Background Screening and Investigations

Managing Hiring Risk from the HR and Security Perspectives

W. Barry Nixon, Kim Kerr

• Publisher: Butterworth-Heinemann
• Year: 2011
• ISBN:
  9780080569178
• Topic: Politics & International Relations
• Subtopic: Political Corruption & Misconduct
• Index: Politics & International Relations

Hiring highly qualified people is crucial to every company, and Background Screening and Investigations is an essential guide to succeeding in a turbulent business environment. A crucial part of any hiring process should be employment background screening, pre- and post-hire, which gives hiring personnel a glimpse into a person's past behavior patterns, propensities, and likely future behavior. Background Screening and Investigations describes all aspects of the employment background screening processes - its history and evolution, the imperative for implementing a screening process, and the creation of a comprehensive policy. Nixon and Kerr show how security and human resources professionals can work together to negotiate legal hurdles and make their background screening process successful.* Where do HR and security perspectives differ on hot topics like hiring convicted felons, data protection, and sexual predators?
* What does state law allow when screening job candidates?
* How should companies deal with emerging issues like international background investigations and continuous (Infinity) screening of current employees?

1 Managing Risk in the Hiring Process

What Are We Risking by Not Having an Appropriate Screening Process?

Some definitions of the word risk are “the chance of something going wrong; the danger that injury, damage, or loss will occur; somebody or something likely to cause injury, damage or loss. To put something in danger; to place something valued in a position or situation where it could be damaged or lost, or exposed to damage or loss.” In other words, to take a risk is “to do something despite the danger; to place something valued in a position or situation where it could be damaged or lost; exposed to damage or loss; or to incur the chance of harm or loss by taking or not taking an action” (dictionary.reference.com/browse/risk).

Risk can occur whether you act or fail to take action. The authors of this book are practitioners who work with clients and customers to create strategies and solutions in order to prevent risky hiring decisions, poor employee retention, and workplace violence. So our definitions of risk have a common sense dimension. But we would like to start with a discussion of risk as the basis for conducting screening of all persons associated with your organization including employees, volunteers, contractors, consultants, and vendors.

Staffing is the most fundamental and critical driver of organizational performance. In the simplest sense, staffing is putting people to work. It begins with workforce design and includes recruiting, assessment, development, workforce planning, and retention. Today, staffing may involve any combination of employees, contingent workers, contractors, consultants, and outsourced operations working around the world. And although it may involve thousands of employees, staffing recognizes the importance of every single person: the individual worker is the ultimate performer (www.staffing.org/staffinga-z/).

The American Society of Industrial Security (ASIS) has produced a Protection of Assets (POA) manual that is considered the foremost expert guide on how to create, maintain, and adjust corporate security strategy, processes, and policies. The POA suggests that “an effective security plan or program must be based on a clear understanding of the actual risks it faces.” We agree that a frank discussion of an organization’s risk should occur before a proper screening strategy plan or process can be launched. Taking time for such a discussion is vital if an organization is truly serious about identifying, addressing, and ultimately mitigating the risks it faces. This is true for every business concern from the smallest of businesses to the largest of corporations.

The following is a discussion on how to address risk in the real world.

The Avoidance of Risk—is This Possible?

Frustration can arise, especially with the small business owner who rolls his eyes when told of the importance of doing a background check, knowing that his primary focus is on running the day-to-day business. Small business owners are not always aware of simple risk-mitigation strategies that could reduce or eliminate sometimes show-stopping issues like violence in the workplace.

You can try to do all the work yourself. Maybe your business is small enough and business model simple enough that no additional staff is required. But what if your business utilizes vendors, temporary workers, or consultants? And what if you get sick and can’t work: What do you do then? Do you have time to make the necessary telephone calls to verify a potential employee’s education, work history, etc.? Perhaps it is more relevant to ask: Will you take the time necessary to conduct a thorough background check on your own?

On the surface, employee screening appears to be a fairly simple, straightforward process. However, when proper screening measures are taken, a degree of complexity is involved, as is clearly demonstrated in the 2002 Winter Olympic Games example discussed in the introduction. These strategies should also include policies on the hiring and retention of personnel, procurement of professional services, and utilization of vendors and volunteer organizations. It is our contention that there is a superior, more cost-efficient strategy that will give any organization a greater return on investment and the ability to make better hiring decisions, which will significantly stabilize their workforce and avoid, or at least mitigate, organizational disruption.

Starting a business or participating in any sort of business relationship has inherent risk factors. There are countless books that talk about risk as a part of life, and there are many experts in the risk management and risk information business that dedicate hours of discussion to the impact of various risks. But for our discussion, let’s keep it simple and basic.

Let’s start with a discussion of strategies to address risk (specifically risk mitigation).

Mitigating Risk Through Insurance and Indemnities

You could attempt to transfer risk to another entity like an insurance company. Most of us are familiar with this strategy. We buy policies that cover our homes, businesses, vehicles, and medical needs. If an insured event occurs, we call our insurance provider and file a claim. If the incident or event is covered, we are compensated, reimbursed, or made whole. If the event involves more serious issues like loss of life or livelihood, the coverage will have limits. In everyday life, we make risk/reward decisions all the time. The cost of risk can be quite high in many industries and is a true risk management decision. This is extremely important in businesses that require working with the elderly and children, driving of vehicles, shipping of cargo, and the operation of publicly accessed businesses like retail stores, amusement parks, and shopping malls.

There is no question that insurance is very important; however, is it the total solution to providing the greatest security and protection possible within an organization? Violence, theft, and loss of proprietary information or trade secrets cannot always be entirely restored with insurance alone. Employee goodwill and morale can be greatly impacted in ways not easily measured. Further study should be conducted in an attempt to weigh out or assess the risks or costs involved in forming all business relationships. It must be determined if the employee, contractor, vendor, etc. with whom the relationship is being formed is well aware of, and in compliance with, the overall organizational function and mission.

Mitigating Risk Through Contracting and Outsourcing

You can transfer risk by contracting the activity or work to some other party. Transferring risk to a third party can sometimes be accomplished by outsourcing the activity or task to an outside provider of goods or services. Vendors, temporary agencies, consultants, and contractors are examples. Many companies use this model in various industries like construction, call centers, and other labor-intensive areas that require a particular expertise. Gaming, for example, has many outside suppliers that are necessary to run a casino or a related facility, like a hotel or restaurant that might be associated with the gaming business. However, the net effect of outsourcing is often more costly and less effective in the employee-screening area because most outsourcing companies will charge for functions that can be done cheaper and more effectively through internal control of the hiring process. This is especially true in the highly skilled areas where you want to truly own the work product.

This transferring of risk is especially prevalent in the background check industry by transferring the liability for mistakes to the outside vendor used in the information retrieval process. In other words, if the screening company makes a deliberate mistake or is negligent in their screening process, the consumer can attempt to hold the hiring company and the screening company liable. However, assigning liability to an outsourced company can be tricky because both the hiring company and the screening company should, ideally, do their utmost to ensure the accuracy of the background check. Both have a vested interest in returning up-to-date information that is attributable to the applicant. However, there are numerous risks involved in background screening that must be addressed. For example, it is extremely difficult to retrieve the correct background information on people with common names. How many people named John Smith or Jose Lopez live in Northern California? For this reason, good background screening companies utilize sophisticated computer applications and employ a great deal of time and manpower sifting through reams of information. In fact, a good background-screening company actually spends more time in the beginning of the process by verifying personal information as opposed to investigating the applicant. A strong process of collecting and matching identifiers (i.e., DOB, addresses, full names and alias, etc.) is critical. If the screening company has strong initial data, they can accurately retrieve information from courts, former employees, and educational institutions.

Risk Acceptance

At some point, every organization must accept some degree of risk. The risk-mitigation strategies discussed here can significantly lower the likelihood of a negative outcome and are therefore extremely important; however, no one strategy or strategies collectively offer a 100% accurate outcome. In fact, the cost to be, let’s say, 99.9% sure of the accuracy of every detail could be enormous and/or would slow down a hiring model to such a degree that an organization’s ability to efficiently conduct business would be negatively impacted. And so risk acceptance, to some degree, is inherent in all business relationships and decisions.

On the other hand, if you are constantly having to hire new employees because your current hires are ill equipped to perform the job or if their background includes a history of behavior counter to your work culture (such as instances of threats or acts of intimidation), your business could have significant problems, such as understaffing and low morale. In some organizations, the only recruiting requirement is verifying the legitimacy of the applicant’s work background. Yet even this basic requirement, in some hiring models, is ignored. For example, many employers, particularly in industries such as construction, farming, and food services, dismiss the importance of proper documentation as it applies to an individual’s ability to work within the United States. Legal penalties more and more companies are beginning to receive for knowingly hiring illegal immigrants is a perfect example of this kind of neglect in verifying an applicant’s background.

Many companies have been unsuccessful in streamlining hiring processes and procedures largely due to politics, bureaucracy, and the “we’ve always done it this way” excuse. While all hiring models must include some form of applicant screening, background screening is a necessity in this day and age that no employer can afford to forgo. As discussed, the risks involved in bringing in an “outsider” are too great for any organization to accept without proper securit...