Shades of grey

by 28 Nov 2006

When around one quarter of applicants either massage the truth or lie outright in their CVs, how can you be sure that the top candidates for any position really have done all they say they have? Teresa Russell reports

When is it okay to stretch the truth on a CV? Does rounding your current salary up from $82,000 to $85,000 matter? What about saying that you grew the business 30 per cent year on year, when it was only a very creditable 15 per cent? Or that you and your boss had a personality clash, when you were really managed out for poor performance? Is it ever really black and white, or are there many shades of grey?

Far more people would consider it wrong to present an MBA degree purchased over the internet as your own, or fail to mention that you had just been convicted of drink driving and had lost your licence for six months. Obviously, many candidates don’t see these types of deception as a problem, as evidenced by the gaps identified by candidate-approved background checking.

KPMG’s Fraud Survey 2006 found that 14 per cent of employees involved in fraudulent conduct had a history of dishonesty with previous employers, up from 7 per cent since their last survey in 2004. The survey report concludes “organisations are either not performing employee due diligence at all or not performing it adequately”.

The survey also found that the use of internal controls was the most effective means of detecting fraud and that poor internal controls were the most important factor contributing to major fraud.

It reports that since the last survey, “fraud risk management is certainly moving up the strategic agenda, particularly as major frauds have the capacity to damage an organisation’s public image, reputation and financial stability. Organisations are investing more time and resources into the management of fraud, with a focus mostly on detection, rather than prevention and response”.

The process

Parcel Overnight Direct is a fully-owned subsidiary of New Zealand Post and now employs around 40 people in Australia across a range of roles from the executive team, office administration, drivers and freight handlers. Every one of them has undergone background verification prior to employment.

Chris Yankos, chief operating officer for Parcel Overnight Direct, says he has been employing people both directly and through consultants for over 20 years and has never rejected a candidate based on a reference – because they were always up to scratch. However, he has used a specialist provider, Reality Check, to verify the claims on CVs of preferred candidates since the start-up of Parcel Overnight Direct early this year. “Twenty to thirty per cent of the people I was going to hire either had errors on their CVs or suddenly withdrew their applications once we asked their permission to conduct a background check,” says Yankos.

Similarly, Alvan Freeman, human resources manager for Symbion Pharmacy Services – Operations, says background checks are conducted for all salaried positions, which make up about one-third of the division’s 1,100 employees. Freeman says all applicants are first alerted to the fact that their backgrounds will be checked, and there have only been a couple of instances where candidates have withdrawn from the application process as a result.

“In the first instance, one person withdrew immediately with no explanation, while in the second instance the person was reluctant to provide referees because of a previous discrimination claim,” he says. “Obviously that rings some bells. There has to be a reason why a person would be reluctant to get their background checked.”


“I’d love to say that the reason we adopted the policy of doing independent background checks as part of our recruitment process was because we saw it as good business practice,” says Alexandra Richardson, group HR manager at Metcash Trading Ltd. “But the reality is that an internal audit on the recruitment process identified some risks associated with not checking for a criminal background or verifying ability to work through DIMIA [Department of Immigration, Multicultural and Indigenous Affairs],” she says.

Richardson says she runs a very lean department that would have been unable to handle the bureaucracy of checking up to 700 new employees’ backgrounds this year. Metcash is a Top 100 FMCG company which owns IGA distribution, Australian Liquor Marketers and Campbell’s Wholesale. It employs 10,000 permanent and casual staff in Australia and New Zealand.

“Although we first did this to comply with audit recommendations, we now see it as good business practice, because of our experience with the process,”says Richardson.

Yankos says that it is not a requirement of New Zealand Post to background check new employees, but a direction set by Parcel Overnight Direct’s management team to ensure they recruited the best people. “It’s not about candidates lying and being deceitful. We want people to understand what it is we want them to achieve, so we are looking for a best fit. Reference checking, ability to work and university degrees are important,” he says.

In less than a year, Parcel Overnight Direct has come across a variety of incorrect claims, the most common of which has been inconsistent dates of employment. Yankos identified one individual with a two-year gap in his employment record and when asked to clarify, the candidate “didn’t want to work for us any more”.

Other common inconsistencies have been licence checks (25 per cent gap), authority to work, exaggerated sales growth and claims of leadership, rather than team roles. “They often say, ‘I revolutionised the company’ when they were a minor player, rather than a major part of a business,” says Yankos.

Some of Metcash’s discoveries have included one IT professional who did not have the undergraduate degree he claimed and another individual who said he had completed an MBA, but had dropped out before completing it. A business development candidate had two drink driving convictions in the past two years and a salesperson claimed a $5 million budget with many direct reports, when their budget was $1 million with no reports. None of these people were hired. Richardson says that the higher than actual remuneration claim is a difficult one, because many people feel they can increase their salary when changing companies.

Delayed offer?

In this tight employment market, it may be argued that it is in an employers’best interest to make an early offer to its preferred candidate, for fear of losing them to someone else. However, neither Yankos nor Richardson believe that the 2-3 days it takes to undertake the checks they require has ever put them at a disadvantage.

“Although we need to act quickly, we don’t want to compromise the quality of the process,” says Richardson. “The key is to ensure that the candidate knows why we are doing it. If they know they are joining a company that does due diligence and they are engaged – they will wait,” she says.

“The only time we’ve ever seen candidates go off the boil was when we have told them we intend doing thorough background checks, never during the reference checking process itself. If they have got something to hide, they can go from very hot to very cold and uncontactable overnight,” says Yankos.

Return on investment

“The cost of background checking is such a miniscule amount of the overall cost to hire someone, but it may be the portion that is the absolute show stopper,” says Richardson. She intends to compare statistics in probationary termination over the year she used a provider compared to the previous year, once the anniversary is reached.

Similarly, Freeman says return on investment can be viewed from two angles. “There is a measure that you could establish in terms of the direct cost of the process, as opposed to the managerial time it would take to conduct the same search yourself. The time is a lot shorter than it would be if I was doing the same thing myself.”

Freeman, who outsources screening to specialist provider verify, says this process “saves a hell of a lot of time. We have a very lean HR function, so we don’t have the staff to be able to do the job ourselves.”

Yankos looks at it another way. “I see it as money well spent. If I had hired the 20 to 30 per cent of people I was going to hire, then it would have cost me a lot of money. Employment at best is a lottery. I use all the tools that are out there to help me. It is a low-cost, independent verification of what candidates have told you about themselves,”he says.