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BEGINNERS GUIDE TO EMPLOYEE BACKGROUND VERIFICATIONS

JantaKhoj InfoServices Private Limited

www.jantakhoj.com

Index
Executive Summary Objective Industry Trends Why do you need Employee Background Verifications? Cost of Negligent Hiring Who Needs Third Party Verifications? Types of Verification Creating Value through Verifications The JantaKhoj Advantage About Us 2 2 2 3 3 4 4 6 7 8

Beginners Guide to Employee Background Verifications

Executive Summary
In recent times, frauds and scams have become so prevalent that organizations have started focusing on proactive risk management strategies. At a very primary level, the discrepancies are spread across the employee resumes. Manipulating the employment credentials like designation, compensation, education history, past track record and many others have become very commonplace these days. Often, an honest candidate misses on the opportunity and the dishonest one gets hired. In addition, the company not only loses a good candidate but also has to bear the costs related to hiring, training and occasionally terminating a bad recruit. It is essential to curb dishonesty at the grassroots level. The first and the foremost solution to such problems is a fool-proof employee verification process. Well run companies minimize the costly threat of frauds, disruption of operations, misconduct, and damage to reputation through an extensive employment screening process.

Objective
One could argue that the cost of conducting background checks can be avoided. However, in reality the cost of negligent hiring is far greater. The objective of this whitepaper is to establish why background screening is a crucial procedure for organizations today. Various types of verifications and their importance have also been covered.

Industry Trends
In the current age of technology, it is very easy to manipulate everything. It is becoming more and more difficult for the human resources team to conduct a thorough and conclusive background verification .The following malpractices are widespread today and need a strict surveillance system.
Certificates and Companies - Many candidates acquire false experience certificates of fictitious

companies. They also ensure that the location of the companies stated, is in a different city from current employer location, thus, making it almost impossible for the HR to verify anything.

their

Experience - More experience commands more money and more value. There are many who cheat the HR

by altering the online paychecks, and increasing the number of zeroes per month!
Embezzlement - Misappropriation of customer accounts by company executives is becoming quite a

regular affair.
Education - Faking graduation certificates from reputed universities in order to get a desired job profile is

also becoming a common practice as many organizations hire only from A ranked schools and colleges.
Fraudulent Internet Companies - These companies claim to provide any random certificate, be it

education or employment. They charge to hand out fake papers, which look authentic.
Ghost Employees Ghost employees are real or fictitious employee names in the payroll system created

intentionally by a dishonest employee to steal money.

Speaking on 'Occupational Fraud: The Enemy Within,' the Executive Director of Forensic Services KPMG in India, Mr. Rohit Mahajan, said that while it is easier to detect a fraud committed by a new employee who is often not adept at the processes, the ones committed by senior employees are tougher to detect as they factor in all the fraud mitigation processes.

Beginners Guide to Employee Background Verifications

Why do you need Employee Background Verifications?

Good employees lead to good business - By hiring verified and honest employees you ensure a strong foundation for your business. Assured peace of mind - You complete your due diligence and are convinced that your potential employees have a good track record. Cost and Time effective - By being verified you are actually insuring yourself from the irreversible damage that can be caused by a bad hire. Facilitates Transparency - By hiring a third party verifier you avoid favoritism and biased or negligent hiring. A third party does not have any stake in undermining the verification process. Support system for the HR - Your HR team can now focus on its core activities, as the professional verification agency will give you conclusive and documented information, regarding each one of your employees. One of the recent surveys, reported that internal sources of fraud (employees) were involved in as many as 65% cases, which was much higher compared to 42% in 2007 and 32% in 2005. A closer look at the survey results as to the reasons for such a significant increase in the level of internal fraudsters reveals that, besides higher tolerance of employers during tough times, attitude, and perception towards committing fraud has changed from 'need' to 'comfort'. Maintaining a particular standard of living was cited as a reason for fraud. This is not surprising, as fraudsters operating within the organization have a strong understanding of the business, including the strengths and weaknesses of the controls in place to prevent a fraud.

Cost of Negligent Hiring

Negligent hiring can lead to seriously damaging consequences. One bad hire can result in the entire company being meddled in a lawsuit and besides the evident financial losses there are several other costs associated with a single bad hire. Let us have a look at those costs.
Pre-Hiring Costs: Includes advertising and job posting costs. These costs include the cost for posting in

daily classifieds, job boards, social media, and commissions for third party recruiters among others. These costs are variable and depend on the position to be filled. An executive level post is harder to fill than an entry-level one, and requires more impression and exposure and has more costs associated with it.
Screening Costs: These costs include the time spent by the HR department in screening through the

resumes received and short-listing a set of candidates for the first round of interview.
Interviewing Costs: This cost is highly variable and depends on the pay scale of the interviewers and the

number of interview rounds involved. Example: If an interviewer is earning Rs 50,000 per month and interviews a new hire for 2 hour then the cost associated would be Rs 313 per hour.
Administration Costs: Once the desired candidate has been finalized, the administration costs kick in.

These refer to the costs associated with putting together the relevant paper work, setting up the new hires workspace, among others.
Training Costs: These costs include induction program costs and the costs associated with providing

domain, process, skills or software related trainings.

Beginners Guide to Employee Background Verifications

 Employee Attrition Cost: This cost occurs when an employee leaves the company and includes both direct

and indirect expenses. The direct expense would be the overtime paid to other employees to take over the workload of the employee that left the company. Indirect costs relate to be the summation of all the costs incurred to find and hire a replacement.tious employee names in the payroll system created intentionally by a dishonest employee to steal money. Besides the stated evident costs, sometimes, immeasurable damage is done by an enormous amount of decline to the employee morale, brand reputation and external business relations of the company.

Who Needs Third Party Verifications?

With the verification process becoming a part of our daily lives, many organizations prefer to outsource the act of running around and verifying the authenticity of the information to third party agencies. Third party verification involves the process of hiring an independent party and outsourcing the verification process. Third parties are entities who take the required information from the clients (who need to conduct verification), and verify the authenticity of the information on behalf of the clients. Third parties make the verification process hassle-free for the companies and individuals wishing to avail the service. Third party verification is based on the assumption that the third party does not have any vested interest in undermining the verification process, and that the third party has special expertise in verifying the credentials provided. For example, in employment screening, the hiring manager and/or the Human Resources may be under pressure to hire a specific candidate immediately, without verifying all the credentials. They may opt to skip some or all of the verifications. Third party verification ensures that all the application credentials are verified and supported by backup documents.

Types of Verification
Employee Background Verification Employee background verification is typically conducted by the employer for a new hire. There could be both pre and post employee verification checks to ensure the authenticity of the information provided by the candidate. The information covers key points like designation, period of employment, feedback on performance, compensation details, re-hiring status, and reasons for leaving, among others. Many employers try to run pre-employment checks with the current employer without taking the candidate's authorization for such a check. We do not recommend such unhealthy practices, as they can potentially have a very negative impact on the candidate's career and professional standing with the current employer. Such pre-employment checks should be done only when the offer has been made to the candidate and his/her authorization has been received for the verification with current employer. Initial Employee background verification comprises
Employment Verification This verification involves contacting the Human Resources/Payroll department in the candidate's previous organization in order to determine all the parameters as follows: Duration of employment Designation Salary Reporting manager details Performance and Professionalism Reasons for leaving Eligibility for rehiring Any issues encountered

Beginners Guide to Employee Background Verifications

Non-existent or closed companies present a big challenge during employer verification. Through independent research, the verification team tries to find out the suitable HR or reporting manager within the company under consideration. Even if contact is established and verification comments received, these have to be taken with a pinch of salt and should not be considered fully authoritative. Thus, employment and experience with such companies may have to be discounted to a certain extent in the candidate evaluation process. We recommend verifying at least two employers for every experienced hire. Salary slips or bank statements should also be verified. Education Verification - The legitimacy of the candidate's education with respect to the degree, year of completion and the course pursued is verified by contacting the educational institution. This verification has gained more ground in recent times as many employees pose fake graduation or post graduation certificates. Only a few of the higher education institutions have placed their graduates' lists online. In addition, the HRD Ministry sponsored National Database of Academic Qualifications is still in the development stage. So the best option for verifying the certificate is to go directly to the registrar's office of the issuing university/institute. Certificates across Class X, Class XII, Bachelor's, Master's and Doctorate levels can be verified. At the minimum, we recommend that the highest-level certificate for every employee must be verified. Certification Verification - This ensures whether the additional professional qualifications mentioned are genuine. Certifications like SAP, SAS, PMP, Linux, among others, are verified. This holds specific importance in the IT industry, as many dubious institutes have cropped up providing false certifications. The verification can be carried out through phone, physically or online. Criminal Verification - This is a massive task and it is impossible for an HR to screen through all the applicants for criminal records. We access the criminal records with the associated police station by physically visiting the respective offices and requesting the checks for each individual. Address Verification - Address check involves checking the address given by an individual to ensure that the employee can be tracked down in case he is found missing. This lends authenticity to the identity of the individual, who has an address where he can be reached. The permanent as well as the temporary address is verified. This verification is important owing to the following reasons:

For carrying out correspondence with the employees in pre-hiring and post-termination phases. This could cover sending out offer letters, application forms, or final settlement documents and dues. For ensuring that the employee is locally based. This is important for roles, which require physical presence in office, instead of virtual working. As a first point for querying in case of absenteeism, disciplinary issues, or any violations. Sending legal notices if required.

Trained professionals physically verify the current and permanent address stated . Address checks are also cross-confirmed from online databases and directories Reference Verification - Professional references are contacted to review information regarding an applicant's capacity to perform the particular job being sought in terms of abilities, skills, qualifications, work habits, absenteeism, honesty, tendency to engage in violent or harmful conduct, etc. Since, the candidate himself/ herself provides the names of the reference, one should ensure while conducting the check that the professional reference is professional, and not a personal contact.

Beginners Guide to Employee Background Verifications

At times, professional references might feel disturbed or prefer not to answer the questions asked. Therefore, in such cases it is best to look out for independent references through websites such as LinkedIn and Ryze. Database Verification This helps to check whether the candidate has been accused of any criminal misconduct. While there is no centralized database covering all the police records in India, there are certain third party databases that aim to cover adverse records in court judgments, criminal investigations, databases covering terrorists, most wanted criminals, members of parties and groups that are on watch list, among others. The biggest challenge in this area is the lack of any consolidated 'official' (government provided) database covering criminal records, terror suspects, and most wanted criminals.While the currently available third party solutions have been created by aggregating information across a variety of sources, they still do not cover the entire spectrum of police stations and court records. This may only be possible once the Home Ministry sponsored Crime and Criminal Tracking Network and Systems (CCNTS) project becomes fully operational in 2012 and beyond. Social Media Verification - The in-depth integration of social media in our daily lives has presented HR managers with unique opportunities and challenges, for screening new talent. Social Media Checks aim to make this gathering of information easier for the employers. The typical services use automated and manual review techniques to scan a wide variety of social media and associated sites to look for any adverse references. Such checks typically cover various social media and business networking sites, blog sites, micro blogging sites, photo/video sharing sites, and other web resources to flag any potentially negative information. Some of the potential negative information would cover (but not limited to) badmouthing current/earlier employers, lying about qualifications / certificates / job history, obvious drug use, other slurs and offensive language, obvious links to criminal / destructive / disruptive behaviour, posting confidential / classified information from current / earlier employers.These checks should be treated as additional 'insurance' checks rather than as the core verifications. The cumulative offline and online information collected about the candidate can help eliminate any confusion resulting from a partial view of the employee's background. Ongoing/Post-employment verification involves surveillance and checks on existing and ex-employees to determine the possible existence of fraud or espionage activities. Since the integrity of existing employees or ex-employees at management level could be critical for any company, post-employment verification is also important.

Creating Value through Verifications

Employee verifications are conducted as a proactive measure to mitigate risk. It works out for the benefit of the employee too, as it ensures a good job fit, and therefore is a preventive

tool against a bad hire. It focuses on process improvement and avoids negligence caused by target oriented volume hires. It empowers HR personnel to make much better and informed decisions.

Beginners Guide to Employee Background Verifications

The JantaKhoj Advantage

Why Us? l Largest public database on Indians with more than 500 million records - enables instant free address check 24x7 access to your verification cases via our online portal ISO 9001:2008 certified for background verification processes Supporting backup documents and proofs from verifying authorities/officials Nationwide network across all cities, towns and rural areas Live chat facility All this for an everyday low price! How do we do it? l What can you expect? Great service at relatively low price. Keeping focus on your needs.We l craft custom verifications that fit your needs exactly. Not insisting on a fixed number of verification cases per month. By bringing a great team with expertise in background verifications, technology and online businesses. l l

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Reliable, accurate reports - on time.

Account Manager and Client Coordinator team supporting you 3 No headache. More time for your core tasks.

Being accountable for delivering l reports within specified Turn Around Time.

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JantaKhoj cares deeply about the data security and its proper use. Here are some of the ways in which we ensure that the data remains secure: 8 Authentication Data Transmission Data Storage and Usage Your personal login ensures that your requests and reports are accessible only by you. We employ GoDaddy SSL with 128 to 256 bit encryption to protect the personal information and verification details that you submit to our site. Registration, email subscription and verification details that you enter for yourself or any other person always remain completely confidential. These details are NEVER used, merged or published with the public database which powers the Information Services like Person Search. We use CCAvenue, the leading payment gateway provider in India. CCAvenue adopts stringent security measures to ensure that critically sensitive information, such as your personal information and credit card details, are well protected. You enter credit card details on CCAvenue's secure server and the same is encrypted before it is transmitted over the Internet to the payment gateway. JantaKhoj or CCAvenue do not store any credit card details. Our servers are hosted in a state-of-the-art infrastructure provided by a leading global hosting provider. These servers are protected against any physical or software intrusion.

Payment Gateway

Servers

Beginner s Guide to Employee Background Verifications

About Us
JantaKhoj InfoServices Private Limited is headquartered in Hyderabad and within one year from going live, has more than 40 business clients, including Anu Labs, Aptuit Laurus, Bambino, Capital IQ, Country Club, Fleming Labs, Gati, Indian School of Business, Infokall, Invensis, Inteq Solutions, IIC Technologies, Kapston, Knoah Solutions, Janapriya, Medha Servo, Regency Ceramics, Rithwik Projects, Sisa Group, Suryachakra Power, SVEC Constructions, TeamLease and ZeroStock Retail. Additionally, every month, nearly 60000 users visit the JantaKhoj.com site for People Search and other consumer services.

JantaKhoj InfoServices Pvt Ltd 403, Bhaskar Empire, HiTech Main Road, Kondapur, Hyderabad, AP 500084

www.JantaKhoj.com info@jantakhoj.com Tel: +91 40 42007092

Beginners Guide to Employee Background Verifications