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ASIS Breakfast Seminar:Pre-employment Screening: A Corporate PerspectiveJeremy Stone, CPP28 February 2011

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Agenda

1. What is Pre-employment Screening?2. Why Conduct Screening?3. Available Types of Check4. Screening Program Considerations5. Conclusion6. Q&A

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1What is Pre-employment

Screening?

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Definitions

Pre-employment Screening:A process for determining whether a prospective

employee is trustworthy or capable of performing the functions required by the job.

Background Verification/Check:The process of checking an individual’s character, general reputation, personal characteristics, or …

[lifestyle] for consideration of employment, promotion, access to sensitive assets … or for

continued employment.

ASIS International (2010), International glossary of security terms. Retrieved February 25, 2011 from http://www.asisonline.org/library/glossary/index.xml.

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2Why Conduct Screening?

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Discourage False Applications

• CV exaggeration commonplace• According to Monster UK (2007):

– 66% candidates prepared to lie– 40% lie about reason left last job– 18% lie about last salary– 10% lie about qualifications

• Diploma Mills• Fake Academic Certificates• Fake Qualifications

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Promote Safe/Secure Workplaces

• In US > 1.0 M workplace violence cases p.a.

• According to US EOC (2007):– 31% of female workers harassed– 7% of male workers harassed – 62% of targets took no action – 43% harassed by supervisor – 27% harassed by a senior employee– 19% harassed by coworker– 8% harassed by a junior employee

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Support Anti-Fraud PolicyPerpetrators of Fraud by Industry

73

65

55

60

24

23

41

44

25

35

39

45

74

69

53

76

0% 50% 100%

Financial

Insurance

Communications

Technology

Hospitality

Manufacturing

Entertainment

Universal

% reported frauds

External Internal Unknown

Price Waterhouse Coopers (2009). The global economic crime survey..Retrieved February 25, 2011 from http://www.pwc.com/gx/en/economic-crime-survey/download-economic-crime-people-culture-controls.jhtml

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Support Anti-Fraud Policy

Profile of External Fraudsters

25

10

20

45

0 10 20 30 40 50

Other Third Parties

Vendors

Agents/Intermediaries

Customers

% reported frauds

Profile of Internal Fraudsters

2

14

42

42

0 10 20 30 40 50

Other Employees

Senior Execs

Middle Mgmt

Junior Employees

% reported frauds

44% 53%

Price Waterhouse Coopers (2009). The global economic crime survey..Retrieved February 25, 2011 from http://www.pwc.com/gx/en/economic-crime-survey/download-economic-crime-people-culture-controls.jhtml

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Reduce Lawsuit Exposure

• Neglecting hiring lawsuits• Negligent retention lawsuits• Other vicarious liability lawsuits

In common law jurisdictions, employers can be held liable under tort law if they negligently provided an employee with ability to engage in an act resulting in injury to another because of the act

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Promote Compliance & Governance

Demonstrate to:• Employees• Customers• Regulators• Shareholders• Future InvestorsThat company has:• Duty of Care• Strong Corporate

Governance Structure.• Robust framework of

Internal Controls

Proc

esse

s

Polic

ies

Proc

edur

es

Prac

tices

Acc

ount

abili

ty

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Reduce Poor Hiring Decisions & Staff Turnover Costs

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Attract & Retain Well Qualified Candidates

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3Available Types of Check

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PES Checks ShouldVerify information about subject’s:• Identity & Contact Particulars• Academic Awards• Professional Qualifications• Employment History• Past/pending legal proceedings (if any); & • Potential conflicts of interest (if any). Include checks/searches of:• Prohibited persons’ lists• Other compliance databases. • Conviction Records• Credit Histories• Bankruptcy Searches• Where legally permissible• In appropriate jurisdictionsChecks can be tailored to candidate type • FTE• Intern• Long term Consultant• Long term Contractor/Vendor

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Checks Available by JurisdictionCountry Education &

Profession Checks

Employment Checks

Credit Check

or local best practice

Criminal Check

COI or Business Interests Search

Financial Regulatory

Search

China Yes Yes No Yes Yes Yes

Hong Kong Yes Yes Civil litigation & bankruptcy Limited Yes Yes

India Yes Yes Limited Yes Limited Yes

Indonesia Yes Yes Bankruptcy No No Yes

Malaysia Yes Yes Civil litigation & bankruptcy No Yes Yes

Philippines Yes Yes Credit check Yes No No

Singapore Yes Yes Civil litigation & bankruptcy Yes Yes No

Taiwan Yes Yes Credit check Yes No No

Thailand Yes Yes Civil litigation & bankruptcy Yes No Yes

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4Screening Program

Considerations

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Legal IssuesData Privacy Laws• Purpose & manner of collection.• Accuracy and duration of retention• Use of personal data• Security of personal data• Information to be generally available• Access to personal dataAnti-discrimination laws:• Race, gender, sexual orientation, religion, nationality,

marital status, pregnancy, etc.Rehabilitation of Offenders:• If only convicted of one offence• < 3 months prison• < HK$10,000 fine• The conviction is expired• Record cannot be used to disbar employment• Subject does not need to disclose it. • Does not apply to – professions, bankers, insurers,

etc.

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In-house or Out-sourced?In-house• Corporate Security Department• Human Resources Department• Do they have requisite expertise & skill-set?• No. of staff required?• Sources of information availability• CostOutsourced:• Size & geographical footprint• Information sources & databases• Technology platform• Ability to conduct cross-jurisdiction checks?• Reliability – turnaround time?• Reputation• Quality control process• Fee structure• Cost effectiveness? Rule of thumb – annual program

cost should equate approx. to a senior manager’s salary

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Screening Program Flaws• Many organizations fail to:

– Seek independent verification– Check criminal & civil litigation records– Check for bankruptcy & credit worthiness– Search prohibited persons & compliance

databases– Identify reputation issues– Identify & resolve potential conflicts of interest– Index & check for persona non grata

• No consistent / fair mechanism to makeadverse hiring decisions

• No corporate screening policy• No formalized program = high exposure to hiring risks

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PES Policy ContentsPolicy Statement:• Conduct & Integrity• Duty of Care• Screening Requirements• Types of Check• Levels of Check• Adverse Decisions• Facility & IT System Access• Data Privacy Statement• Employment Contracts• Legal & Compliance• False or Misleading Statements• Law Enforcement Referral• Persona Non GrataPolicy Rationale & Objectives:Scope & LimitationsPolicy Exceptions• Urgent Hiring Cases• Third Party Screening• Re-hires• Other exceptions

Roles & Responsibilities• Corporate Security• Human Resources• Hiring Managers• Compliance Officers• IT Managers• Screening ProviderScreening Procedures• Candidate selection process• Communication of Job Offers• Collection of Screening Data – Manual/Online• Case Initiation• Case Processing• Discrepancy Reports• InvoicesAdverse Decision Process• Adverse decision criteria• Adjudication panels• Communicating decisionsManagement Information• Reports & Performance Indicators

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Discrepancy Management

• Discrepancy reports & red flags need to be:– Analyzed– Clarified– Categorized– Escalated

• Who conducts this process to:– Ensure consistency– Provide a check & counterbalance– Ensure policy compliance– Act as gate keeper

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Adjudicating Panels

• Comprises of:– Corporate Security– HR Manager– Hiring Manager

• If cannot resolve, canalso include:.– Compliance Officer – Country GM / Dept Head.

• If still cannot resolve:– To HR Director for final decision.

• Detailed decision-making guidelines devised.

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61%

39%

31%

3% 6%

0%

10%

20%

30%

40%

50%

60%

70%

No Issue Discrepancy Resolved Terminated TBC

Discrepancy Case Actions

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5Conclusion

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Conclusion

PES can be an effective risk management tool:

• If the program is carefully planned• Detailed policy document formulated• Detailed procedures formulated• Properly communicated to all stakeholders• Reliable/reputable provider selected• Stakeholder expectations are managed• Centrally controlled & managed

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Questions

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Contact

Jeremy Stone, CPPDeputy Head – Group Corporate Security

American International Assurance Co., Ltd.

AIA Building1 Stubbs Road

Wanchai, Hong Kong SAR

T. +852 2832-8017 F: +852 2893-6890Email: Jeremy.Stone@aia.com