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Know Your Hire
The need to swiftly, economically and accurately evaluate job candidates is growing as global competition soars.
Traditionally, HR executives have relied on experience and instinct to make good hiring decisions. While that hasn't changed, the 9/11 attacks and immigration fears have put risk management in the driver's seat of the staffing vehicle, and that, in turn has increased the role of background checks as part of the hiring process. Sorting through reports and reams of data from third-party background checkers is now standard operating procedure. A false or noncommittal reference or red flag on a background check can lead to anything from a simple delay and losing a good hire to a competitor, to ending up with a nasty lawsuit on your hands. Given the growing mountain of data available to us, one would think it would be easier to paint an informative picture of a candidate. Instead, it's tougher than ever. The sheer volume of data per candidate continues to increase, along with its complexity and potential for errors. Taken together, these factors have made -- and will continue to make -- it exceedingly complicated to extract the most valuable insights from screening and assessment procedures. Take, for example, the challenge facing Southwest Airlines, the continuously profitable and fastest-growing airline, as it sorts resumes and screens and background-checks candidates. "In 2005, Southwest received more than 260,000 resumes, screened 4,840 candidates, and hired far less than half of those individuals," says Linda Engstrum, who oversees Southwest's background-checking function. With roughly 50 data points to peruse per candidate, the number of items reviewed rivaled the raw number of resumes the company received. Ironically, just as background screening industry was growing, reference checking became unnecessarily marginalized in the recent past. Employers have been schooled to provide as little information as possible about former employees. As a result, firms have made their most preventable hiring mistakes by failing to check references at all, or else checking them in an obligatory fashion. The tide is turning though, as executives reassess the time, cost and risk involved in evaluating candidates. In fact, HR executives are, once again, emphasizing old-fashioned reference checks, which, when done well, are a highly valuable piece of the hiring puzzle. The good news is HR executives are prompting their teams to use a more powerful tool, known as "judgment neutral" reference-checking questions. The result is what we call "balance-sheet hiring" that, by reflecting both strengths and weaknesses, paints a highly usable picture of a job candidate. Given all of this change, here are five major trends to keep on top of and prepare for when assessing prospective employees and navigating hiring risks: Checking Data
The trend is for fast, economical, accurate and tailored background knowledge of the candidate. In each of these four areas, expectations continue to rise, and firms are scrambling to build or buy the ability to gain an edge in the hiring process. When it comes to closing the deal with a strong candidate, speed is critical. If the candidate is a hot commodity, chances are you are not the only one with an offer in mind (or in hand). Using background-screening firms to expedite data collection on candidates is nothing new. What is new, though, is that many firms are using background screening on 100 percent of their prospective hires -- from mailroom clerks to CFOs. And they are itching for their vendors to deliver in hours, not days. At the executive level especially, time is of the essence. This trend will continue to escalate. "In a highly competitive market, time kills," says Jay Andre, executive hiring manager at Booz Allen Hamilton, a McLean, Va.-based commercial and government consulting firm. "One blip on a background check can cost a few days, and those few days can make the difference between someone coming here or going somewhere else." Booz Allen uses an outside firm for screening, he says, and in the last few years, has ratcheted up its background checking to cover 100 percent of its candidates. The cost of screening someone depends on the services you select. You can get a simple background report on someone for less than $100, or pay thousands for reports that address executive-level capabilities and concerns. Do the same data points need to be collected and evaluated for the clerk as for the CFO? Indeed, they do not. As a result, firms are refining their data requests with respect to what data need to be collected for each particular job and grade, and they are applying these measures to the screening process. The ability to tailor background checks will have a positive influence on the future, as HR professionals and hiring managers alike are challenging themselves to evaluate more carefully the role and position for which they are hiring. Definition is critical in the hiring process, so this trend can do nothing but improve the likelihood of making the right choice. Tailoring is "in." Vendors who traditionally bundle up reports and present them in a useful format are finding that they are now expected to deliver more bang for the buck, and that means automation, reliability and clarity of information for a fair price. The pressure will only mount in the near future. From an accuracy standpoint, the rating for the industry is: "Needs work." The quickly growing, relatively new background-screening industry is still in the "Wild West" mode, and the prices, quality and deliverables among the vendors are all over the board. The background-screening industry is now attempting to implement certifications to develop common standards, as many other industries have done. Managing Risk
The world has changed from the days when resumes were assumed trustworthy. It's no longer a secret that a great resume, strong interviews and glowing references do not ensure that the person you hire is who he or she seems to be. Hiring managers and HR professionals no longer trust what is being said or provided by the candidate, and that trend is intensifying. No matter what you may want to believe about your soon-to-be-hired star, even nice people tell lies. In fact, the assumption is fast becoming that everything on the resume and paperwork from the candidate is false or misleading until proven otherwise. Take, for example, a college degree. A screener must verify not only whether a candidate has a degree, but also whether the school is accredited, as many people are buying degrees online from diploma mills. Yet honesty will still remain the best policy, and telling the truth can show good character. "Candidates are concerned about disclosing information or problems, so they try not to. That's not a good idea -- they need to disclose it. Many companies will offer someone a position if [he or she is] honest and up-front about any problems . . . in the past," says Gail Appell, president of Avon, Conn.-based Research Services, a background screening firm. Protecting the Security
Risk management in hiring once meant keeping the wrong person out. Nowadays, it's becoming more and more critical to protect information provided by job seekers. If your firm lacks solid controls around candidate information, then you are not alone, but you have some work to do. Employers need to be more conscious of, and manage more carefully, who has access to what candidate information, and how that information is controlled. Technology and data security will play an increasing role, as both actual and potential mishaps in the background-screening industry have illuminated the pitfalls of how confidential information is entered, stored and eliminated. What are the best practices? Employers are now trending toward limiting access to private data on a need-to-know basis, backed by solid procedures and controls on the candidate data-evaluation process. An internal audit/controls review can do wonders to help identify and correct issues, particularly in the area of candidate private data security and integrity. In the years to come, more companies will be looking for ways to carry out these reviews. Government Involvement
The so-called bread and butter of background screening will continue to lie in reviewing court records and potentials for criminal issues in a person's past. A key trend emerging after 9/11 is the increasing involvement of the federal Department of Homeland Security in the hiring process. It is likely that the current pilot project, where employers submit names and Social Security numbers to DHS for comparison with various watch lists, will become standard operating procedure. The question of whether someone can work for you will be answered, in part, by whether his or her name appears on a list in Washington. So much of what is done in the background-screening process relies on Social Security numbers. And yet, court records are far from uniform at the city, county, state and federal levels. Frequently those records do not include Social Security numbers, a key identifier. The result is that tracking is done manually, or via less-reliable indicators -- people's names and birth dates -- creating a relatively large margin for error. The trend in this area is a question mark, as privacy concerns and technology expenditures must be balanced against the need for rapid access to information. Neutral Judgments
Due to litigation fears, checking a candidate's references has become an unnecessarily unhelpful activity. Put bluntly, most references either won't tell you anything or they won't tell you the truth when you ask for a conclusion about the person. Judgment-neutral questions do not ask for positive or negative assessments of candidates. Asking better reference-checking questions can elicit vital information about your candidate. Consider replacing the traditional question, "What are Lisa's strengths and weaknesses?" with the neutral version of that same question, "If you were to rehire Lisa, into what type of role or position would you be most likely to hire her, and what type of role would you be least likely to hire her to do?" The key to the process is to get the reference-giver talking. A "home run" occurs when you use these questions as the springboards to get the reference telling stories about your candidate. Pressing for real answers to these questions (among others specific to your organization, HR policies and industry) will help you paint a more accurate picture of your candidate before you make the hiring decision. Every candidate has assets and liabilities relative to the role for which he or she is being considered. For example, being "highly detail-oriented" can be an asset for an individual contributor role, yet a yellow flag for someone being considered for a leadership role. It is now, and will continue to be, a best practice in the hiring process to develop a balance sheet, made up of corroborated information on the candidate from interviews, reference checks, experience and network, before an offer is made. What should it look like? Here's my suggestion: One page, completed by the hiring manager, with an equal number of important and job-relevant attributes listed on both sides of the page. David Peck is the president of a San Francisco-based leadership coaching and management consulting firm called Leadership Unleashed. For more information about the company, visit www.leadershipunleashed.com.
November 17, 2006 Copyright 2006© LRP Publications |
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