Home > Uncategorized > Global background screening, an integral part of risk management

Global background screening, an integral part of risk management


sextantWith increasing connectivity, there is an advent of a truly global workforce, multinational business has led to an exponential increase in the risks associated with candidate recruiting and contract and or contingent workforce.

Human capital is increasingly being acknowledged as the most important investment for any company. Finding the right talent in the right job at the right time is an enormous challenge that global HR teams are facing in today’s current hiring scenario.

In all of this, in the more recent times, individuals from corporations involved in various crimes as well as increased legal scrutiny related to anti-corruption has led to increased realization about the value for background screening all employees, contractors, and vendors at all levels.

Reported incidences of corruption, doing business with vendors listed on sanction and debarred parties lists in the petroleum sector, unauthorized access to sensitive customer information in financial services sector, instances of staff in educational institutions involved in exploitation cases — all have led to growing awareness of the need for background screening of employees as well as vendor / contract staff.

The reality is that an organization’s reputation is at stake should they hire someone or do business with an entity that has a questionable background. Brand equity and value can be adversely impacted if it is known that an organization didn’t exercise a reasonable level of due diligence before recruiting a certain individual or decided to do business with a trading partner who had a questionable background. Thus, lack of background screening or even not performing best practice type checks depending on the circumstance on current or potential employees and or trading partners is something that could come back to haunt an organization — through reduced business, inability to retain better employees and adverse impact on its public image.

If that wasn’t enough, not only can it be rather embarrassing for an organization that does not excise due care in vetting their employees, contract staff or trading partners such organizations can also be exposed to enforcement action by government authorities for not conducting what may be considered a reasonable level of due diligence or have not applied “due care” as may be required by new and existing anti-corruption laws such as the U.S. Foreign Corrupt Practices Act (FCPA), Sarbanes Oxley, Patriot Act, and US. Federal Sentencing Guidelines for Organizations (FSGO) and many other similar industry and or country specific laws like the UK’s Bribery Act.

The FSGO requires organizational implementation of compliance standards and procedures that are “reasonably capable” of reducing the prospect of criminal conduct by employees, contractors, and business partners. In fact, according to FSGO, due care must be made in avoiding passing on to individuals whom an organization knew, or should have known, had a propensity to engage in illegal activities.

What is considered adequate due diligence or due care according to many of the above mentioned legal provisions is beyond the scope of this article and will be discussed in a later article.

businesssunsetmtgGlobal Background Screening Industry Overview

Although there has always been some demand for background checks abroad, the initial driving force for international or global background screening was first introduced about ten years ago. This was triggered by the post 9/11 attacks. With a number of Fortune 1000 companies going global — either through setting up their own offices or outsourced work abroad, it was expected that their overseas based entities (mainly IT and BPO companies) followed processes that were an integral part to their recruitment policies. (Incidentally, recent studies show more than 90 per cent of Fortune 500 companies have a formal policy of background screening their employees). This led to background screening of their employees as well as their outsourced counterparts.

The concept of global background screening is no longer limited to just IT or the financial services segments. A growing number of organizations in the manufacturing, maritime, defense, pharmaceutical, petroleum, hospitality, health care, retail, travel, telecom, educational institutions and entertainment industries are adopting international background screening practices.

Today’s multinational companies (MNC) face a growing challenge in managing the collection, use, processing and transfer of mass amounts of personally identifiable information globally, especially in light of the myriad of data protection (privacy) laws that exist today. Effective management of global talent management, data privacy, and security involves a multi-disciplinary approach involving legislation, technology, and business processes in order to fully understand and address data protection and personal privacy issues on a global basis. It also requires recognition that effective management is a process that must include solutions for responding to constant changes in both internal and external factors effecting human resource data use especially when it involves screening candidates around the world.

The actual overseas background screening process involves carrying out various different types of checks based on a number of factors such as type of hire (entry, mid, professional, executive), regulated position, level of risk the individual position poses to the organization, and finally, the country at hand to name a few. Any misrepresentation in the below listed checks should be reported as a discrepancy. The discrepancy rate is the percentage of misrepresentations/fraudulent/adverse information that a comprehensive background screening procedure should uncover during the verification process.

  • Identity check– confirms candidate is who they say they are
  • Right to work check– confirms candidate is authorized to work in a given country
  • Address verification– confirms candidate’s current residency
  • Education– confirms academic credentials
  • Employment– confirms claimed work history
  • Reference check– confirms professional reputation
  • Professional credential verification– confirms professional certifications
  • Criminal recordshistory – determine if candidate has a propensity to engage in illegal activities
  • Regulatory and Compliance / Sanctions Search– determine if candidate has been sanctioned by relevant regulatory authorities, has been the subject of other enforcement actions, or identified as a possible politically exposed person
  • Adverse media– news articles that contain derogatory information the candidate
  • Conflict of interest– evaluate if candidate may be involved in multiple interests
  • Drug Testing– determination if candidate has a propensity to abuse illicit drugs
  • Trading Partner / Vendor Screening– determine if vendor is legitimate and of good standing

It is critically important that ALL checks are initiated only after an authorization in writing by the concerned candidate is obtained.

A “credible” international background screening company will ensure that the process goes only through the legal / legitimate route of obtaining records or verifications. This may imply relatively later verification compared to some agencies who provide “quick,” “easy,” “cheap” criminal record results from every country on the planet but through processes which may not be able to stand the scrutiny of law! This was most recently highlighted in a case involving a company who purported to provide court record checks from a country where it is well know that court records are not the best practice source for employment purposes. The end result was a series of missed criminal records that should have been reported, the loss of a screening company’s entire clientele, and finally an ongoing litigation involving suspected fraud and misrepresentation.

While more and more screening companies offer international or global service, the best way of managing background checks at least internationally is to ensure that international background checks are done by organizations that actually specialize in this area. This assumes the provider is able to demonstrate they have more than just a passing knowledge of available products. In fact specialized providers should be able to demonstrate a thorough understanding of the local data sources, a clear understanding of the specific geographic and search requirements, the legal environment (laws related to data/record access rights, personal privacy, relevant employment and human rights laws), and who are able to offer specific answers to questions related to best practice screening in the given country. A specialized global background screening organization would not ordinarily compromise its reputation by not following local compliance requirements.

Way forward
Data shows that individuals with a questionable background tend to join organizations that do not conduct background screening of its employees or contract/vendor staff.

Hence, when these organizations do start conducting background screening, they find many discrepancies (number of employees who have misrepresented facts on their resumes or have a criminal background) and/or go through huge attrition (as employees who have misrepresented facts or have negative background prefer to leave than be found out) when they announce background screening.

This is validation of how background screening becomes a deterrent against employees or prospective employees or even vendors misrepresenting facts on their resumes or employment applications. Thus, background screening proves to be a good insurance against risk to reputation related to bad hires as well as trading partners!

The international or global background screening industry is still in its emerging phase. There are many organizations/institutions overseas who, as a policy, do not share information with third parties for verification purposes. For some organizations and institutions which do not mind sharing information, it can be a longer process as databases are manually maintained and verification process involves going through very old data maintained physically.

Employment checks that can be conducted at the click of a button in the US have to be conducted through phone calls, faxes, or emails or site visits in India.

Moreover, many organizations abroad do not maintain databases or records for temporary employees, which lead to unavailability of such crucial information.

Criminal background information that is available through various online databases and court records in the US are not comparable with what is available in other geographies. In many countries, such information needs to be sought at the central repository level and even locally in the concerned jurisdictions.

Collaborative online database solutions involving all parties concerned — the candidate, the recruiter, the verifier, the verifying authorities, etc. — will help in developing a ‘pre-qualified and pre-checked’ ready-to-hire talent pool — which is the need of the hour in the present economic scenario.Aletheia-Consulting-Group

Aletheia Consulting Group provides multinational companies best in class International Background Check Provider Vendor Evaluation and Audits. If you would like to learn more about our Services for Multinational Employers please feel free to contact us at terry.corley@me.com.

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