Mr. Background Check’s Checkup

Screen Shot 2014-10-07 at 2.51.03 PMScene: Antiseptic, hospital room filled with the latest diagnostic equipment. Mr. Background Check lies happily in bed, not a care in the world. By his side are his nurse and doctor.

Nurse cheerily: Good morning Doctor. How is Mr. Background Check today?

Doctor checking an exam chart: Well, let’s see … no heartbeat, no pulse, no brain waves

Nurse raises back of hand to mouth: You mean he’s …

Doctor interrupts: No, no, Mr. Background Check is alive and well.

Nurse: But how can that be? With no brain waves I’d have predicted he ‘d be (pause) gone.

Doctor: No surprise really. We could never predict very much from the information we get from Mr. Background Check

Nurse: Then why do we collect the information?

Doctor pauses, then angrily: Because we always have. That’s why.

Stage direction: Doctor quickly exits stage left in a huff. Nurse looks at Mr. Background Check, shrugs her shoulders and exits stage right.

Do you rely on the information garnered in background checks to make employment decisions? Most of us do. But, the research on selection methods’ ability to predict job success puts background checks near the bottom of the list.

For example, Koppes and Palmer in 2012 found “no relationship” between credit report data and performance. Other studies show that reference checks only account for about 4 percent of the variance in employees’ performance.

Most arguments in favor of the status quo in background checks go like this: “I only want honest people on my team.  After all, isn’t it just common sense that a candidate who lies on his or her application or resume will be an employee who lies?” Not necessarily. Our common senses tell us that the sun revolves around a flat earth. Common sense can be a false guide. We need to rely on objective evidence of what works in predicting employment outcomes.

Unfortunately, much of what we read on background checks are cautionary tales. So and so lied on their application, and despite 20 years of sterling performance he/she was fired. A case in point is a September 18, 2014 article that appeared in the NY Post but was first published in Marketwatch. This article tells of five executives who were terminated when it was discovered that their resumes contained inaccurate information. Some of these leaders had decades of presumably good performance before their secret was discovered. They lied on their resumes and they performed well at the executive level?

This is just one anecdote that illustrates a bigger point: If lying on your resume or application doesn’t predict employment outcomes, then why are we using background checks to make employment decisions?

If you are conducting unstructured interviews or are not employing a validated assessment test, then you can get a higher level of predictive validity from your hiring process by investing in those tools than in paying for or engaging in background checks.

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Background checks are not going away. So, the question: is how can we make them more valid predictors of employment outcomes? The answer is important, because if we don’t address this issue, the government will do it for us.

First, we need to differentiate between a “misrepresentation” and a “lie.”

Wood, Schmidtke, and Decker, in a 2007 article appearing in the Journal of Business Psychology, said that there are three components to a lie:

  1. The statement must be an intentional act
  2. An overt statement is not required (lies of commission {telling a lie} and lies of omission {leaving a substantial fact out} both count as lies)
  3. The false statement must be material to the employment decision

Liars Quiz:

Mary stated on her application for employment as a Senior Dog Walker that she has an AA in Outer Mongolian Studies. A subsequent background check revealed that she attended classes, had 25 credits, but no degree. Did she lie? Yes____ No____

Answer: No. Mary’s education is not material and therefore not a lie.

Materiality is the key to increasing the background check’s value. Material information is that information upon which we make our employment decisions. If you don’t need a degree to do the job then the degree is not material.

This means:

  • Only verify education and employment that is directly related to the job for which the candidate has applied
  • Conduct credit checks only when the position requires a significant fiduciary responsibility
  • Conduct a motor vehicle check only when a driver’s license is truly required of the job
  • Reference checks that throw back to Downtown Abbey days should be conducted using validated, structured interview items
  • Conduct thorough criminal checks. We owe our employees and customers a safe environment. But be judicious on how the results impact the employment decision. Old convictions without any evidence of recidivism are not strongly predictive of employment behavior.

One final thought:

Candidates misrepresent their backgrounds for a pragmatic reason. They want to get hired. When we: publish invalid or unvalidated job requirements; pass over candidates who have been unemployed too long; or question the “energy“ of older workers; aren’t we encouraging misrepresentations? Aren’t we a cause of the problem?

John Miraglia is an organizational effectiveness professional with expertise in recruitment, applicant assessment and talent reviews, performance management, and learning and development. He has extensive experience in the financial services industry. He resides with his family in central New Jersey.

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25 Comments on “Mr. Background Check’s Checkup

  1. Sure we are the cause of the problem when we pass over people for age or other reasons like that. Further, we go farther than background checks in China and find that 70% of qualified candidates have recent materially relevant lies on their resume. By avoiding those people, we have found that our clients keep our candidates 80% longer than those by other means. We are highly reliant on background checks for good reason in our context.

    1. How do you know avoiding those people resulted in the 80% figure? Case in point with regard to illogical thinking; this is post hoc ergo propter hoc. You applied this standard and achieved X result, therefore X result is the result of the standard, but in reality, unless you forgot to mention something, you may achieve the same or better result without that standard in place.

      1. I have relied on good recruiting to make my living in China since 1997. I got lucky in the 90’s as I had a good eye and thinking for China. I got burned in 2002 by relying on reference and interview. Had good results but still gaps in 2003-2007 period. Moved to deeper background checks based on candidate permission in 2008. We did that to close visible gaps. Started my own focused recruiting company in 2009. Built a stronger creative recruiting team and found the nuances to close the gaps on getting first time hiring success and have only done one replacement hire since that time. How we did background checks and did all parts of the process reached higher levels. We confess that some people, who could have been hired if not for background checks, could have worked out. We have also placed people with falsified resumes transparently, so customer knew all. The overall fit by increasing overall transparency in candidate info we can uncover and turn over has led to very good fit. We rarely check education as usually irrelevant in management positions here.

          1. In China, everyone is a politician. Everyone learns from early childhood to say what they need to say and not what is true or from their heart. They are rewarded as being smart for doing that. So we search out the minority who have talent and have overcome that background

          2. So you can imagine how aghast I was when an article appears saying background checks are no use. In truth, big international recruiters active in China do worthless background checks like the article talks about, and their very spotty results show that. Then the recruiters blame China when it is their process from the States that is causing the problem.

    2. If 70% of your “qualified candidates” have “materially relevant lies on their resumes” then they aren’t qualified candidates to begin with.

      1. John, thanks for asking. That is 70% after seeing résumé is qualified and 2 hour interview checks. Most companies do not go even that far. We still have 40% of our work left when we then background check before the customer interviews.

        Accountants are below 70%. Salesman, purchasers, GM’s and other directors cost us more than 70% of our pool in the background check stage. We are China focused and have no data for outside China. We would guess that the West would have lower but still significant numbers, but that is only conjecture on our part.

  2. This article mixes background checks with reference checks. I would segment the two. Background checks typically refer to a criminal history, driving records (if needed), etc. We conduct these not to predict performance but to reduce risk (e.g., negligent hiring). Reference checks are used to confirm reported information on the resume as well as collect 3rd party information regarding the person’s past work performance. When done right, in conjunction with other validated selection measures, these add incremental validity to your overall hiring decision.

        1. Could you give more detail? Doing a prehire skill survey doesn’t really prove much if you don’t hire some of the ones you thought might not work and see their performance as well. You could have them juggle as well and only hire the good jugglers, and if they performed conclude juggling was the determining factor even if it was something entirely different.

          1. Jonathan, I think what you are saying is that the article is a classic straw man with a funny story to prove what is not true. When John’s study says background checks are no use, he apparently means calling the police station and calling the phone number the candidate provided. We agree. He attacks other data like his data and terms have been used scientifically. I think his background checks could be improved to have impacts like we see, and he would not have to make fun of something he has not understood or defined deeply enough. I guess we all can think more careful about our use of data and terms.

          2. HI Jim,
            Your experience in China may or may not apply to the US. Why not publish your results in a peer reviewed US journal so that we can see what your talking about. Show us your techniques and actual data not just rounded up %’s.

          3. Nope, I’m familiar with it, as it’s been posted here in the past several times. From what I recall ‘integrity’ tests and smarts get the hiring process to be slightly better than a coin toss. Also, I don’t recall integrity tests been limited to or analogous to what background checks are. It was because of studies like this that I looked into integrity tests at my last job. They were your typical psyche tests, NOT background checks. So, back to the topic at hand.

          4. HI Medieval
            ,

            The standard practice in validating an assessment tool is to do a concurrent study with current employees, then develop you algorithm from that research. Next you do a predictive study using new hires.

        2. HI Jon, I’ve read the published research on the Skill Survey product and it is interesting but also relies on rate of response and # of responses (not just the ratings) to make their predictions. To buy into that, the researchers would have needed to hypothesize why rate and number should predict job outcomes in advance of their study. To do otherwise is bad science. Having said that I think you’ll admit that the Skill Survey approach compared to standard reference check is like comparing the sun to the moon in the amount of light they shed on a candidates fitness for a job..

          1. I agree…response rate and # of will affect your results with Skill Survey. We’ve been using this for over 4 years now though and find the response rate to be near 90% (far better than traditional reference checks) and the number averages around 5 per person (again, more than traditional). So, if using reference checks in your process, you can see small, incremental validity (not to mention, you may need to have this as part of your risk mitigation for negligent hiring). I would not, however, ever recommend reference checks to be your primary method for vetting a candidate’s skills, abilities, etc. to perform the job (refer back to Hunter & Schmidt for more effective methods).

  3. John
    Great to see the invitation to effective use of data.
    You bring up great points about the mutual nature of the data exchange. Both the corporation and the candidate are decision makers.
    How relevant is the job spec? And how relevant is the background data?
    We can learn a lot about people from various data sources. The issue becomes the discernment on what to use, what to ignore, and how to interpret and apply the data for the best decision support.

    As Jonathan states – risk management is one element. And confirmation of BFOQs is another.

    The key is proper use.

    Background screening may help you eliminate candidates. but as noted, the data is not overly informative, much less predictive of the behaviors you will get from those who are left standing.

    in-house validation of job-relevant, multi-method, or whole person assessments are the best for predicting on-the-job performance.

    Keep writing John.

  4. Seems likely the employer cited in the article who let go of the C-Level Executives was looking for a way to fire them with cause to avoid large severance. I could see the background check being very valuable in that case.

  5. Background screenings are used in many different ways from what I can gather. Some companies use criminal backgrounds to verify recent arrest records, open warrants, excessive speeding or domestic issues that may be in conflict with the company’s image depending on the position applying for. This may also be used to inform insurance company for say driving company vehicle(s), etc. Criminal backgrounds are just a good place to start and can be extremely useful in determining the way the candidate conducts themselves as a human being.

    Financial background checks may also be used in several ways to entertain a candidate. As mentioned in the above article one most common use is to verify a candidates honesty. I disagree with this completely. People’s situations change more rapidly then they did some thirty years ago. With electronic payment systems and debt cards people’s financial status can be disrupted from one day to the next. I truly believe that financial backgrounds are used to see how in debt the potential candidate is. This is used to judge the longevity of the candidates loyalty to the company and how to compensate them accordingly. Here is my thinking on this. If you are covered over in debt you will: stay at a job because you need the job, you will tolerate more abuse from poor management, you will work longer hours, drive longer distances, work for less pay, not complain about the environment (physical and mental), and are less likely to rock the boat and jeopardize your own wellbeing. Those with a strong financial background will NOT tolerate being mistreated, being underpaid, not respected, having to commute long distances, no forward momentum, etc.. I see this every single day. I’m disgusted by the way people are being miss treated in the work place.

    Employment backgrounds is another story altogether. This is a must do, and is the most neglected and poorly performed background of all. Let’s face it ALL candidates will lie on their resume! A simple telephone call (yes Telephone) can clear these items up in a hurry. Our profession has forgotten how to make a simple phone call due to the fact that electronic (Social Media) has taken over the world. If we are so social why is it so hard to make a phone call and actually communicate these inconsistencies within resumes. You should require at least seven (7) professional references and call the people that have placed recommendations, and endorsements on their LinkedIn pages. You need to ask deep probing questions to the candidate and then to all references, and those providing endorsements and recommendations for these candidates. Once completed with them go back and ask the candidates to further explain.

    All of these methods have their place in the hiring process and should be considered. However, you the hiring authority or recruiter should not make final decisions based solely on these backgrounds, but used together for an overall landscape of the candidate. The human factor MUST be present.

    1. “Criminal backgrounds are just a good place to start and can be extremely useful in determining the way the candidate conducts themselves as a human being.”

      How so? Finding someone has a career criminal background is an extreme case and unusual. Most such ‘criminal’ records are usually limited to offenses people had when younger, or one off issues. Other criminal histories, such as in Arizona and other states, will turn up certain traffic tickets as misdemeanors and as such, ‘crimes.’ Not to mention that a significant amount of criminals simply don’t get caught and are never arrested, much less convicted. Criminal checks will never catch them, yet it doesn’t seem to hinder hiring much at all. Has anyone ever studied the issue from the point of view of trying to isolate this latter default control group – criminals who were never caught – and compared their performance metrics against those with records?

      “If you are covered over in debt you will: stay at a job because you need the job, you will tolerate more abuse from poor management, you will work longer hours, drive longer distances, work for less pay, not complain about the environment (physical and mental), and are less likely to rock the boat and jeopardize your own wellbeing. Those with a strong financial background will NOT tolerate being mistreated, being underpaid, not respected, having to commute long distances, no forward momentum, etc.. I see this every single day. I’m disgusted by the way people are being miss treated in the work place.”

      So am I, but your above reasoning assumes people who are in massive debt are making rational financial decisions. The fact that they are in such debt belies that, hence anecodotal experience aside, the above is not necessarily the case.

      “A simple telephone call (yes Telephone) can clear these items up in a hurry.”

      Often, it doesn’t. I recall one recent background check where an employee was rehired by a company, and the confusion between his original hire date and his rehire date couldn’t be reconciled because the company he previously worked for had farmed out employment verifications to a third party, dumped their records on them without making sure they were correct, and then refused to be involved to any degree at all with the verification process. How in the world would that be relevant to HIS performance though, the laziness of his previous employer? How many companies routinely check and audit their HRIS to make sure it’s accurate and up to date? I had one company claim I hadn’t worked there, except that I had a W2 that I had saved by chance.

      The presumption that verifying employment dates is a valid check assumes the honesty and competence of the people keeping the records, and as such is inherently biased againt employees in favor of employers, because the latter are assumed to be error free and bastions of integrity and honesty.

      “All of these methods have their place in the hiring process and should be considered.”

      Why? Have ANY of them shown effectiveness beyond a coin toss, or barely better? Why seven (7!) references and not 6, or 8, or 4, or 10? Where’s the validation behind the magic number 7?

      The problem with our profession isn’t a lack of sociability or hesitance to pick up the phone, but the near complete and total inability to rethink processes or demand good data. As a profession we proceed upon lore and habit, and maintain standard practices without EVER questioning whether or not they even accomplish the ends they’re aimed at. Your last statement says it all: “However, you the hiring authority or recruiter should not make final decisions based solely on these backgrounds, but used together for an overall landscape of the candidate. The human factor MUST be present.”

      Do ALL this stuff, but then the tacit admission that absolutely NONE of it is predictive enough of performance to be used on its own. The thing is, evidence of nothing is evidence of nothing, and evidence of nothing plus evidence of nothing is STILL evidence of nothing. Our profession relies on all these barely validated circumstantial bits of information, which on their own apparently have little to no predictive value, and yet we insist that when you add all this garbage up you get the hope diamond. The somehow metric X, with the same predictive value as a coin toss, plus Metic Y, with the same 50-50 chance of being right, when added together actually gives you more than 50-50 chance of being right. It’s nonsense.

      Perhaps instead of making excuses for all these borderline useless methods, we should be developing news ones to replace them, instead of trying to augment the already nearly useless crap we give our customers with yet more useless crap, like Facebook and social media ‘checks’ to make sure none of their potential employees have social lives or political opinions they don’t agree with.

      1. Thanks Medieval. If HR is to be a profession then we must act as professionals. We need to drop the gut reactions and personal opinions and only use what can be proven through empirical evidence that stands up over time.

        1. The problem is there is more information presented in these comments than the article, and that’s standard for our profession, which is horrendous. Well over half the time when I ask for data for some claim or another, I get pointed to a LinkedIn survey. And the conclusion of every such claim is always, “We recommend you do X, but never make a decision based solely on X.” As if adding one questionable method to a bench of 4 others, all with the same caveat, will lead to better results. If we were to follow the result of the Hunter & Schmidt study, the best way to predict success is to find a resume that’s more or less on target, find out how smart the person is, and then give an integrity test of some kind. And even that plus a good interview, which is a rarity, get’s us only to 65%, and that’s assuming best practices up and down the line. As a profession, that’s pretty pathetic results. Nor does it seem necessary, except for the fact that almost everyone in this profession refuses to tell their stakeholders that their sacred cows are giving sour milk, and they need to rethink the ENTIRE process and question every assumption.

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