I have two times – well, at least that’s those I know of. Once with a candidate I had shortlisted for my client. And once when I hired for my own team.
Read in this article how I got cheated by a conman, who I unfortunately hired before I later realized what had happened. And then there was the shortlisted candidate for my client who pretended to be the reference person for herself. You would love this – and learn.
Report: The Real Cost of Recruitment Fraud
If you don’t take pre-employment processes seriously, you are leaving the door open to financial loss and reputational damage to your organization according to a new report from UK.
The report titled The Real Cost of Recruitment Fraud was recently published by Crowe, a UK based accountancy firm, in cooperation with the University of Portsmouth. The report established that the annual cost of recruitment fraud in the UK alone is more than 30 billion US dollars.
Crowe carried out Resume and CV checks of an unnamed organisation’s 5,000 employees and found 80% contained discrepancies, with 20% using inflated job titles and 12 per cent falsifying educational grades. A further study showed that almost a third of 619,000 pre-employment checks, undertaken over a year-long period by a company specialising in pre-employment checks, had discrepancies.
Definition of recruitment fraud
Recruitment fraud is when someone lies about their experience, qualifications, employment history or previous integrity. It’s using false or fabricated documents or arranging false references. Falsifying allows applicants and candidates to secure positions as senior executives and, even more worryingly, as doctors and pilots.
The most common recruitment fraud experienced by organizations was false qualifications, followed by fabricated references, use of false or fabricated documents and exaggerated grades.
Costs associated with a bad hire include lost money spent on training and the recruitment process, reduced productivity, internal investigations and disciplinary proceedings, aside from any external sanctions and reputational damage.
Once inside, fraudsters often engage in further misconduct against their host organisations, such as fraud, theft or corruption. With access to sensitive data and private company information, unscrupulous employees pose a serious security threat and exacerbate the likelihood of a data breach.
Jim Gee, National Head of Forensic Services at Crowe in London and also Chair of the Advisory Board for Centre for Counter Fraud Studies at University of Portsmouth, said: “Recruitment fraud is a serious problem, for organisations of all shapes and sizes. Initial misrepresentation or misleading information presented on a CV is often seen as being little more than ‘a white lie’, but it can and does lead to bigger financial and reputational costs down the line.
Types of false information provided
- Claimed to have qualifications / status the person did not possess
- Fabricated references
- Use of false or fabricated documents
- Exaggerated degrees or grades of educational qualifications
- Fabricated past roles never undertaken
- Failed to disclose past criminal convictions, which they should have
- Claims of having registration/membership with professional body they did not have
- Exaggerated work periods / roles / salary of past employments
- Use of false identity
- Exaggerated status of professional body or registered membership
- Failed to disclose financial information they should have
How I got fooled by candidates
Let me put it this way, I know of three times where candidates tried to fool me. One succeeded but two didn’t. Here’s what happened and let that be learning lessons from this article.
Case 1: I was hiring a Business Development Manager for my executive search team to manage our international clients. He was a foreigner but already living in Thailand. The moron had provided two names and mobile telephones to people he claimed were former superiors. Fast forward six months.
When an invoice was way overdue and still not paid by a client, I called the client’s CEO whose signature was on the search agreement. It turned out that the CEO had never signed our agreement and in fact had never met my Business Development Manager. The signature was falsified.
When everything then obviously hit the fan and devolved into utter chaos, it came to light that one reference person I had spoken to was his own mother and the other a close personal friend. Both were obviously a part of the scam. Needless to say, his career in executive search was cut short. He was last seen years ago in a beach resort chased by a gang of thugs.
Case 2: A candidate who was the last standing from the shortlist and now the client’s preferred candidate, provided names and contact details of reference persons for us to talk to. A quick researcher in my team, who made the calls, reported to me that one of the persons she talked to had a familiar voice that sounded very much like our candidate. And even though the name and mobile number of that reference were different from the candidate’s details we had on file.
We decided to call her bluff; after lots of swearing by the candidate she admitted her guilt. She confirmed that the reference name and mobile number belonged to her.
How did it end? We informed the client immediately and agreed to move to the second choice.
The insights provided by Crowe clearly prove that recruitment fraud can have serious consequences and costs for the hiring organization.
If there is any good news in all this, it must be that quite basic and proper pre-employment checking of a candidate would be likely to identify the falsehoods.
The small cost of effective checking in relation to the potential costs (both financial and reputational) suggests organisations would be well served in undertaking such checks.
(Article published in Bangkok Post’s Human Resource Watch series; on the front page of the section Market Place)