Why are they publishing those awful stories?
If you spend time online or watching television, you could get the idea that the media don’t want you to use credit checks as part of your hiring process. Here are two examples.
The Wall Street Journal ran an article titled: Bad Credit Derails Job Seekers. The lead told the story of Rosa, a single mother of three, who wasn’t hired because of (she thinks) a poor credit report.
MNBC had Bad Credit Sidelines Some Jobless Workers. They led with the story of a woman who “believes an unpaid medical bill cost her a full-time job.”
You’re going to see more stories like those two. And they come at a time when state legislatures are considering legislation that would ban the use of credit reports in hiring. There are three reasons why the media run stories like this.
It’s a feeding frenzy. When one medium is successful with a story, others crank out similar stories.
The media loves human interest stories, especially where the villain is a business of some kind and the victim can be portrayed as helpless. People read stories like that. They lure advertising which is how most media make their money.
Those are two reasons. You can’t do anything about either one.
But, there’s a legitimate issue here. The two stories above tell us that they let the report make the hiring decision.
If that’s true, then, if either business had dug into the reason for the poor credit report, they would have discovered issues that had nothing to do with responsibility. […]
It takes a village to catch corporate fraud
The question, “Who blows the whistle on corporate fraud?” is also the title of an article that will be published in the Journal of Finance. To find the answer, the authors studied “all reported fraud cases in large U.S. companies between 1996 and 2004.” Here’s the answer they came up with.
“We find that fraud detection does not rely on standard corporate governance actors (investors, SEC, and auditors), but takes a village, including several non-traditional players (employees, media, and industry regulators).”
That’s good news. It means that you’ve probably got honest employees on the payroll who may spot fraud, even if the government or the board of directors can’t do it.
But there’s also bad news here. Whistle-blowers are a rare breed indeed. Whistle-blowing is an act that takes courage. Many whistle-blowers suffer some kind of reprisal. So for one of your people to catch fraud they have to be honest, placed in a position where they can spot the fraud, able to identify it, and brave enough to bring it to your attention.
And you have no way of knowing how long fraud will go on before it gets caught. It might be only a little while. But it might be years.
So while that village might be your best bet to detect fraud, that’s just shouting “the horse is loose” after the horse is out of the barn and running hard. If you want to cut your fraud losses, prevention beats detection every time. There are three steps.
Hire smart. Use criminal […]
Lessons from Sandra Bullock
Normally, the world of screening and security has me reading reports on fraud and stupid corporate stunts. Every now and then, though, my Google Alerts throw something juicier up on my screen. That’s what happened this week.
A blog named MomLogic published a post by Dr. Wendy Walsh with the title, “Sandra Didn’t Believe the Background Check.” The supermarket tabloids could not have done better.
Here are the basics of the tawdry story. When Sandra Bullock met Jesse James, her tattoo-sporting, biker husband, he was married, for the second time. His wife was pregnant. He had two children by his first wife.
Now several women have come forward claiming affairs with Jesse. Sandra Bullock is consulting divorce attorneys.
There’s no reference in the blog post to any actual background check. So what does one more Hollywood divorce have to do with background checks and with you? Here’s the answer from Dr. Walsh.
“It’s an old adage, but: If you want to predict someone’s future behavior, look no further than their past behavior. As Sigmund Freud so brilliantly observed, ‘Human beings have a compulsion to repeat.'”
That’s one reason we do background checks. Past behavior is the best predictor of future behavior. Background checks help you discover any past behavior that an applicant might not willingly share.
This is especially important when it looks like you’ve got just the right person and get excited about it. When that person looks like they might be the perfect employee or tenant it’s easy to get excited and overlook things.
That’s […]
Scarecrows and background checks
“Are you a scarecrow?” my mother would ask, usually arching one eyebrow. The correct response was, “No Ma’am.”
The scarecrow my mother was referring to was the one in the Wizard of Oz. If you’re not familiar with that tale, let me refresh your memory.
Dorothy, a young girl living in Kansas, is picked up by a tornado and whisked away to a different place. To get home, she will have to follow the yellow brick road to Oz where the Wizard can send her home.
Dorothy makes the trip with three friends who all want something from the Wizard. There is the Cowardly Lion who wants courage. There is the Tinman who wants a heart. And there is the Scarecrow. He wants a brain.
I wish my mother was still around to ask her Scarecrow question when I read about the case of Ray Fetcho. Fetcho was a nurse, beloved by the families of the dementia patients he has cared for more than three decades.
He just lost his job because he was arrested in 1976 for a misdemeanor connected to a night club act. He has no other criminal record. Here’s how the Sun Sentinel explains the situation.
“The state has been cracking down on caregivers with criminal records since a Sun Sentinel series last fall found people with the most serious offenses — rape, child abuse, even murder — had slipped through because of flaws in Florida’s background screening system.”
I would ask the state officials: “Are you a scarecrow?”
The state is […]
Background checks for small businesses
The Wall Street Journal has been adapting articles from their forthcoming Small Business Guidebook and publishing them in the paper and on their site. Here’s a powerful paragraph from one of those articles, titled: How to Avoid Hiring a Bad Egg.
Small businesses, unfortunately, are particularly vulnerable to embezzlement and other kinds of employee theft because they lack the checks and balances of big corporations. One report by the Association of Certified Fraud Examiners found that the median loss for small firms with fewer than one hundred employees was $190,000. The most common schemes? Employees fraudulently writing company checks, skimming revenues and processing phony invoices.
Here’s the question for you. If you’re a small business, can you afford to lose almost $200,000?
If the answer is “No,” then start protecting yourself by improving your hiring. The Journal article includes several tips. The idea is to set up a hiring process that catches possible bad actors before you hire them.
Standardize your process. Take the same steps every time. Use the same forms. Use simple checklists to make sure you don’t miss anything.
Ask tough questions. Ask about gaps in work history. Ask about relations with the boss and co-workers. Ask about anything that might be a potential problem.
Check references. It’s amazing how many companies don’t do this.
Use background checks. The Journal puts it this way: “Preemployment checks can screen out applicants who may be unfit (or dangerous) for your workplace because of a criminal record.”
Have your attorney review your process to make sure […]
Criminals at the court
In Farmington, New Mexico, the job description for a Court Services Coordinator (similar to a probation officer) lists the following. “Certified substance abuse counselor or five (5) years experience in the criminal justice system required.” That usually means “working for a criminal justice agency” not “as a criminal being processed by the system.”
But, it turned out that Court Services Coordinator Christos Derizotis had lots of experience in the criminal justice system that the city didn’t know about. According to an article in DUI Attorney headlined “City official fired over New Mexico DWI arrest,” it was only after Derizotis had been arrested for DUI that they discovered that had six prior DUI charges and:
“officials learned Derizotis had been convicted of battery, false imprisonment, criminal damage and impersonating a police officer in the past.”
But wait, as the late-night pitchmen say, there’s more. According to the Farmington Daily Times, Derizotis was also “sentenced to six years in the Federal correctional Institution La Tuna in Anthony, Texas, in 1985 for bank larceny.” He was paroled in 1989, but nine months later he was arrested again for violating the terms of his parole.
How did this happen? The Farmington paper suggests that it might have been a bit of favoritism. Derizotis is the son of a former Magistrate Judge.
They may be right, but I think the real explanation is much simpler. The city never ran a criminal background check on him. They only ran those on people applying for positions that handled […]