Risk Management and Recruitment – avoiding Frank Abagnale

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"I blew it, didn't I? Why didn't I concur?" In the internationally acclaimed movie Catch Me if You Can, Leonardo Di Caprio plays the role of Frank Abagnale Jnr., a charismatic and duplicitous 17 year old who deceives a vast array of employers about his credentials. One day he is a Pan Am aeroplane pilot, the next he is a district attorney prosecuting criminals. In one of his many escapades with the FBI, he poses as a supervising emergency physician who is asked to assist two junior doctors in diagnosing a patient. Drawing on his knowledge of medical sitcoms, Abagnale queries one doctor about whether he 'concurs' with the other doctor's assessment of the injury, much to the first doctor's bafflement. Unable to respond to Abagnale's question, he stutters and stumbles, later fearing that he may have lost his chances of a promotion because he just didn't blindly agree with the assessment. Although the movie appears to be a somewhat incredulous example, it might astonish business managers to learn just how easy it is for the 'wrong' person to end up working for your company. While most candidates are honest about their work credentials, there are many who seek, and have in fact achieved, being placed into a job they should not be in. Selecting the right workers for your organisation is one of the most important elements of a successful business. Much has been written about matching the qualities of an individual into the culture of the organisation - a task that can be as much an art as it is a carefully managed process. Equally important, but perhaps less discussed, are the technical aspects of the recruitment process. These include meeting various statutory requirements and best practice standards for selecting and engaging workers. We would all prefer to trust the person we are talking to is reliable and truthful, however this is an assumption we can't afford. The risks of employing the wrong person are high, and the costs can be significant. This article describes some of the common technical aspects of recruitment which could help to reduce the risk of selecting the wrong candidate for a job.

The Recruitment Process

The recruitment process broadly follows three main stages:

  • Define Role Requirements
  • Assess Candidate Suitability
  • Placement in the Role

Managers and recruiters, whether in-house or outsourced to a recruitment agency, would follow these steps, and they would be the same whether placing a worker into a permanent role or casual or contract role.

Stage 1: Define Role Requirements

Duty: Clearly define the competencies, tasks and responsibilities for the role. Explanation: Often roles are only described in only the most general of terms. The information is limited to the responsibilities and tasks, and perhaps to whom that role will report and who reports to them. A well developed position description will include the competencies required for a person to undertake the role at a competent level. This means defining the skills, qualifications and experience required. Other criteria may also be important and should be described, such as:

  • Licenses: These include Working with Children's Certificates, licences to serve food and alcohol, licences to operate certain machinery and to drive vehicles, etc
  • Transport: Will the role require the person to travel from site to site, and if so, will they require their own transport; do they have a clean driving record?
  • Criminal convictions: Certain criminal convictions can disqualify directors from managing corporations for a period after conviction or release from prison.
  • Integrity: Some roles include access to the assets of the business such as the finances, IT systems or critical business data. Financial organisations in particular demand high levels of integrity for many roles, and would exclude and prior bankrupts from certain roles.
  • Recently I spoke to a senior recruiter about some of the challenges he faces at his job. He told me about the time he was asked to source a senior Business Development Manager for a finance company. The role involved travel to regional areas in order to build relationships with existing and potential banking clients. After a meticulous search and a number of interviews the best candidate was selected. Ostensibly, this candidate met all the relevant criteria and, after a quick scan of his resume, the finance company offered him a job and sent across the contract. However, it was returned to them unsigned- one of the clauses in the contract required that the candidate attest that he/she has never been bankrupt, and the candidate was evidently unable to comply with this clause. The recruiter was embarrassed, the candidate was frustrated, the role was unfilled, and the business (still) lacked a key resource. Criteria for the role had not been properly defined up front.

    Stage 2: Assess Candidate Suitability

    Duty: Assess the suitability of candidate for the role. Explanation: Assessing the suitability of applicants for the job can take a couple of stages. The first stage is the initial screening, which is simply a review of the application and resume, and perhaps a telephone interview. The purpose of this stage is to determine whether the applicant can proceed to the second stage, where more thorough assessment will take place.

    Initial Screening

    At the initial screening the recruiter will be seeking to determine if the candidate meets the general requirements of the job. The questions might be "what type of role are you looking for, what are your qualifications, what experience do you have?" The recruiter can also explain that if the applicant proceeds there will be series of checks to confirm the candidate's qualifications, right to work, and perhaps a police and other checks. The main risk at this stage is breaching privacy principles. It is common to collect as much information about the applicant as possible at this stage because it is convenient and may well be needed later. But if the applicant is not suitable this data should not be retained. Details of referees and medical history are commonly collected but not needed at this stage. Date of birth is doubly problematic if collected at this stage, as unless age is a requirement of the role as for driving or serving alcohol then it could be used as grounds for age discrimination. Woolworths was recently fined for discriminating against a job seeker by requiring information on age, gender and evidence of right to work when completing an online application. The Queensland Civil and Administrative Tribunal held that this information was not necessary until the applicant was being considered for the job. http://www.couriermail.com.au/news/queensland/woolworths-ordered-to-pay-compensation-for-discriminating-against-job-seeker-by-asking-age-gender-and-proof-of-right-to-work/story-fnn8dlfs-1227159313334

    Assessment

    The second stage of candidate assessment is when various checks are conducted and evidence collected. This can be quite a thorough process depending on the type of role being filled or the industry. Some industries or organisations have certain standards such as banking and finance which has requires strong prudential standards, and sections of federal government which require security clearances. Most organisations still conduct interviews face to face, although the use of telephone or web conferencing tools is becoming common, particularly where the applicant is not physically located near the recruiter. These communication tools can be effective, but all too often the identity of the person being interviewed is not checked. How does the recruiter know that the voice they are talking to belongs to the person described in the CV? The more savvy recruiters ask some clarifying questions to confirm they are speaking to the right person. The purpose of the interview is to assess how well the candidate meets the requirements of the role. A variety of interview techniques may be used such as behavioural, clinical or technical or role playing. It is important that the questions asked are about the capability of the candidate to perform the requirements of the job, and are expressed in job-relevant language. For example, you are interviewing for the role of account manager which includes visiting different sites; the candidate is in a wheel chair. It is appropriate to ask how the candidate would handle accessing the different sites; it is not acceptable to ask how long they have been disabled. There are a variety of other checks which can be grouped broadly into qualifying and disqualifying checks. The qualifying checks are those seeking to confirm the candidate's capabilities to perform the role; the disqualifying checks are those which might show the candidate is not suitable. Examples of qualifying checks are:
  • Skill Levels - often skill levels will be discussed in interviews, but on occasions it is appropriate to test skill such as utilising tests for manual dexterity, computer applications and data entry speeds etc.
  • Training and Qualifications - seeing these listed in a resume is useful for initial screening, but it can be important to verify these when it is a requirement of the role and particularly for technical and professional roles such as engineers and medical doctors. Sighting copies of certificates is usually inadequate, and recruiters may need to sight evidence such as original or certified copies of certificates, transcripts of academic records, or speak directly with the candidate's educational institution.
  • Registrations - many professions must be registered in order to practice, including medical doctors and nurses, lawyers, migration advisers and accountants. Whilst viewing a card or certificate is useful, checking the register online will confirm currency and any reveal any registration conditions.
  • Licenses - requirements for driver's licences, electrical licences, and licences to drive specialised vehicles are common.
  • It is important these be conducted as verifying checks with proper evidence, and any questions or uncertainties checked thoroughly. In 2010 hospital authorities discovered that a junior doctor was practising at Alice Springs Hospital with fake qualifications. He had submitted a bogus medical degree when he applied to the NT Medical Board, and subsequently interviewed and examined patients as an intern. http://www.abc.net.au/pm/content/2010/s2830469.htm Examples of disqualifying checks are:
  • Police checks - Certain roles and organisations require the candidates are free from certain types of criminal convictions. Sometimes these are obvious eg a candidate would not be suitable for a finance role if they had been convicted of fraud, or a driver convicted for drunk or dangerous driving; but sometimes less obvious, for example a traffic controller may not have any convictions relating to children as their job may take them into the proximity of a school or other location where children are present.
  • Health checks - used to confirm the capability of an individual to carry out certain types of work or suitability for working in certain environments eg asthmatics would not be best placed into dusty environments; a worker who is vision impaired may not be best placed to drive large vehicles or equipment.
  • Work references - well designed questions put to work and character referees can confirm a candidate's suitability, skills and experience for a role, and can also raise any problems or concerns about the candidate's past performance.
  • Right to work - It is the responsibility of all Australian businesses to employ legal workers, and penalties can be imposed for each individual worker who has been engaged illegally to work. The preferred method to verify the right to work is by using Visa Entitlement Verification Online (VEVO), a secure and free government web-based service.
  • Identity - common means to check identity is cross-checking with details held on the electoral roll, online telephone directories and public databases. The 100 identity point check, designed to limit bank fraud, is also being more commonly used.
  • Sometimes not undertaking these very important checks can result in the most disastrous consequences. In 2011 fourteen people died when the Quakers Hill nursing home was destroyed by fire set alight by a drug dependent nurse who was attempting to cover his theft of prescription drugs. The nurse had a history of inappropriate behaviour including vandalism, and had been previously removed from shifts because of patient safety concerns. The NSW deputy coroner found that the owners of the nursing home did not make inquiries about the Dean's past before employing him. http://www.abc.net.au/news/2015-03-09/quakers-hill-nursing-home-fire-inquest-findings-released/6290248 Disqualifying checks, by their nature, can be intrusive and include sensitive personal information. It is very important that the candidate consent to these checks being conducted, and that collection, use and access to this data be carefully managed in compliance with privacy requirements. It is also essential that these checks be conducted as required by the job or the organisation, to conduct these checks for only selected individuals would be highly discriminately. For example, it is not acceptable to ask only candidates who have English as a second language to show evidence of their right to work, where everyone else with an Aussie accent is not checked.

    Stage 3: Placement in the Role

    Duty: Ensure that the worker is fully informed about the work that they are about to commence. Explanation: Proper on-boarding assures that an employee is appropriately engaged with the work that he/she is about to commence. An employment contract is established and clearly defines the parameters of the individual's employment: whether he/she is an employee or a contractor; whether the engagement is under an Award or other special arrangements. There is general confusion about the circumstances that define whether a worker is a contractor or an employee. Not even these terms have been conclusively defined, but here is an attempt:
  • Employees: Workers may be engaged to perform work under an employee arrangement, such as permanent full time, permanent part time (both of which are regular work hours) or casual (working as required). Employers are responsible for all remuneration including wages and superannuation, taxation, leave arrangements and insurances.
  • Contractors: Sometimes referred to as Independent Contractors, these are individuals working with a business client but under a commercial contract rather than employment arrangements. Payments to the contractor are usually by invoice rather than wages. The client may not be responsible for superannuation, taxation or insurances. Contractors may be individuals (referred to as sole traders), or incorporated entities.
  • Getting this distinction right is important, as the risk of "sham contracting", where an employee masquerades as a contractor in order to avoid tax, superannuation and other obligations, has significant consequences. Other important considerations in finalising the placement into a role include:
  • Induction - Whether a contractor or employee, all workers should receive an induction on joining an organisation. The induction should cover, amongst other things, the requirements of the job, policies and procedures of the business and how to manage grievances or disputes. Ideally this induction should be evidenced with a checklist signed by the worker.
  • Safety training - The importance of effective and ongoing safety training cannot be understated. This should include sufficient training in safe work practices, hazards in the workplace and what to do if an accident or near miss occurs. This training may be included in the induction.
  • Contract - the contract should state the nature of the engagement - employment or contracting - and set out the obligations and benefits of the arrangement. (Note that the contract is not the sole determinant of contract or employment.) Some commons sense measures should be in place to ensure the contract is effective including the correct and address or each party, proper signoff by each party, and, if an on-hire arrangement including an accurate summary of assignment conductions (or equivalent).
  • Employee Details - The time to collect information relating to employment is now (not at the time of application or assessment). Required information includes Tax File Number, date of birth bank account details, next of kin (for emergency contacts).
  • Employer Responsibilities - It is the employer's responsibility to collect PAYG tax on behalf of the employee, and to pay other taxes such as payroll tax.
  • The consequence of failing to adequately prepare the worker for their new job can be both costly and dire. During 2009 to 2010 four young men who lost their lives whilst working to retrofit the controversial Home Insulation Scheme for the Rudd government. Three suffered electrocution and one died of heat exhaustion after his first day installing insulation. 10,000 companies were created to take advantage of the Scheme, and were required to qualify as "registered installers" which allowed them to supervise an unlimited number of employees and contractors. However, part of this qualification could be accomplished online within an hour, and the related two day training sessions were often conducted for only "couple of hours" that were scattered between the morning and afternoon. Improper induction procedures, low qualification barriers and poor safety management were some of the reasons the scheme failed and lives were lost. http://www.theaustralian.com.au/national-affairs/labors-home-insulation-scheme-was-fundamentally-flawed-report/story-fn59niix-1227043700717

    THE CONSEQUENCES OF IMPROPERLY PLACING CANDIDATES

    In 2014 an American businessman was hired and then sacked by Myer on his first day. Andrew Flanagan was appointed by Myer as its group general manager for strategic and business development. He claimed to have been a former managing director and vice president of a Spanish retailer which owns the international fashion chain Zara. However it was subsequently revealed that both companies denied he had ever worked for them. Mr Flanagan had falsified his CV and references to get the job. Mr Flanagan has been charged by Victorian police with fraud and the recruitment agency that recruited him as suffered a major blow to their reputation. http://www.smh.com.au/business/police-charge-former-myer-manager-andrew-flanagan-with-fraud-20140728-zxlio.html#ixzz3TpM5WJLQ The consequences of improperly placing candidates can be severe and far-reaching. Various penalties can be imposed for breaching employment requirements; the cost of repeating the recruitment process can be 30% or more of the salary package for the role; and then there are costs of delays in filling the role. If a complaint is made to the Fair Work Commission an investigation could be undertaken which reviews all processes and procedures of the business. In more serious situations there could be a death or injury or massive reputation damage. Senior managers and directors carry their share of responsibility for the recruitment process. The Corporations Act and case-law surrounding director's duties confirm that executive officers owe a high standard of care, skill and diligence to the company. In order to not breach their obligations, these officers must keep up to date about the issues that face the company and make inquiries into problems when they become aware of them. Ensuring your recruitment process is well managed for effectiveness and for risk can be a large task. The place to start is by reviewing what you already have in place. Here are 5 questions that may help:
    1. Are all position descriptions suitably defined?
    2. Do we have clear and well documented policies, procedures, forms and contracts for recruiting and placing workers?
    3. Do all personnel who are responsible for recruitment have the proper competencies - skills, qualifications and experience?Does the business regularly monitor implementation of the process to check it is complying with procedures?
    4.  If recruitment is outsourced then have the procedures of the recruitment agency been assessed or are they independently audited for quality such as against AS/ANZ ISO 9001 or appropriate industry standards