Verification Agencies Ecosystem – Competition and Cooperation

This post aims to give an inside view of the industry to the customers who use employee background verification services. It will help them understand how the verification agencies compete and cooperate with each other to serve customers.

The background verification industry in India has emerged over the last decade to become a mature ecosystem with around 15-20 national and large regional players and literally hundreds of local players. India being a large country, with hundreds of cities and towns, 14000 police stations and 600 police offices, thousands of universities, it is impossible for a single player to have its own dedicated employees covering the entire nation. Relying on other verification agencies and providers to extend the geographical and logistical reach is the logical outcome.

Even the largest of the verification agency follows the outsourced model in which certain parts, if not all, of the verifications are conducted through a network of trusted partner agencies. At a certain level, the verification agencies may be competing with each other for the end user businesses, but at the implementation level, the agencies work with each other to extend their reach. For example, a large regional agency based in National Capital Region (NCR) may be in a position to manage all the verifications in the Northern region on their own or using their direct consultants. But they may enlist support of other regional agencies in Western, Southern and Eastern regions of the country. Also, they may select specific vendors for different types of verifications (viz. address, education, criminal) in each of these regions.

Using such a model would definitely mean sharing of the profits with other members down the value chain, but it will still be profitable than hiring their own employees in each and every part of the country and building the relationships that may be required for conducting educational and criminal checks. So the resulting value chain benefits customers as these lowered costs of operations lead to lower price for them.

In summary, the verification agencies ecosystem presents a very good example of ‘co-opetition’ where they cooperate and compete with each other to bring the best solution to the market.

Employer, Employee and the Employee Background Verifications

Employee Background Verifications are fast becoming a mandatory requirement for hiring new employees. Employers are no longer willing to rely on pure instincts to make a hire and often analyze a candidate’s background check report before taking a hire or not decision. The reliance, by the employer, on the employee background verification report has created a new dynamics between the employer and the employee. It has become eminent that the job seeker needs to maintain a well defined career path from the start. The career choices, duration of each job, employee qualification, conduct at work places, etc. have all become elements that are scored upon in the employee background verification report card.

The reliance of the employer on the background verification reports provides the employers with information that the job seekers presumes has been lost in the bygone years. With the employee background verification report the employee has an upper hand during the interview process. Not only does the employer have access to the information that the job seeker has provided but also can retrieve information via the background check report. This dual access to information allows the employer to segregate the real from the fake.

The candidate on the other hand has nothing to fear if the information provided by him is accurate and backed with sufficient evidence. Information that was genuinely forgotten may crop up, an valid reply to such query would help absolve any seeds of doubt that may grow in the employers mind. Then again employees need to realize that the background verification check is a peek into their previous work history; a short stint in company due to unfriendly work environment does not impede the possibility of a bright future.

The employee background verification check provides a win-win situation for both the employer and the employee. It helps weed out candidates that have fake work or educational experience thereby providing more opportunities to the deserving ones. On the other hand it allows the employer to make hires that are in his company’s best interest. The employee background verification report is thus weaving employer-employee dynamics that is beneficial for the parties.

To what extent are Background Verification Agencies accountable?

In today’s scenario, employee verification have become a necessity. However, it is also true that verifying can only reduce risk, not eliminate it. There is no doubt about the fact that thorough background verification goes a long way in ensuring a strong foundation for any company in the form of good employees. Yet this does not necessarily ensure that an employee with a picture perfect background on papers will never succumb to any wrongdoing ever. If this happens, the accountability of a verification agency automatically becomes questionable. To what extent is an Employee Background Verification agency legally liable for its reports?

Everything that a verification agency does is available for easy reference to the employer in the form of employee verification reports. These reports give a conclusive summary about the background history of any given employee. Can these reports prove to be useful when a verified employee is caught cheating? Let us investigate further.

Employee Verification Reports

In most cases, verification agencies provide reports that cover a wide spectrum of information ranging from address, education, criminal records to the social media presence of the employee, for a specified tenure. The reports are generated after conducting extensive physical, telephonic, and online verification. The employment verification is carried out by contacting the HR department of past employers directly. Address, education and criminal verifications are done by physically going to the address/educational institute/police stations. A quality assurance team checks all the verification reports and random audits are conducted to ensure accuracy. Basically, a lot of hard work is put in creating these reports individually for each employee. Utmost care and precision is taken to cross check the minutest of detail.

How to use the Verification Reports?

This information should only be used in conjunction with other reliable and verified information obtained by an individual/company from a different source, duly verified before any kind of litigation. Decisions on hiring or termination employees should be taken only in coherence with the applicable state and national laws.

In the event of using the information contained in the reports for criminal, civil background checks, it should not be assumed that the information provides a person’s complete criminal or civil history as in most cases the verification requests pertain to the employee’s activities in the past one to ten years. Therefore, it becomes difficult to determine whether there is a history of misdemeanor, before or after the specified duration.

The Accountability factor

The verification agency is certainly liable for the accuracy and veracity of the reports it has provided at the time of employment background verification, but not liable to any employee actions or discrepancies which occur after the point of initial verification. A verification agency does not claim to monitor, or investigate anybody’s movements 24/7. This is the reason why ongoing periodic verifications are necessary and highly recommended.

Which One to Choose – Pre- Or Post-Employment Background Verification?

Occasionally, we receive this query from the companies which are either just about to start employee background verifications for the first time or those which are keen to get an unbiased external opinion. Like with most of the issues with background checks, the answer is driven by the unique requirements of the company, the role / functional area, the seniority, the labour pool and the industry. Here’s how some of these may be kept in consideration.

The unique requirements of the company and the experiences which they have had till now with their recruitments have a significant impact on this decision. If a company has seen too many fraudulent candidates and a fair bit of discrepancies, it will definitely be inclined to go for pre-employment background verification. This decision is perfectly all right.

If the role is a highly significant or critical one or involves a high level of seniority, then it makes sense to go in for pre-employment checks so that the possibilities of discrepancy can be done away with and the company can move forward with employment of the candidate. For certain functional areas like finance, purchase/procurement, systems security, pre-employment verification may be the way to go.

If the labour pool available in the market is known for opportunistic behaviour or for highly discrepant resumes, it may again make sense to go for in for pre-employment screening. To a certain extent, this is linked to the industry too. For example, in the real-estate, construction and infrastructure industry, pre-employment screening is pretty much the norm. Generally a higher trust industry will tend to go for post-employment background verifications.

Whichever model you choose to go ahead with, we recommend that you always take candidate authorization for the background verifications. This may require you to issue the offer letter too in most of the cases. Also, in pre-employment verification, safe-guarding the current employment of the candidate should be kept in top most consideration. That is, the process of verification should not have an adverse impact on current employment of candidate.

Please feel free to share your thoughts via the comments.

2011 – A Evolutionary Year for Background Verification Service Industry

In 2011, the effect of the US economy crash was felt in India in terms of job loss, decreased projects and more importantly the clamour of oversees clients to get more ROI from their Indian service provider. The wavering job market provided the employee verification industry with a unique opportunity to showcase its importance in the Indian market. The Employee Background Verification services have since made great in roads in providing fast and accurate information to help companies assess candidates during the pre and post hiring process.

There were obvious apprehensions about the success of the Employee Background Verification service in India, given the lack of a centralized database for background screening. However this major hurdle bas been overcome by the background verification industry by creating localized networks to check on the candidates educational and employment details. The Internet has also helped in analyzing, detailing and verifying candidate information. Candidate information collected from both the offline and online venues is merged, validated and the final verdict sent across to the requesting companies. The employee background verification service has become a HR manager’s advisor and guide. The information provided via the background verification service helps the HR manager get a transparent and unbiased view into the candidates past, and thus helping the HR manager make a confident hiring decision.

The application of the employee background verification services not only helped in hiring new deserving candidates but also helped retain valuable employees through an ongoing post-employment verification process. The post employment verification process provides the company updates about its employees new achievements, both educational and/or social. Access to this information can help the HR manager develop a better understanding about the employee requirements and help retain the employee by addressing the employee requirements within the company.

2011 was a year of recognition and acceptance of the background verification services in India. The service proved its potential as an important HR tool. This service industry continues to evolve and is gaining acceptance from a plethora of new industries. All companies that follow a background check policy have experienced undisputable short and long terms benefits. If you are a company that has yet to set up a employee background process then call us @ +91 40 42007092 today and we will tell you how you can have a more profitable and productive 2012.

Economic Slowdown and Employee Background Verifications

As the year 2011 ends, the Indian economy does not have much to offer to make the businesses, consumers and the government happy. Interest rates have remained at high levels, currency depreciation has been brutal, inflation continues to remain high, consumers are not buying more goods and services and businesses are hedging their bets by sitting on cash. Most of the analysts are predicting a turbulent and gloomier 2012. While the predicted Mayan apocalypse of 2012 will not happen, the impact on the economy and markets will definitely not be very positive.

So what happens to the need for background verifications during such difficult phases? Many companies and HR professionals may start viewing background verifications to be an easy area to cut down on the costs. Under pressure from the finance heads and leadership, it is natural to view the cost of employee background verifications to be an overhead, which can be done away with during the tough times.

The important question is how the candidate behaviour changes during times when jobs are tough to come by. The incentive to falsify credentials is much higher when job markets are tough. There are lesser jobs, with greater number of candidates chasing them and what better way to beat the competition by adding a few more fictitious credentials here and there in the resume!

So cutting down on employee background verifications in this stage would mean taking a higher risk with candidates having potential discrepancies in their credentials. There is a higher likelihood that the great candidate whom you are just about to hire may have some skeletons lurking in their past. It is all the more important in tough job markets to do even more comprehensive background verifications. Another way to look at this – in these times, every position and new hire represents a critical investment on part of the company. So it becomes even more essential to ensure that the investment is being made on a worthy candidate.

Ensuring Authenticity of Employee Background Checks

One question which comes up frequently in our discussions with prospects and customers is how we ensure authenticity of the background checks which we do. The answer lies in the specifics of the type of the check.

Address Checks
It is imperative to physically visit the specified address and to confirm the residence by meeting the person being verified and/or the other residents. Certain verification agencies just call up the candidate and ask him/her for the address and that becomes their ‘address verification’. Needless to say, such a phone based check is completely useless. Only a site visit can ensure authenticity. It is even better if the field officer collects an authoritative copy of address proof to attach with his/her address verification report.

Employment Checks
Authentic employment verification will not rely on a telephone or email based verification with the reference or manager whose contact details have been given by the candidate. The only trustworthy method is to independently reach out to the HR team of the earlier employer and to verify the credentials directly with them.

Education Checks
As of now in India, the only reliable way to authenticate education qualification is to go to the certifying board (for X, XII classes) and the registrar’s office of the university / college / institute issuing the degree. Having the photocopy of the certificate or degree stamped and signed after such verification by the board or registrar’s office lends high reliability. Relying just on the photocopy without verifying with issuing educational body or relying on database checks for these is not recommended.

Criminal Checks
The lack of a centralized database to conduct criminal checks will continue to wreck havoc on true, authentic and reliable criminal checks in India. Till the time, home ministry sponsored CCTNS becomes fully active, the only recourse is to do criminal verifications at the local/city/state police levels. If the person has been moving around, such checks need to be done at each residence. Again, within these checks, it is important to have a stamped and signed document from the police authorities which clearly mentions that there are no such adverse references or records against the candidate.

Reference Checks
These are generally the weakest of the checks as there is a high chance of the candidate trying to rig them up by introducing ‘bogus’ references. So any personal references can immediately be ignored. Even with professional and academic references, care has to be taken to ensure that these are indeed what they claim to be and that they did actually have some association with the candidate. Additional research should be done over the Web and other people search databases to ensure that such references are not bogus.

So these are some of the points which go a long way to ensure authenticity of the background checks. What do you think? Feel free to share your own insights.

Employee Background Checks and their Socio Economical Impact

I would understand if the readers of this article think that the title of the article ‘ Employee Background Checks and their Socio Economical Impact’ is a little too far-fetched. Let me explain my reason for why I believe that a stringent and mandatory employee background check can have far reaching affects on the social and economic conditions of the country.

First let’s understand what an employee background check entails. Background checks typically include the following verifications:

• Professional Verification
• Educational Verification
• Address Verification
• Criminal Record Verification

Now for a moment let’s assume that the need to carry out a detailed background check, by the hiring company, was a law in India. Would the mandate for a background check change the job seekers approach towards the job? Would it require the job seeker to be more honest and transparent? The answers to the above questions lie in the depths of human psychology. A large pool of the population wants to be law abiding and in the process leads a stress free life, free from the fear of getting caught. As per mass consensus, any requirement that is not a law is open to self interpretation or can be tweaked to suit one’s needs. Implementation of a law translates to a case of imposing honest by making dishonesty punishable.

Employee background check is one of the few checks that take into consideration multiple aspects of the candidate’s life into picture. It’s not a check for a given instance of the candidate’s life rather it spans over multiple years, taking into account the candidate’s educational and professional history, while being refreshingly current. Now if the employee background check was the law or for that matter a mandate in all companies, big or small, then it would push the candidates to be more focused on studies, as forging educational certificates would be a big risk. It would require the candidates to choose their career paths more carefully, apply themselves more honestly to their work and to be more honest about other aspects of the background check.

Not all people will be honest – there will always be a few that will try to game the system; the emphasis here is on having a large set of the population to follow the system. A study in comparison would be the mandatory military service law in Israel. In spite of this law not all Israelis would be disciplined but I am sure a large majority are. From a social aspect a strictly implemented employee background check process would result in a more transparent and honest society.

The economic gains from the above suggestions are a natural outcome. A country where the employee background check process is a law is a haven for all businesses, big or small. It’s a fact that companies that conduct stringent background checks have a higher retention rate and the employee background check being a law would put also put pressure on the job seeker to be honest.

Mandating a stringent employee background check will definitely create an positive impact on both the social and economical growth of the country. It will allow distribution of jobs to the most deserving candidate, curb falsification of educational or professional documents, and provide a win-win situation not just for the employee but also for the employers.

Clues for discovering the Holy Grail of Employee Retention

The employee attrition rate in India is at an all time high. The Hewitt Associates’ annual Asia Pacific Salary Increase survey for 2009-10 pegs the turnover rate in India at 13.8 per cent. This high employee turnover rate results in both direct and indirect losses to a company and causes continued and unwarranted pressure on the HR department. I believe that given the current job opportunities the attrition rates would continue to see an upward trend in the near future.

Before we discuss a solution for this problem it is important to understand the causes leading to employee defection. Most of the causes revolve around the level of satisfaction the job provides to the employee. Job satisfaction can be a factor of salary provided, level of workload, opportunity for growth, level of skill competency and level of job security.

I would assume compensation as being the most important factor for employee defection. Resolving job compensation issue can be a tricky situation wherein a consensus needs to be reached between what the company is willing to pay and the employees’ perceived value of him. However either of the attrition factors cannot be held in isolation. It is always a combined effect, for example if a company invests in improving employee skills then a progressive employee may not mind a lower salary. On the other hand, low job compensation coupled with excess work hours and no opportunity for growth is a sure shot recipe for losing the employee.

One more not so obvious reason leading to employee defection is the lack of job skills. Most employees exaggerate their competence for a given sill set. This allows the candidate to be hired, however as the work load begins to mount and deadlines are set, there develops a fear of getting fired. Rather than get in a situation where his/her skill sets are questioned the employee begins to seek alternate job opportunities and defects ASAP.

Most of the HR manager may be aware of the above causes of employee attrition and may also have the necessary steps in place to prevent the same. However the implementation of a thorough employee background check during the hiring process can provide insight into the candidate’s professional background and personality.

The valuable information provided by a thorough background check arms the HR manager with the information for making critical hiring decisions and allows filtering of candidates that are a mismatch to the organizational culture.

Why are Employee Background Checks so costly in India?

The cost of employee background verification depends primarily on the types of the checks selected, number of each such check and the vendor selected. This has been dealt with in detail in a previous blog post – How much does Employee Background Verification cost? The reason behind these checks being so costly in India is that there are certain checks that require a lot of physical operations and running around as against online database checks (which are the norm in more developed nations). The address, education and criminal verifications in particular are relatively costlier. This post will focus on why these verifications cost as much as they do.

Address Verification
Address verification is conducted through a field officer’s visit to the mentioned address. The field officer verifies the address details, the tenure of stay, the ownership status and details of other members residing there. If in case the door is found locked, the officer goes ahead and verifies the details from people residing in the neighborhood. The cost of such a check will typically depend upon the remoteness and accessibility of the location. This check may not be feasible in certain disturbed areas or may cost extremely high. With the advent of Aadhar, this cost may probably be lowered substantially, as physical verification might not be required anymore in some cases.

Education Verification
Absence of a centralized database is the main cause behind education checks being high-priced. Some of the universities have started maintaining online records of their students. However, development of the system and implementation going forward will may turn out to be fast but retrospectively will take time; they have a huge data to transfer from the old system to the new online model. Therefore, a unified, centralized educational database will still remain a challenge.

So physically, you can go to the universities and check the old records, but there are hurdles associated with that. Thanks to the endless sinewy protocols in Indian academic institutes, it can take a long time for the university authorities to find and verify the record you are looking for. Only a few of the higher education institutions have placed their graduates’ lists online. In addition, the HRD Ministry sponsored National Database of Academic Qualifications is still in the development stage. So a physical visit to the institution becomes imperative in most cases.

Therefore, the best and only reliable method is that a designated officer physically visits the registrar’s office with a photocopy of the certificate, mark sheets and sometimes even examination hall cards to verify the authenticity of the degree. The pricing therefore depends on the distance and the mandatory university fees.

Criminal Verification
The police records are available at different levels – national (National Crime Records Bureau), state, city/town/district, and local police station. While the records are computerized at NCRB and most of the state levels, they may not be available in electronic form at most of the district and local police station levels.

Therefore, the criminal records have to be accessed at the state, district, or police station level by physically visiting the specific office and requesting the criminal background verification.

Criminal verification in India is more difficult as there are no Felony or Misdemeanor courts in India like western nations. Instead, India has Police Departments of various states and metros. With each Indian state having its own system of functioning, and absence of computerized database in many cases, as almost all records are filed manually, it becomes difficult to verify criminal records.

Now you have a fair idea about the costs associated with verifications. However, have you ever wondered what is the cost of negligent hiring, or not executing due diligence in the Employee Background screening process. The blog post Employee Background Verification and its effect on Employee Turnover Rate will help you understand the implications of negligent hiring.