Thou Shalt Know Thy Employees
By Philip A. Castro
Published in the June 2007 print edition of Enterprise
July 25, 2007

In 2005, authorities in New Delhi, India arrested Biplab Saha, Ritesh Srivastav, Abdullah Aziz, and Sandip Shrama for stealing data from Parsec Technologies Limited, a business process outsourcing company in Anand Vihar, east of Delhi. Aside from costing the company, which has a subsidiary company in the US, the Parsec Technologies Incorporation, which provides loans to US residents for residential loans, a considerable amount of money, the theft actually compromised the company's image, so that direct competitors easily leapfrogged it to profitability.

This is, of course, not an isolated case.

In 2006, Liu Lihua, 52, who used to be the president of the Beijing Dragon Spring Hotel and Beijing Quanxing Economic Development Co. Ltd. From 1992 to 2000, was sentenced to 20 years in prison for embezzling over 20 million yuan ($2.5 million). The former big boss, who actually also headed the Western Beijing Tourism Development Co. Ltd., was also charged with embezzling another 10 million yuan, which he used to finance a private hotel management firm. Again, this did not only cost money - in this case the taxpayers' money, since the firms Liu headed were state-owned - but also denting the Chinese government's squeaky clean image, thereby affecting people's perceptions of it.

Interestingly, all these could be easily avoided, says Wayne Tollemache, Asia-Pacific executive vice president and regional managing director of First Advantage Corporation (FADV), the Florida-based provider of pre-employment background screening services in the Asia-Pacific. “All it takes is intelligently coming up with the decision not to hire these people, and their (ilk), in the first place.”

And coming up with the “intelligent decision,” as Tollemache puts it, can be easily done with background screenings, which include checking of any applicant's educational and professional qualifications, employment history, criminal records, character references, and credit and financial regulatory checks.

GROWING TREND
It is estimated that “18% to 20% of job applicants across the Asia-Pacific region have 'discrepancies' in their resume,” Tollemache says. In fact, in the Philippines, Tollemache notes that most cases FADV comes face to face with involve “misrepresentation of qualifications, such as the padding of roles in past employers, as well as fake degrees (claimed to have been received also from fake educational institutions).”

Adds Ankesh Surinder, chief operating officer of FADV in the Philippines: “Illegal reproductions of diploma, certificates and NBI certificates are very rampant here in the Philippines. You can get them easily in Manila. Applicants can just purchase these documents and use them when applying for a job.”

This is, of course, not limited to the Philippines, as the same misrepresentations were also noted in other Asia-Pacific countries. In years of operation in the region, FADV has “uncovered many fabricated resumes with exaggerated salaries, fake degrees, and overstated job titles.

Applicants resort to this hoping that their 'impressive' CVs (curriculum vitae) would translate into better employment,” Surinder says.

The statistics, according to FADV, are actually worsening (see sidebar), up to 50% of the discrepancies they identify among their existing clients major in nature.

FAST FACTS: SCREENING RESULTS IN ASIA AND THE PACIFIC

• Up to 20% of all screening requests reveal a discrepancy, which include detection of criminal records, falsification of documents/past employment records, concealing of facts, and overstated credentials.
• Nearly 50% of all identified discrepancies are major in nature, while the remaining 50% pertain to falsification of stated information.
• Discrepancies relating to qualifications (educational and professional) account for approximately 9% of all deviations identified. Approximately 1% of all discrepancies relate to criminal records. The remaining 90% of discrepancies are found in past employment verifications.

When the discrepancy is proven after a screening, “the only way for the applicants are out of the door,” Surinder says.

EARLY SEIZURE
Background checks are not entirely new to companies in the Philippines, says Tollemache. “However, these were earlier viewed more as a formality, and not as a stringent necessity and a risk mitigation tool.”

He adds that companies actually spend more by not screening. “The true (monetary) values (may be kept secret), but companies are spared the expenses of potential legal implications, higher recruitment and training costs, potential loss of clients, low productivity, and the (costs of leaks should there be breaches when there is) fraud or theft of proprietary information,” Tollemache says.

But awareness for screening is already growing. At FADV's Philippines operations, for example, about 5,000 individual screenings are done every month for its clients in investment and retail banking, insurance, information technology, call center, telecommunications, business process outsourcing, executive search/recruitment, and in the oil and gas industries.

“Companies now see this as best practice, as well as a security tool, since the cost of a bad hire is quite high,” Tollemache says. “Companies find that spending PhP10,000 to PhP15 ,000 to check out employees are worth their money because repercussions can cost your company a lot more.”

“The need for background screening is really important for companies to assure them that they are getting the right person for their company,” adds Surinder. Fortunately, “background screening is gaining ground in Asia and the Pacific, and not only with multinational corporations, but also with locally based companies (as awareness increases on the necessity of) screening the employees they hire, thereby ensuring that they only get the best, the real best, who will help them further their growth.”