When top honcho is a liar

The corporate world woke up to a shocker recently. Ramesh Tainwala, CEO of luggage maker Samsonite was compelled to pack his bags and exit the company on account of having falsely claimed to possess a doctorate in business administration. This Samsonite episode is not a rare occurrence in the corporate world. Experts point out that candidates being opaque about their qualifications, work experience, or personal details is common across companies, and hierarchies.

“It is fairly common to have people who go to great lengths to hide their complete backgrounds. Incomplete documents usually serve as an indication of having something to hide,’’ says Rahul Belwalker, CEO, SecUR Credentials, an employee background verification company.

According to Kamal Karanth, co-founder of specialist staffing firm Xpheno, faking background is a practice that is more common at the ‘’bottom of the employee pyramid’’, than at the top. “People who reach the top know they will be found out if they fudge.” But like in Tainwala’s case, this statement does not hold true. Nor did it hold true in the case of David Tovar, Wal-Mart’s former VP – corporate communications, or Ex-Yahoo CEO Scott Thomson, or Bausch & Lomb’s former CEO Ronald Zarella; all of whom had faked information about their qualifications.

“Inaccuracy in personal and professional data of employees is a peculiar challenge across industries. It is more rampant in an industry which is chasing rapid growth and where the recruitment process is fragile,” says Sudhakar Reddy, founder – executive director, Nirvedha Executive Coaching Solutions.

A study, Trends & Insights on Background Screening in India by background verification firm AuthBridge, reveals one in every six candidates lied on their resume in 2017. The background check discrepancy levels increased from 10.29% in 2016 to 15.21% in 2017. Discrepancies have been noted in educational qualifications, address verification, and during reference checks.

What is critical to organisations is the apt action to be taken while dealing with an employee who has faked, especially when it concerns those at the top level.

Reddy says organisations should take the first call of culling out such a candidate at the earliest, “as it sets the wrong precedence amongst the team.”

Agrees Belwalkar who states that organisations should have a zero-tolerance policy towards fraud in any form. Even if the individual is a top-ranking executive known for exemplary performance. “The ethical dilemmas of sticking by a person who has committed fraud, yet delivers and fulfils all goals are non-existent because the very integrity of that person is compromised. Meaning, the very credentials used for hiring him were false and there is no objective way to assess the damage of doing so. Moreover, the message the organisation sends to all its stakeholders by excusing such behaviour is detrimental to how it will be perceived, both internally and externally, and by extension – its long-term viability,” says Belwalker.

Weeding out a candidate who has joined, delivered and worked in the organisation, especially one who is at the VP or C-level, costs the organisation immensely. Experts say background verification usually takes place within a month of the candidate having joined. The costs of booting out an employee who fails verification is often dependent on his/her duration in the company, training conducted, and the amount of time and resources spent in finding a replacement.

Says Karanth, “First, you lose time to replace, which is a direct business cost. At a CXO level, organisations can need up to a year between the first hire and replacement, which is a year’s performance gone down the drain. The reputation cost to the Board or the HR is more damaging if it is a high profile hire and a PR damage is imminent.’’ Karanth adds that recruitment companies and the HR person involved could also face sacking if the stakes are high.

Estimates show costs can go up to five times the candidate’s annual salary.

With technological advancements, companies are strengthening their background verification processes to ensure they hire right. Ali Asgar Kagzi, co-founder and director of a start-up, Genext Students, says today most details can be verified with secure APIs provided by government authorities. “Capturing, uploading and verifying photographs and documents is much faster.”

According to Reddy, predictive analytics helps to unearth fake candidates and sensitise the internal recruitment systems.

Belwalkar says they use an API that sifts through court data that highlights criminal history, if any. “Social media and psychometric checks allow companies to check for any red flags like extreme anti-social views or proclivities. The attempt is to get an all-round view to avoid hiring anyone who puts the organisation or employees at risk.”

DEGREE OF DIFFICULTY

• Faking background is a practice that is more common at the lower rung employees than at the top
   
• It is more rampant in an industry which is chasing rapid growth and where the recruitment process is fragile
   
• Weeding out a candidate , especially one who is at the VP or C-level, costs the organisation immensely

...& ANALYSIS

• 1 in 6 candidates lied in their resume in 2017, says a study by background verification firm AuthBridge
   
• 15.21% discrepancy levels in background checks in 2017
   
• 10.29% the figure in 2016
  Estimates show costs of replacement can go up to five times the candidate’s annual salary