Background Check Lessons learnt from the Fake Pilots Scam

A couple of days back the fake pilot scam rocked the nation. The scam, continues to uncover the depth of corruption in the hiring process and the fraudulent practices carried out by the job seekers to get their dream job. Below is a list of a few things we can learn from this scam.

1.   Background checks are essential across all industry verticals: Currently background checks are usually  more prevalent in IT, ITES (BPO), banking/financial, and telecom sectors. Background checks should be an inherent part of the hiring process across all industry verticals. If cost is a constraint then the employer should ask for a customized  background check package and have the elements most critical to the job profile verified. Example: for a security guard job it is important that the applicant does not have any criminal record.

2.   Background checks should be mandatory at all levels of hiring: Background check should be made mandatory irrespective of the position or the level the candidate is being hired into. A check at the entry level dispels the need for a background check at a later stage and prevents any loss of investment in terms of employee training.

3.   Government bodies need to provide access to candidate information: It was difficult to carry out a detailed background check on the pilots involved in the scam due to the lack of access to the Directorate General of Civil Aviation (DGCA) database. The government needs to make a proactive effort to centralize and provide online access to individuals’ non-confidential information.

4.   Background checks need to consider reputation of educational institute: In case of the fake pilot scam the educational certificates were doctored and validated by a dubious flying school. The background checks should mention the ranking or reputation of the institute that provides the degree and leave the final decision up to the discretion of the HR manager.

5.   De-centralize hiring process: In most companies a few select people are responsible for making the hiring decision. De-centralizing the hiring process will decrease corruption, allow for a more thorough screening process and ensure that the right candidate gets the job.

6.   Verification of educational certificates: Use of fake educational certificates is rampant. The background verification company needs to visit the educational institutes provided by the candidate, carry out a thorough check and report discrepancies, if any.

7.   Recurring background checks required: Background checks must be carried out at regular intervals. This will allow validation of any additional qualifications that an employee submits for promotion purposes, allow checks to ensure all paperwork and licenses required for the job are in order and valid.

Backdoor Entry – Background Verification Services to the rescue

A couple of days back an article in one of the local newspapers caught my eye. At first glance I thought the article would talk about tips for improving resume, acing an interview, etc. But to my horror the emphasis of the article was on the burgeoning IT staffing / consulting firms and the dubious practices followed by them. The dubious practice in question is being termed as a ‘backdoor entry’.

A backdoor entry allows the job seeker to substitute his lack of experience with heavy payouts to the consulting firm. The current going rate for a Rs 5 lakh package job ranges from Rs 1.2 – 2 lakhs. The payouts to the consulting firms are termed as deposits which the job seeker is supposed to get back if he loses his job, within a stipulated period of time. However in almost all cases this amount is never returned back.

The newspaper article also mentions the involvement of the top brass, within the hiring company, in facilitating backdoor entries. Those involved are provided kickbacks by the consulting firms to ensure that the candidate clears the interview and is selected for the desired position.

This creates a vicious circle causing damage not just to the fresher who bought his way into a well paying job but also for the experienced candidate that would now have to grease the hands of the consulting firms to get the job that he deserves. The only winners in this process are the consulting firms and the top brass from the hiring companies that indulge in this nefarious practice.

If we dissect the entire process we see that there are three parties involved

1.     The job seeker

2.    Consulting firms and

3.    Top brass in the hiring company that indulge in this practice.

And the cause for everybody getting away scot-free is the total lack of transparency in the hiring process.

This fraudulent practice can be easily counteracted by following a multi pronged approach wherein the HR department works in close collaboration with an external employee background verification company to carry out thorough background checks. It’s almost coincidental that in our previous post we had talked about the importance of carrying out background checks on temporary or contract hires.

The steps for combating this practice are outlined below:

1.     Companies should mandate background verification for all new employees – whether they work full or part time. This will prevent any laxity in screening a new candidate.

2.    The background verification process should be outsourced to a third party. This will allow the company to get a detailed background check, free from any biases.

3.    The credibility of the information provided by the background verification service provider needs to be continuously monitored. This can be done by the HR manager carrying out random checks on the information being provided.

4.    A more radical step – the background check results for a candidate, specifically the professional and educational checks, can be stored on a public server within the company and made accessible to all employees. This will not only allow the other employees to know the new hire better but will also provide a check against hiring based on biases.

Implementing the above process is not such a tall order. It just requires commitment and discipline from both the hiring company and the background verification service provider to inject the best talent in our work stream.

We at JantaKhoj can help you verify the right candidate.  Reach us on 040 42007092 or sales@jantakhoj.com to get a free sample of the employee background verification services we provide.

Background Checks – A requisite for Temporary Hires

According to the Teamlease Annual Report 2011, temporary staff hiring is up by as much as 19 percent in the year 2010 for IT and salary increments are between 10 percent and 12 percent. Automobile, Telecommunication and Healthcare follow, with about 15 percent growth, and with salary raises between 9 percent and 10 percent. These numbers are predicted to see a sharp increase as more and more companies turn towards temporary staff providers for their employment needs.

A temporary employee (temp) is usually hired for adminstrative work and at times for projects that require very high level of specialization. A company hires a temp to be free from any liabilities i.e. running payrolls, providing insurance etc. that result from hiring a full time employee. However, in their enthusiasm companies forget that they can be held responsible for any misconduct by a temporary employee.

The current trend in hiring a temp is that the company lets the staffing agency worry about the quality of the temp provided. In some cases the interview is also carried out by the staffing agency. As demand for temporary staff increases, the staffing company maybe tempted to become lenient in its hiring process and place people that do not match the employee standards for a given company.

Also a company may want to go the temp-to-full time hire route wherein they hire a person from a staffing agency, review his/her work over a stipulated period of time and then offer the temp the option to join the company on a full time basis. A thorough background check would provide a company with the required information and insight to make the right decision.

Given the high employee attrition rates, it is imperative that each new addtion to a company’s work force be thoroughly scrutinized to provide a conducive work environment for all employees. Companies do not want to bear the pre-employment expenditures i.e. background checks, in hiring a temporary employee. In doing so companies fail to understand the importance of background check and can expose themselves to negligent hiring lawsuits that may arise from any acts of misconduct carried out by a temporary employee.

Companies hiring a temp can pass the cost of background check to the staffing companies. The background check should be thorough and must include address, education verification, criminal check and employment verification. Companies may have to shell out a premium when they demand a background check for each temporary employee but this cost would pale in comparison to the long term savings that result from hiring the right candidate.

It is also important that the staffing companies use a known and well established background check service. The background check service being hired should provide documentation for all the checks performed. We at Jantakhoj understand the importance of background checks in hiring the right candidate. Reach us on 040 42007092 or sales@jantakhoj.com to get a free sample of the employee background verification services we provide.

Employee Background Verification and its effect on Employee Turnover Rate

In our past articles we have listed the qualitative benefits for conducting an in-depth background check. Most of the HR managers agree with the fact that a thorough background check is the best aid in finding a qualified and dependable employee that can be a long term player and a driving force in the company’s growth. Others however need more convincing and some numbers to help them make the transition from a skeptic to a believer. In this post I have tried to quantify the Return On Investment (ROI) for a background check and dispel any skepticism for the need to carry out employee background verification.

Before we take out our calculators and start crunching numbers, it is important to understand the cost involved when a employee leaves an organization. The simplest way to chalk out the costs involved is to detail the employee lifecycle which begins with the hiring process and ends with the employee leaving the company.

The costs associated with the employee lifecycle can be outlined as below:

1.     Pre-Hiring Costs: Includes advertising costs. These costs include the cost for posting in daily classifieds, job boards, social media, commissions for third party recruiters, etc. These costs are variable and depend on the position to be filled. An executive level post is harder to fill than an entry level one, and requires more impression and exposure and has more costs associated with it.

2.    Screening Costs: These costs include the time spent by the HR department in screening through the resumes received and short listing a set of candidates for the first round of interview.

3.    Interviewing Costs: This cost is highly variable and depends on the pay scale of the interviewer’s and the number of interview rounds involved. Example. If an interviewer is earning Rs 50,000 per month and interviews a new hire for 2 hour then the cost associated would be Rs 313per hour.

4.    Administration Costs: Once the desired candidate has been finalized, the administration costs kick in. This refers to the costs associated with putting together the relevant paper work, setting up the new hires work space, among others.

I have purposefully left out the costs associated with carrying out a thorough background check. We fill factors in this cost in our final ROI analysis.

5.    Training Costs: These costs include induction program costs and the costs associated with providing domain, process, skills or software related trainings.

In today’s market there is no dearth of opportunities for a job seeker. This abundance of job has created unique challenges for HR managers in their effort to hire and retain new talent. Today the employee attrition rate for IT/ITES companies stands at around 25%.

The final cost associated with the employee turnover rate is the Employee attrition cost.

6.    Employee Attrition Cost: This cost occurs when an employee leaves the company and includes both direct and indirect expenses. The direct expense would be the overtime paid to other employees to take over the workload of the employee that left the company. Indirect costs relate to be the summation of all the costs incurred to find and hire a replacement.

To help calculate the employee attrition cost lets head over to http://bit.ly/Employee-Turnover-Calculator and enter the required information. The turnover costs that are estimated based on a 25% attrition rate can be a real eye opener. The resulting expenses are a testament that even a 2% decrease in attrition rate can result in significant savings.

Eventually control over attrition rate boils down to the degree of information and understanding an HR manager can develop about a new hire. The cost incurred for hiring the services of a premium employee verification company pales in comparison to the net saving that can be achieved.

We at JantaKhoj understand the need to be result oriented. We can provide you with the most detailed information about your prospective hire and help you make the most profitable decision. Reach us on 040 42007092 or sales@jantakhoj.com to get a free sample of the employee background verification services we provide.

Could an Improved Background Verifications Process make for a Scam Free India?

Huh…the title of this article does sound a little absurd, well at least that is what I initially thought. But humor me for a while and read on as I try to put together pieces of this complicated argument.

India has been bogged from times immemorial with scams of varying proportions – be it the Haridas Mundhra scam, the first big financial scandal of free India, to the more recent 2G scam. The story underlining every scam has been the same – excessive greed of a few people and their belief that they can game the Indian system. Given the rate at which new scams are coming to light, gaming the Indian system seems to have become the national pastime.  Is a better system the nirvana for a scam free India? If yes, what are the changes that need to be made and how does background check fit into all this? To answer these questions we will have to understand the ingredients that go into the making of this heady cocktail and devise controls to impede a hangover.

The magnitude of a scam has always been directly proportional to the financial, political clout and connections that the scammer wields. A good scam is a long term game e.g. Madoff investment scandal is spread through word of mouth, and usually plays on the ignorance and greed of the scammee by promising returns that are disproportionately higher than those of the market.

In today’s ecommerce economy there exists a need to convert black money into white. Cash no longer reigns supreme; almost every online, bank transaction is tied to a person’s PAN card number. To legitimize the money earned via these endeavors (scams), it is percolated within family members, invested in real estate through bogus companies setup on family member names and used to purchase gold.

A scam starts because the activity of a certain individual goes unchecked for too long and is made successful by the lack of a centralized information system that can document a person’s personal and professional earnings. In past storing, handling and centralizing the financial records of a billion plus people would have been an arduous task but this feat is achievable today. This centralized information system would be a social media of sorts, that connects people via their financial activities.

The idea is to connect people with each other based on their personal, professional and financial relations. Any erratic change in the financial activities of one individual results in a red flag for all the people within his immediate network and will lead to scrutiny of all their financial records. At this point an offline background verification company can be hired to drill deeper and discover any additional information that can assist in understanding this irregularity better.

This system can be made truly infallible by connecting all the dots with a common identifier. I recognize the UID in its full and true implementation as that common connecter between all financial transactions. To make this system truly robust and international a stipulation that requires all international financial institution’s to request the UID for all transactions, should be tabled. This international transaction information along with the UID needs to be fed into the centralized information system. Hence providing for total assimilation and integration of all financial transactions.

There is need for our government to enforce stricter employment rules including a thorough background verification process for hiring new recruits to any political party. To maintain transparency the services of a third party background verification check company should be availed and the finding for each individual needs to be published online for the general public to view. This initial offline background check will act as a benchmark to compare all future activities.

The above is my attempt to provide a structure for a semi-automated process which is continuously aided by a thorough and ongoing background check. I understand that the process defined by me is in its simplest of form and require a detailed document for real implementation. However all ideas start with a concept and ultimately reach their destined goal.

Please feel free to provide your comments on this article and help us evolve it further.