Growing Trend of Employment-Related Background - Essay Example

 Growing Trend of Employment-Related Background Abstract The purpose of this paper is to highlight the instances of credential fraud in employment-related circumstances. Offering false information regarding previous employment history or educational credentials is a growing trend in North America (and abroad), leading many contemporary organizations to conduct background checks as a loss prevention and risk management tactic. This work will discuss the problems in today's businesses and offer examples of how to best protect a firm from this difficult business issue. Credential Fraud: Growing Trend of Employment-Related Background Falsification and Combative Measures Introduction Research indicates the instances of credential fraud in the United States are on the rise, with many contemporary organizations taking dramatic steps to secure the business. Credential fraud consists of an employment candidate falsifying information on the employment application, usually in the form of misrepresented employment history and academics-related credentials. This type of fraud has witnessed the creation of many external agencies which act as third-party investigators and are generally hired as a proactive risk management investment. There is also ample research evidence pointing toward an increased awareness of credential fraud in modern business organizations, prompting human resource officials to promote extensive training to interviewing managers in recognizing potential discrepancies within employment applications. With background checking being established by many organizations in an attempt to combat this fraudulent activity, it is somewhat unexpected that credential fraud continues to rise statistically. This project identifies the potential detriment which is caused by credential fraud, both to the business which experiences increases in similar fraud and to the employee or potential job candidate who knowingly falsifies their credentials. Further, an interview was conducted with the Regional HR Manager at The Home Depot, a major home improvement center with facilities in North America and abroad, to highlight the issues faced by today's human resources departments. A Growing Trend Credential fraud is not only a modern problem plaguing businesses, instances of misrepresentation have been experienced since at least the 1970's. Research indicates that fraudulent employment activities involved degree forgery and the use of diploma mills on black markets. These mills offered the creation of official-looking degrees from major universities across the nation, costing, at the time, around $1500. In today's market, this would be valued at approximately $3200 (Slater, 2006). During the 1970's, job candidates without valid qualifications took advantage of the weaknesses in various company hiring policies and considered the risk of credential fraud to be virtually negligible (Cooper, 1977). This trend has continued to grow as access to forged university degrees was made available by Internet applications and diploma mills. Credential fraud is not only a North American phenomenon, instances of employment-related misrepresentations have been witnessed in Europe and Canada as well. Mike Comer, chief executive of the Maxima Group, a background investigational organization based in the United Kingdom, conducted a research study regarding credential fraud in America, and suggests that nearly 75 percent of curriculum vitae (the resume) has shown some sort of falsification; both minor and blatant (Donkin, 1998). A somewhat alarming statistic, this study indicates that most instances are not outrageous fabrication, rather most instances are simply half-truths, such as indicating that a degree program was completed when in reality the employment candidate has not achieved graduation. Another background investigation firm, established in the United States in 1995, suggests that nearly 30 percent of the applications checked by this organization contain instances of "material misstatements, embellishments, or downright lies" (Edgecliffe-Johnson). This tends to support the research conducted by the United Kingdom-based Maxima Group, pointing toward a sharp increase in credential fraud most closely associated with American workers. The question as to why application misrepresentation occurs can likely be answered by today's advancements in technology. With modern applications available to today's job-seeker, such as advanced printing equipment and internet-based diploma mills (agencies offering genuine-appearing diplomas for high costs), it is becoming significantly easier for potential employment candidates to create a stellar-looking resume in the hopes of landing a superior-paying job despite their lack of genuine qualifications. Further, many businesses today lack the internal process controls necessary to competently select qualified, knowledgeable, and credible employees (Stamler, 1997). These control methods involve generating new managerial training programs designed to offer human resource managers new methods to detect suspicious elements within employment applications and utilize appropriate interviewing techniques to uncover the deceptions. The Costs and Remedies of Deception Both for businesses and for the unqualified employee, credential fraud maintains significant costs which impact both parties. From a business perspective, failing to check references on employment applications has allowed many organizations to become targets of various lawsuits, charging the company with negligence when unqualified workers have been hired and subsequently committed violent acts on the job against another employee (Mathis & Jackson, 2003). This may appear to be a somewhat dramatic outcome of a firm's lack of recognition regarding background checks, as many fraudulent resumes do not entail criminal behavior, however the business, from a legal perspective, maintains a significant obligation to ensure that they have employed the proper candidate. Businesses maintain several options to assist in uncovering credential fraud, one of which involves establishing an at-will contract, which states that the business many terminate an employee's position at any time and for any reason (Clarkson et al, 2004). Establishing an employee as at-will provides the business with a failsafe in the event that it happens to be discovered post-hire that the resume or employment application consists of documented fraud regarding previous employment or educational credentials. When a long-term employee has held their position at a firm for a significant period of time, and the misrepresentation is discovered, the employer is generally "free to terminate the employment relationship based on breach of implied contract" (North, 2001: 162). When a business and a potential job candidate finalize the employment agreement, in terms of pay and level of position within the company, they have entered into an informal employment contract. Any misrepresentation regarding education or previous job history, regardless of the severity, represents a breach of this agreement. For this reason, legalities are being established which protect the business from human resource-related risk and as a loss prevention tactic. From the employee's standpoint, especially in a situation where the employee has held a position within the firm for several years before his or her deception is uncovered, the costs of this fraud would appear to be highest on the employee. However, many businesses are limited to the volume of information which they are allowed, by law, to discuss with inquiring agencies. For instance, one firm calling another to discuss previous employment history will likely receive only basic employment information, such as dates of employment to verify the information. However, conduct-related termination information is often omitted by the verifying organization in order to prevent a potential lawsuit based on slander. In this situation, the deception or resume misrepresentation is never uncovered, allowing the employee to indefinitely benefit from their deception. As a protection measure for businesses, there are two options available to ensure an adequate background check and to avoid legal complications when verifying potential employee credentials: Require candidates to sign a statement verifying the accuracy of the information contained within the resume and application, and submitting a signed background consent form in which the employee agrees to the terms of the checking procedures. These signed statements are crucial to protect the business as it is often illegal to perform these background investigations without a signed authorization statement (Stamler). From yet another business perspective, initial and follow-up interviews, and competent managerial staff trained in conducting them, can serve to uncover deception prior to formalizing the employment agreement. It is simply too costly to train, hire and motivate people only to lose them and be forced to invest further effort in replacing them (Nickels et al, 2005). It becomes the responsibility of the assessing, interviewing manager to scrutinize the employee credential information as listed on the application paperwork, spot any noticeable discrepancies or questionable issues, and use appropriate interviewing techniques in an attempt to draw out the deception. For instance, focusing on previous employment history and rather in-depth discussions about past employment will discover whether the candidate is actually knowledgeable and competent regarding their proposed field of understanding. In this scenario, the assessing manager must use a combination of instinct and training to determine the most qualified candidates. Training managers in this type of advanced human resources competency is likely a costly and time-consuming task, however it is often a business' best opportunity to spot credential deception. The Home Depot In order to assess today's instances of credential fraud, it became imperative to conduct a personalized interview with a member of a reputable and sizeable organization in the United States. For the purpose of this project, an interview was conducted with a member of the regional human resources team at The Home Depot. This company employs more than 350,000 people and is ranked as the number one home improvement center in the United States (Homedepot.com, 2007). For anonymity purposes, the interview respondent asked to have his name omitted from all associated research materials and will be referred to as "Jim". Jim has been employed with The Home Depot for nine years, promoted to HR manager in 2002 with a subsequent move to Regional HR Manager in 2005. A five year tenure in human resources adds credibility and validity to the interview results. Jim indicated that The Home Depot company is well-acquainted with credential fraud, suggesting that academics-related credentials are the most commonly overstated on application materials. Further, many potential candidates, who had experienced no higher-level education whatsoever often claimed to hold Master's or Ph.D. degrees (Personal interview, February 20, 2007). In rather jovial manner, Jim implied that these blatant falsifications often trigger the assessing manager to actively scrutinize the resumes, offering the logical assumption as to why an individual with an advanced degree would be interesting in working as checkout associates. Though this may seem to be a more elementary aspect of spotting credential fraud, it does serve to support the research evidence which indicates that North American employment candidates tend to use more outrageous and consistent usages of employment-related misrepresentation. Further, during the interview process, Jim offered that instances of credential fraud were on the rise within The Home Depot, contributing statistics that, nationwide, approximately 30 managers had been discovered offering blatant misrepresentation about their background, with one notable situation involving a manager who had proposed that he worked as a senior executive, but was in reality just a subordinate associate at his previous company (Personal Interview, February 20, 2007). In this situation, the deception was uncovered as the manager was unable to competently perform the managerial tasks, showing a wide lack of understanding regarding basic managerial principles. Jim offered another example of a junior executive manager in Atlanta who had claimed on his resume to hold a Master's in Business Administration. After five years of employment, it was discovered that this employee had not even completed his Associate's program (Personal interview, February 20, 2007). Jim offered several examples of how The Home Depot is currently combating this growing problem, which, he offered by best estimate, is up 20 to 30 percent at the firm (Personal interview, February 20, 2007). Jim offered that their primary business protection method against credential fraud was the use of background checks and consent forms. Moreover, the company performs bi-annual sample checks in which a small sample of existing employment files are pulled and subsequently introduced to background checking and verification procedures (Personal interview, February 20, 2007). These background checks involve third-party organizations, offering a protection method to the firm's loss prevention policies. During the interview's conclusion, Jim offered his advice to other businesses which are struggling with credential fraud. His advice: "Check, check, and more check" (Personal interview, February 20, 2007). Jim, as a person who might be considered an expert in human resource management, suggested that whenever a question arises as to credentials, the managers of other companies should call previous employers and those individuals listed on references. He implied that this is not a solution for all credential fraud, but taking an employee for their word could mean long-term detriment to the firm. All of the information provided by Jim tends to illustrate the more blatant usage of credential fraud when attempting to land a position without proper qualifications. Jim did not provide instances at The Home Depot where less-extraordinary fraud was experienced, however his participation in this interview served to support many of the concepts discussed throughout this project. Conclusion With the ease and availability for today's organizations to provide a competent check of academics-related backgrounds, it is somewhat staggering that employees continue to use blatant instances of credential fraud. It might be a competent and logical assumption to state that verifying an individual's tenure with a previous organization or university can be accomplished relatively quickly; often with a simple fax or phone call. This might be especially true for those individuals who pay high dollars for third-party organizations to create falsified degree certificates. However, both secondary and primary research supports the idea that such blatant misrepresentation is on the rise, especially in the United States. The United Kingdom organization, Maxima Group, described a 75 percent statistic highlighting instances of some sort of credential fraud, both minor and extraordinary, on all of the employee background checking materials as submitted by verifying business organizations. This is an alarming statistic, which implies that only 25 percent of United States employees provide accurate information regarding their genuine credentials to justify employment. Perhaps this is a significant indicator as to why companies appear to be making such extraordinary efforts to combat this growing problem, as it represents a considerable detriment to the firms, both in finance and managerial investments. As previously discussed, one reputable United States industry specializing in third-party employee background checks claimed a 30 percent statistic regarding the instances of credential fraud. Considerably less than that of the United Kingdom's findings, perhaps this represents a more unbiased viewpoint from an overseas source and a willingness of the Maxima Group to provide more accurate research results. Whatever the issue, it is clear to conclude that credential fraud is surfacing in businesses on an international level. The purpose of this project was to uncover credential fraud, its definition, and its implications on both the businessperson and the employee. All of the research indicated that misrepresentation provided virtually limitless damage to both parties and is costing contemporary businesses a great deal of investment to combat the practice. From a third-party organizational perspective, the increase in credential fraud is providing big business opportunities, with background checking organizations growing steadily in North America and Europe. The problem involves a concept known as integrity, which might be the logical conclusion to state that today's employees tend to favor the career and its benefits over their own reputations. That, however, will remain to be seen in the years to come. Word Count: 2508 References Clarkson, K., Miller, R., Jentz, G. & Cross, F. (2004). West's Business Law: Texts and Cases. Thomson South-Western West: 647. Cooper, Kenneth C. (1977). 'Those 'Qualified' Applicants and Their Phony Credentials'. Administrative Management. New York. Vol. 38, Iss. 8: 44. Donkin, Richard. (Oct 21 1998). 'Exposing Charlatans: Many job candidates lie about themselves. But there are ways of catching them out'. Financial Times. Edgecliffe-Johnson, Andrew. (2000). 'How to Keep the Enemy Within: Background Investigations'. Financial Times. Mathis, Robert L. & Jackson, John H. (2003). Human Resource Management. 10th ed. Thomson South Western: 267. North, Charles M. (2001). 'Remedies for Misrepresentation in Applications in the Presence of Fraudulent Intent'. Atlantic Economic Journal. Vol. 29, Iss. 2: 162. Nickels, W., McHugh, J. & McHugh, S. (2005). Understanding Business. 7th ed. McGraw-Hill Irwin. Slater, Jeffrey. (2006). Practical Business Math Procedures. 8th ed. McGraw-Hill Irwin. Stamler, Michael. (1997). 'Screening for Fraud'. The Internal Auditor. Altamonte Springs. Vol. 54, Iss, 5: 67-68. Appendix A: Interview Transcription Results "Jim" – Regional Human Resources Manager: The Home Depot Thank you for your participation in this research study. The intention is to uncover instances of credential fraud in today's businesses, with a focus on preventative measures and offering insight as to how these events occur. There is no monetary award associated with this interview. All of the information will be utilized for academic research purposes only. Your help is appreciated and could serve to help other industries struggling with credential similar application-related problems. 1. How long have you worked at The Home Depot? Nine years. Promoted from Assistant Store Manager to Hr Manager in 2002. Promoted to Regional HR Manager in 2005. 2. Are you familiar with credential fraud? Yes. In fact, the business has seen many instances of it in recent years, especially regarding academics. It causes us to run around in circles trying to find the best candidate. We find that people have had no education WHATSOEVER, but offer Master's and even PhD certifications, which usually isn't easy to uncover. (laugh). I mean, why would a doctor want to work on the cash register? Sometimes, it's just insane. 3. Give me some examples, please, of where and how you discovered credential fraud. Just a month ago, we had to terminate our association with a junior executive manager in Atlanta who claimed to have a Master's Degree in Business Administration. He had been with us for five years. It was discovered when we noticed discrepancies in the subordinate staff members' resumes, prompting an entire organizational search. His name appeared on our random search….meaning where we took a sample of resumes from the whole district. We discovered that he had not even finished his Associate's program at a community college. In the last couple of years, we've found that roughly thirty or so managers across the country BLATANTLY lied about their background. Some even told us they had worked in senior-level positions, but were actually just store associates. A few of them revealed their own deception by having a strange lack of understanding about BASIC management policies. 4. How do you combat this problem? We do regular background checks and make our applicants sign a background check consent form. We use an external agency for this. This protects us in so many ways. We also conduct bi-annual sample checks where we pull, at random, several employment files and verify what's written there. If it's severe, there is an immediate termination to at-will employees. If it's minor, we deal with each issue according to the severity. We also try, keyword being try, to use sound questioning in the interview process and train managers to understand the right verbage in questioning candidates. Appendix A: Interview Transcription Results "Jim" – Regional Human Resources Manager: The Home Depot 5. Does credential fraud seem to be on the rise, in your viewpoint? No doubt, but remember that we have been much more aggressive in recent years which is probably why we're finding more situations. I would venture to guess that we have seen about a 20 to 30% increase in misrepresentations since 2004, when I first started as regional hr manager. 6. What advice would you offer to other businesses? Check, check and more check. (laugh). Seriously though, I would offer that firms establish a third-party system to do the checks because no single store HR manager can do this alone. Very time consuming! Don't ever take candidates for their word. If a problem exists or you think one does, check it. Call their past employers. Call their references. Do what you can, within reason, to prevent more issues. Customer, this is not part of the paper, just for you with a few bulleted points that I thought might help you with your oral presentation….due to the rapidity this demanded. Reports indicate the 30% of all third party background checks contain some instance of credential fraud in the United States. Reports from European third party background checking organizations show credential fraud instances as high as 75% in the United States. Credential fraud is represented primarily by academics-related and previous employment history Credential fraud can be tracked back to at least the 1970's, with black market diplomas available, at the time, for $1500; equivalent to over $3000 today. Internet and sophisticated technolgies make access to forgery and pay-for-degree programs easier to manipulate Examples of blatant misrepresentation include: Providing resumes showing a high-level degree when no educational completion whatsoever is the reality Providing resumes showing executive level positions, when it was, in reality, a subordinate associate position Businesses are investing more time and managerial effort to pinpoint credential fraud, including background checks, HR training, and interviewing techniques. Businesses can be the target of liability lawsuits for not conducting background checks if a non-credentialed employee is hired and conducts violent acts on the job. Read More