn’t help that degrees can be purchased very easily in some of the Asian countries. Manila has a well-known forgery district where a high school diploma can be purchased for as low as $8. There are similar sources in India and Malaysia too.
The major consequence of hiring the wrong fit is reduced productivity. The lack of required education, skills or experience can lead to placement of incompetent candidates in roles where they are not effective. This has prompted Talent Acquisition leaders to check if the educational and/or professional qualifications are valid and if they had been issued by legal and accredited institutes.
These unfortunate cases just form a sample amongst tons occurring in Asia. This has increased the awareness of the values of a thorough background screening in Asia. A mix of the appropriate checks based on the risks associated with the roles and accountability levels will definitely alleviate these avoidable occurrences.
This article is written by Kannan Chettiar, Managing Director of Avvanz. Avvanz has 3 business pillars – Avvanz Hire (Recruitment Process Outsourcing and Comprehensive New Employee On-boarding), Avvanz Screen (including Psychometric Assessment and Background Screening) and Avvanz Develop (e-Training, Instructor-led Training and Blended Training).