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Are You Well Armed to Screen Applicants

December 1, 1995
Thoroughly checking a job applicant's background is one of those things that sounds like a good idea. After all, you don't need to look past a newspaper or the nightly news to hear about the onslaught of crime and violence plaguing Corporate America. You don't have to glance beyond the high turnover and sagging productivity many companies find themselves dealing with. But when your human resources department gets buried by the load of everyday work, it's entirely too easy to gloss over things and dismiss a background investigation entirely. Add to that a dizzying array of legal restrictions and difficulty accessing information and it's possible—if not probable—you're hiring someone without knowing who they really are.

Just look at the facts. Experts say, depending on the position and industry, between 10% and 30% of all job applicants distort the truth or lie on their resumes. That's about double the estimates from 20 years ago. Some exaggerate their educational or professional accomplishments; others fill in employment gaps. Many try to hide irresponsible work patterns; a few attempt to conceal a criminal background. A couple of years back, when the Port Authority of New York and New Jersey ran an advertisement for electricians experienced at working with a Sontag connector, it received 170 responses, despite the fact such a device doesn't even exist. The Port Authority placed the ad simply so it could determine how many applicants falsify information on resumes.

Horrible, but not hopeless. HR professionals like Bobbi Navarra say they have learned to look beyond the resume to know just who they're hiring. "The hiring process can set you apart from the competition," states the director of human resources administration for APCOA Inc., a Cleveland-based company that operates parking facilities at 400 urban sites, including 70 airports, in 42 states. Every time the organization considers hiring a new employee, it conducts a battery of checks. Depending on the exact position, the investigation can include driving record, credit history, criminal record, education and employment verification. But the company doesn't stop there. It also might carry out a detailed reference check and conduct an interview that probes specific issues. "The perception is a parking company would never spend the time and energy to do all this, but if you're committed to excellence, then it's absolutely necessary," says Navarra. "Nowadays, you have to know who the people are who work for you. The risk is just too great to ignore."

Better safe than sorry.
Indeed, the horror stories abound. Not long ago, for example, McDonald's Corp. found itself paying out $210,000 in damages to a family of a 3-year-old boy who was assaulted by an employee who had a previous conviction for child molestation. And a Florida furniture company recently got walloped with a $2.5 million judgment for negligent hiring after an employee—whose background hadn't been checked—returned to a home after a delivery and viciously attacked a woman with a knife, nearly killing her. At the ensuing trial, it became clear the man had an extensive criminal record and a long history of mental problems. Says Edward Niam, president of Hudson, Ohio-based Corporate Solutions Inc., a company that conducts background checks: "The entire incident would never have taken place if the company would have spent a few dollars on a criminal check."

The dollars spent for a check are nothing if you consider workplace violence and harassment cost businesses more than $4 billion a year, according to the National Safe Workplace Institute in Monroe, North Carolina. Or that workplace theft tops out at more than $120 billion annually—more than 10 times the cost of all theft that takes place in the streets of America. Or that a single lawsuit for negligent hiring can drain a company of millions of dollars and severely cripple its stability.

The companies that use background checks and other screening tools generally find themselves with far fewer problems. They find themselves reducing hiring and training costs and creating an environment in which violence, crime and sexual harassment are kept to an absolute minimum. "No system is going to eliminate every problem and no amount of interviewing or screening is going to make the workplace a perfect environment," says Niam. "It's all about reducing the odds that incidents take place. Investing dollars and hours up front can save enormous headaches later on."

"Not investigating an employee's background can lead to a lawsuit if that person commits a crime or infringes on another individual's civil rights."

The words sound convincing. The concept seems clear enough. Yet few companies screen job applicants as thoroughly as APCOA—particularly those hiring lower-paid service workers. That's because screening applicants requires serious effort and a commitment to use all available resources. And, getting reliable information about a person isn't easy. According to a recent survey conducted by Alexandria, Virginia-based Society for Human Resources Management (SHRM), 63% of all human resources professionals have refused to provide information about a former employee for fear of a lawsuit. Nearly 40% indicated that HR professionals should refuse to provide job-related information to prospective employers, even if the information is honest and factual. And while 92% of respondents in the survey indicated they do speak to an applicant's former employer, only 61% verify educational information, 42% check driving records and 25% conduct credit checks. "There's a dire need for better reference information, but fear of litigation keeps employers from providing much more than name, rank and serial number," says H. Kenneth Ranftle, chair of SHRM's board of directors.

Add to that the fact that over the last two decades, laws and restrictions have become ever more confining. One of the major issues, of course, is that Americans respect their privacy a great deal and resent others having access to what they would consider personal information. So, legislation such as the Freedom of Information Act denies access to such things as arrest, trial and conviction records. Yet, a tort—known as negligent hiring—holds employers responsible for determining an existing conviction record. In other words, not investigating a person's background can lead to a lawsuit if that person commits a crime or infringes on another individual's civil rights. Not making things any easier, 20 states have their own policies about how one can search criminal records. These laws override federal restrictions.

And that's not all. The decentralized nature of information translates into a major obstacle for any HR department going the route alone. Many records, including criminal convictions, are generally not available in a central repository. In most states, they're stored in county offices, which must be searched individually. Although an individual might have a felony conviction, there's no way to know without checking a specific locale or knowing where that person has been in the past. If an applicant has falsified information about where he or she has lived in the past, a criminal check alone isn't going to pull up any hits.

Anticipate the obstacles.
Despite all the hurdles, it's possible to legally obtain the data needed to make intelligent choices, experts insist. Perhaps the most basic but useful tool is a Social Security trace, which verifies previous addresses. Another popular tool is a motor-vehicle records check, which can show violations, convictions and restrictions—usually for the last three years. An education check can confirm degrees and offer transcripts. A credit history can show how individuals have handled money and whether they have any judgments or liens against them. And criminal conviction and court records can show civil litigation and any felonies a person has committed over the last seven years. (For a complete discussion of various background checks, please see, "How To Screen Job Candidates Effectively,").

Although each individual check can be useful, experts say it's often more important to look at how everything fits together. According to Niam, a cross section of checks can expose someone who is using a false name, has lied about the employment history or fabricated other information. He points out, for example, a Social Security trace can verify a current address, and also show where that individual has lived in the past. That information can be used to check the accuracy of employment dates and also provide a framework for conducting a county-by-county search for a criminal conviction. Likewise, the fact an applicant doesn't have a motor-vehicle record might be an indication of a suspended license due to alcohol or drug problems. With an accurate list of previous addresses, it's possible to probe deeper into that issue. The cost of conducting a background check? Depending on the firm and the scope of the check, typically $50 to $200. In a few cases, the fee can run as high as $500. Turnaround time is typically 24 to 72 hours.

Many companies take the issue seriously enough to willingly plunk down the cash. At Atmel Corp., a San Jose, California-based producer of highly specialized semiconductors and microprocessors, all prospective employees are thoroughly investigated, using a variety of methods. The 10-year-old company, which has almost 3,000 workers in the United States and overseas, has been growing at an annual rate of more than 50%. That puts tremendous pressure on recruiters to fill positions, says Bobbi LaPlante, Atmel's manager of human resources. "It's a huge challenge," she says. "The problem is nobody ever wants to think the preferred candidate can possibly have anything wrong. Recruiters often don't want to wait the three to five days needed to get the information about an individual's background. They want to make an offer immediately, and they think it might show bad faith on their part to tell a person they're checking on him or her. All it takes is getting pinched one time for you to realize you can't make exceptions. The reality is the money spent on screening is an investment.

Match the tools to the job.
Atmel—which frequently uses outside consultants—conducts different types of checks for different positions. Line employees, who typically work in chip fabrication, undergo a Social Security verification and a criminal check. Since education and financial issues aren't important for the job, the company forgoes any background check to verify that information. At the management level, the firm conducts a more detailed investigation. It verifies education, checks that employment dates are correct, conducts a Social Security check, and a criminal-record check. And, depending on the position, it sometimes requests a credit check. "The higher we go up the ladder, the more we focus on personal references," says LaPlante.

Any type of criminal violation catches HR's attention, although several issues weigh into a decision about whether to hire the applicant. For example, if an individual has a DUI (driving under the influence) conviction, it's considerably less of an issue if the person isn't going to be driving for the company, says LaPlante. However, if the individual has been convicted of criminal fraud, that eliminates the candidate from consideration altogether. And when it comes to checking the accuracy of the information that's been provided by an applicant, the same general rules apply. "If someone is a few months off in their employment record, it isn't something we're too concerned about. Obviously, you have to allow for some margin of error. We get a lot more concerned if someone has worked somewhere and doesn't put it down. Or when the person claims to have a degree or credentials and doesn't."

The company is particularly careful about who it hires for reasons that extend beyond possible violence or theft. Industrial espionage always is a concern, particularly for a technology company like Atmel. There's also some concern about an individual's employment history and what information that individual claims. Even the perception one is carrying secrets to a new company can spawn lawsuits. And then there's the general issue of finding people who are reliable and honest. "You want someone who's stable and productive," says LaPlante.

Although the firm has never had a violent incident or a problem with theft, LaPlante recently was reminded how insidious the problem can be. Under pressure from a manager who had an open position and desperately needed to fill it, the HR department allowed an engineer to begin work before all the usual checks were completed. Only a week into the new job, the background investigation revealed the person had falsified his degree, work experience and other facts. Although Atmel had to pay a week's salary, that was the least of the headache. HR also had to go back to find a new candidate to fill the position. "It reminded us a couple of hundred dollars and some patience are a good investment," says LaPlante.

APCOA's Navarra is no less committed to knowing who the company is hiring. Although it uses Hiring Authorities (the name given to managers who hire employees) to make employment decisions at its various locations, it has established a standardized process for checking on applicants. After a Hiring Authority has weeded through applications and narrowed the list of finalists, an outside company checks on the applicants' driving records and looks for criminal convictions. Additionally, management candidates are subjected to a credit history check, as well as education and employment verification. Navarra says approximately 15% of all entry-level applicants falsify information and approximately 5% of all management candidates—something that's usually apparent after a background check.

But the company doesn't limit itself to verifying information. It also conducts reference checks in-house. In some cases, that translates into a phone call and direct questions to an individual listed as a reference. In other situations, staff sends out specialized forms and then examines the responses. "Usually, a person puts someone down as a reference who's going to say something good, and many people assume there's no point in talking to them because of that. But asking the right questions can provide clues and insights into attitudes, behaviors and actions. It can open up things the reference might not otherwise discuss," Navarra explains. For example, HR managers might ask a former employer whether the candidate ever showed signs of irresponsible behavior.

At Intuit Corp., the Menlo Park, California software company that produces Quicken, reference checking has turned into something between an art and a science. The organization typically requests that applicants for management positions supply between five and nine references—occasionally a dozen. Then the HR department calls these personal and professional references and asks specific questions, such as: "What are the candidate's strengths and weaknesses? Can you describe a project in which the candidate achieved outstanding results? Can you describe a situation in which a candidate's performance was disappointing?" "We find the folks we call are pretty open and honest," says Sharyn Vucinich, staffing manager for Intuit. "The common perception that they're only going to say positive things isn't true." And if those conducting the interview—a combination of hiring managers and those from other departments—run into roadblocks, they simply ask the candidate for more references.

Even when a reference isn't overly cooperative or forthcoming with information, it's still possible to glean insights about the candidate, according to Edward C. Andler, president of Bridgeton, Missouri-based Certified Reference Checking Company. At the very least, he says, it's often possible to get some idea just by the tone of the voice and the demeanor of the person answering the questions. What's more, basic information, such as employment dates, job title and whether a previous employee is eligible for rehire, can help a great deal. He also points out there are other ways to overcome reluctant sources. One of the most effective strategies: calling one's counterpart at another company and engaging in old-fashioned networking—informal and off-the-record, if necessary. "The worst the person can do is say, 'No.'"

Regardless of whether a company conducts its own checks or contracts with an outside firm, Andler believes the crucial thing is to verify those being considered for a position are really who they say they are. He explains: "Most crimes and most problems are committed by a small percentage of people. It might be difficult to determine a top performer from an average performer, but it's relatively easy to spot the vast majority of individuals who are poor performers, dishonest or have other problems. Once you weed out the bottom 20% of the work force, quality and productivity will increase. Once you get the troublemakers out of the loop, you've solved many of your personnel problems."

Take advantage of tests.
Background checks and interviews with references can certainly go a long way toward weeding out undesirable applicants. But a diligent HR department doesn't stop there. In fact, verifying the accuracy of information is sometimes just a start. James M. Powell, a senior vice president at Charlotte, North Carolina-based Pinkerton Services Group, argues organizations also can screen applicants by using personality tests, psychological assessments and structured interviews. He also believes an individual well heeled in the art of interviewing can expose inconsistencies and potential problems. "Many companies are beginning to understand it isn't just an issue of theft or violence. They need to provide a high level of customer service and they have to find people who can do that."

One of those companies is Nordstrom Inc., a Seattle-based department store chain. It uses the Reid Survey, an integrity test, to screen for violent tendencies, drug use and dishonesty. The paper-based test takes approximately 15 minutes to complete and immediately is fed through a scanner to obtain results. It's given to anyone who a manager shows interest in pursuing beyond the application process. "Although it's only one step in the hiring process, it immediately eliminates people who are suspect," says Joe Demarte, vice president of personnel. And he has the numbers to back that statement up. When Nordstrom conducted a controlled test of 400 applicants at one store, it tracked the results of the Reid Survey. Approximately 100 weren't recommended, but the company hired them anyway. Three months later, 44% of the group had left the company, compared to a 22% turnover rate for those who scored in the appropriate range on the test.

"Background checks and interviews with reference checks can certainly go a long way toward weeding out undesirable applicants."

Overall, approximately 20% to 25% of those tested aren't recommended for hire, says Demarte. "[The test] simply increases the probability of tagging those who wouldn't be acceptable employees." He explains a Nordstrom interviewer has roughly a 60% chance of screening out an undesirable applicant. With the assessment test as an additional tool, the probability rises to 90%. "Spending $5 on the test is well worth it. It's a negligible cost compared to the alternative of having employees steal and treat customers in an undesirable way," he says. Nordstrom also conducts criminal, driving and credit checks, depending on whether they're relevant for the position. It typically spends $20 to $30 per applicant for anyone being seriously considered for hire.

Nordstrom isn't the only company that has turned to testing and a more structured approach to hiring. A growing number of firms are using psychological assessments—and even personality tests—to match workers with a predefined profile of who a successful person is within that company. Says Pinkerton's Powell: "The tests can't tell you whether to hire the person or not. They simply provide insights into how that individual might function in that environment. They can show a person's strengths and weaknesses." Pinkerton's Stanton Survey, for example, gauges an applicant's attitude and provides some insights into how well the individual is likely to handle a particular position.

Don't underrate face-to-face interviews.
All the discussion about background checks and screening, however important, overshadows another important part of the process: face-to-face interviewing. It's one of the most powerful screening tools that exist, although many human resources professionals fail to use it effectively. "By asking good questions and by probing beneath the surface, it's possible to find out a lot about a person. No amount of testing can ever take the place of a human being asking questions. A trained interviewer is crucial to finding people who have the people-skills to flourish," says Demarte. Adds Atmel's LaPlante: "A good interviewer who phrases things the right way can coax a good deal of information out of someone."

One of the most effective methods is simply asking the applicant questions that are relevant to the job: How would you handle a customer who gives you a hard time? What would you do if another employee yelled at you or told you that you weren't doing your job right? Such questions can evoke responses that provide clues about how that individual might react in a stressful situation or deal with others.

Pinkerton's Powell agrees people often will provide all sorts of information, and applicants will admit to all kinds of things, if the questions are well designed. Another technique that works best, Powell believes, is a structured interview. It can eliminate many of the variables and inconsistencies that can sneak into the process—particularly at decentralized organizations that use field managers for hiring. Rather than sitting an applicant down and saying, "Tell me about yourself," the exact questions are phrased ahead—and are often linked to follow-up questions. The process is constructed to address the specific needs of a specific job and so questions are tied into job functions. Popular in the 1940s and '50s, it's now making a strong comeback.

"The tests can't tell you whether to hire the person or not. They simply provide insights into how that individual might function in that environment."

At Ameritech Cellular Services, the Hoffman, Illinois subsidiary of Ameritech Corp., structured interviews are becoming the norm. That has created greater uniformity in the way the hiring process works and reduced the potential for legal problems. Hiring managers use a behavioral approach that focuses on past accomplishments and actions. From this, they're able to get a much better idea who the people are and what they bring into the organization. Candidates answer questions directly relating to skills and abilities. "It's not just an exercise in running down all the points of the resume," says James A. Riecks, director of human resources. "We're shifting toward competency-based systems, which really zero in on the attributes of a candidate. We're looking for specific examples of how they succeeded on previous jobs rather than examining their entire work history." In some cases, the company also uses computer-based simulations to determine if an individual has the skills to do the job.

Yet the firm doesn't overlook conventional methods. Once an applicant is considered a finalist for a position, Ameritech conducts a background check—using a variety of different methods. It also has hiring managers and staff who check references. "The philosophy is driven from a cost perspective. If you can do a better job up front, if you can select a person who has the skills and attributes to fit the organization, you're probably going to lower turnover, boost productivity and eliminate problems," Riecks explains.

Whatever method you choose, ensure consistency.
Of course, there's no single formula that works for every company in every situation. Experts say one of the keys to creating a solid screening program is to first determine what the company's needs and concerns are. A candidate for the accounting department will require a far different background check than an individual who will drive a delivery truck. A sales manager will dictate an entirely different approach than a shipping clerk. Likewise, different industries require different types of screening. Certain sectors, particularly those paying low wages and with little opportunity for advancement, are far more prone to attract candidates with questionable backgrounds.Yet, as Niam puts it: "Nobody's immune."

Whatever approaches a company takes, those on the front lines say consistency is a key to success. Not only does a standard approach ensure the organization will follow its stated policies and pursue its goals, it also reduces the odds of a lawsuit. "You don't have to screen everyone you hire," says Niam, "but anyone who you consider for a specific position should be subjected to the exact same screening procedure and background checks as everyone else." That's also true for pre-employment drug tests and post-hire physicals. Moreover, it's important to avoid tests and checks that aren't relevant for the position and could be construed as a personal invasion. In some instances, they could serve as the basis for a discrimination suit. And when it comes to psychological and attitude assessments, experts caution that a test must not be biased toward a specific race, gender, religion or age group.

Niam also points out one should never assume all information is accurate and up-to-date. Mistakes take place. Credit reports are notoriously sloppy, for example, and things aren't always how they appear on the surface. "It's important to discuss an inconsistency or a red flag with a candidate. It's crucial to give him or her the opportunity to explain why there's a discrepancy or a problem. In some cases, a person will make an admission of guilt if confronted. In other instances, an individual may have a valid explanation." Of course, there's a big difference between an employment gap of a couple of months and a criminal conviction. And that's when human judgment and expertise plays a role. No matter how sophisticated tests and checks become, HR must still weigh the results.

Finally, there's the issue of not overstepping certain boundaries in the pursuit of information. Courts have found some employers liable for collecting intrusive data about job applicants and employees. Although virtually every employer requires a release form that allows the employer to check references and background information, that doesn't provide carte blanche power to conduct an investigation and ask any question. One California company that began asking candidates about their sexual orientation and inclination to attend church found itself the target of a major class-action discrimination suit. By the time the dust had settled, the firm had coughed up $2 million for a settlement.

Of course, all the checks and tests in the world can't eliminate every problem. Crime, violence and unproductive workers always will be a part of the workscape. People with emotional problems or a poor work ethic sometimes slip past even the most careful scrutiny. Yet human resources professionals who screen applicants and conduct background checks insist the money and time invested is well worth it. "It reduces turnover, it reduces theft and it cuts down on liability," says APCOA's Navarra. "You can have the best product or service in the world. You can create an award-winning training program. But if you haven't selected the right person for the job, it's all for naught. An organization is only as good as its employees."

Personnel Journal, December 1995, Vol. 74, No. 12, pp. 84-95.