Check Backgrounds: What evil lurks in the minds of men?

“Smiling faces sometimes pretend to be your friend

Smiling faces show no traces of the evil that lurks within.”

Smiling Faces Sometimes by Undisputed Truth

It was summertime in 1971 when the pop single, Smiling Faces Sometimes, hit the airwaves. Coming into popularity after the 60s, a decade of social turmoil and distrust, the lyrics resonated to listeners.

These same lyrics resonate today, but for a distinctly different audience. It’s you — hiring managers, small business owners, human resources directors and generalists reading this newsletter — who understand what can be hidden behind a smile, a warm handshake and a friendly demeanor.

Consider the interview candidate who dresses well, gives all the right answers, and practically oozes personality. Everyone is bowled over and reference checks confirm gut instinct. You hire the person, and suddenly events start to spiral out of control.

A business that hires employees without screening them faces problems ranging from lawsuits to bankruptcy. The Association of Certified Fraud and Examiner’s 2004 Report to the Nation on Occupational Fraud and Abuse, reported that the typical U.S. organization loses 6 percent of its annual revenue to fraud. This translates to approximately $660 billion in total losses. That’s billion, with a “B.” If you believe that kind of scandal is limited to the big corporations that make the news, think again.

Sure, Enron, TYCO and even venerable not-for-profit organizations such as the United Way and American Red Cross have come under fire. Sadly, that may be the tip of the iceberg. This is the view below the water line: Approximately 46 percent of the fraud affected small businesses, which the study defined as organizations with less than 100 employees. The median loss to these small business owners was $98,000. Industry giants may be able to take the hit of large loses and plummeting stocks. For most small business owners, that sort of body blow does irrevocable damage. Consider the sobering thought that one incidence of employee-committed fraud can literally put a company out of business.

The potential for fraud lurks everywhere, although position tends to affect the size of the loss. More fraud occurred among hourly employees at 68 percent; however, a dishonest manager costs the company 6 times more than the loses incurred by dishonest rank-and-file employees. When a business owner or high-level executive commits fraud, the amount of loss is 14 times higher.

It’s clear why employers want proof about who lies and who doesn't. Finding the proof isn't so easy. Back to the prophetic lyrics … “Smiling faces, smiling faces, Tell lies and I got proof, Beware, beware of the handshake, That hides the snake, I'm telling you beware, Beware of the pat on the back , It just might hold you back.”

Fear of libel or slander suits reduces most reference checks into little more than confirmation of the dates an employee worked for his employers and the last position held. What do you do when you can’t rely on just gut instinct and reference checks?

First, rethink stereotypes. It’s not always the young workers with different values about honesty and a strong sense of entitlement who deceive employers. Forty-nine percent of the perpetrators were aged 40 or more; one in six fraud perpetrators were under the age of 30. The amount of money lost is directly related to age, as well, with employees aged 60 or more causing losses up to 29 times higher than the losses incurred by younger employees

Nor is previous behavior a reliable determinant of potential for fraud. A mere twelve percent of the fraudsters reported by the AFCE study had a previous conviction for a fraud-related offense. Fraud-related behaviors transcend education. More than 50 percent of the men and women who commit fraud had a bachelor's or postgraduate degree. The impact of fraudulent actions was 6.5 times larger for highly educated offender than the impact of fraud committed by employees whose education stopped at high school.

Hiring managers resort to several screening and selection tools to recruit energetic, hard-working, and highly skilled employees. With lying and deception rampant among job applicants how can employers gauge integrity, as well as competence?

The combination of behavioral interviewing and validated personality tests so often favored by employers are impractical to screen the volume of candidates who submit electronic applications through job boards and email. A more pragmatic approach is the lower cost and equally effective applicant processing system, background checks, and pre-employment testing to weed out high-risk candidates. Then HR staff has time to focus on qualified and desirable candidates.

At SPS, we recommend a three-step process to weed out applicants who may be dishonest or unethical. First, have applicants use an online application processing system such as Total APS. This system can accept resumes and record the results of an employer-generated online "pre-interview" with customized questions on topics ranging from years of experience to how well the applicant resolves mistakes. The applicant completes the questionnaire when he or she submits a resumes. Each question is weighted and rated. Very quickly, the applicant is either qualified or disqualified for the job. An HR manager can log into the company account and scan the list of qualified and disqualified candidates without making a phone call or sending an email.

Next, qualified candidates are complete a pre-employment test. SPS clients report great success with one or more of these three assessments: the CandidClues, SELECT Associate System, and JobClues.

CandidClues is an excellent tool for assessing honesty and integrity. SELECT Associate System gauges a candidate's attitude toward dependability, honesty, aggressive behavior including sexual harassment, and workplace drug use. It adds another dimension by quantifying the candidate’s work attitude for and energy to do the job. JobClues, our newest solution, is a cognitive and personality screening tool. All three assessments can be completed on paper questionnaires or online.

Third, employers must conduct background checks to verify applicant identity, confirm education and employment history, and determine whether there is a history of criminal conviction. Background checks are almost mandatory just to verify the person you are about to hire is really and truly that person. (Watch for our announcement within the next few days about our new partnership with a leading online background checking service).

There are more benefits to using this three-step system. In addition to weeding out high-risk candidates, which saves two valuable commodities — time and resources, these pre-employment products have high reliability. Each test has a validity check, a scale that determines when an applicant tries to fake out the assessment. These critical measures, also called good impression and social desirability scales, weed out applicants who may have tried to manipulate the test. Finally, the prescreening package includes recommended interview questions, providing consistency and legality to the interview process.

For more information about any of these products or services, click on any of the links above or call 800-803-4303.

To learn more about Success Performance Solutions or read back issues of The Total View, stop by our website at www.super-solutions.com.

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Ira S. Wolfe. 2004 - All Rights Reserved. Reprints and other distribution by permission only.

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