Trust But Verify

Joe needed a bookkeeper for his 150 person home healthcare business, and Shelly seemed perfect for the job. She had four years of experience with a similar company. At the interview, she had all of the right answers. She was pleasant, knowledgeable and available. Her salary requirement was a little high, but Joe thought she would be worth it. He called one of the three references Shelly provided. She received rave reviews. Joe was not surprised. References never shared negative information. Why waste time. He hired Shelly.

At first, everything was fine, but soon, things began to change. Shelly’s attitude and work habits deteriorated. She came in late, took long lunches and her computer was always off at 5:01 pm. Joe wasn’t sure, but he thought Shelly might not be as good at bookkeeping as he thought. The numbers just didn’t look right. When he asked questions, Shelly always had an answer that sounded reasonable. After 18 months, he made the decision that Shelly had to go.

Joe and Tom, the head of human resources, explained to Shelly that she just wasn’t a good fit with the company and that her employment was being terminated immediately. Tom escorted Shelly to her office to get her personal belongings. Shelly tried to throw away some papers that were on her desk, but Tom stopped her. Shelly protested saying they were just her personal notes. Tom would not allow her to do anything but get her belongings and leave.

Within one week of Shelly’s departure, Joe discovered that she had embezzled more than $60,000. Shelly had set up a fictitious employee and was funneling money into her own account. The names have been changed, but this story is real. Unfortunately, this isn’t an isolated case. The Small Business Administration states that 30 percent of all business failures are the result of employee theft, fraud or embezzlement.

In conducting the research for our book, Let Go to Grow; why some businesses thrive and others fail to reach their potential, we analyzed more than 100 small and midsize businesses. We heard one thing again and again; hiring good people is a huge challenge. We learned that in hiring, small business owners are often penny-wise and pound-foolish. They don’t spend money to verify if the potential hire has represented themselves honestly and completely. Once a decision to hire is made, three additional steps are essential:

1. Check references – Most employers will call one or two references provided by the candidate. These people will likely give high praise. What a shock; these are the people the candidate wanted you to call. We recommend getting to at least the second level. How? Call the candidate-provided references, but at the end of the discussion, ask who else the candidate worked with closely. Get other names and numbers. You are now getting beyond the people provide by the candidate, and may get different information.

Speak with someone who worked with the candidate at each of his or her most recent jobs. Obviously, if the candidate is currently employed, you may not be able to speak to that employer. However, if a recent employer is not represented on the list of references, that may be a red flag.

We also recommend asking specific and pointed questions. General questions such as, “Will Fred do a good job?” are likely to get positive answers. Specific questions such as, “Tell me how Fred reacted in stressful situations” will get you the information you want to hear.

2. Validate claims – Candidates will claim to have worked for other companies and earned degrees and licenses. Verify all claims. According to the Society of Human Resources Management 53 percent of job applications contain inaccurate information. The Wall Street Journal states that 34 percent of applications contain outright lies. False claims are rampant.

Do not use candidate-provide phone numbers when validating claims. There are services that will provide whatever reference the candidate specifies. With the internet, finding phone numbers is easy. Take the time to find the number yourself so that you know who you are calling.

Beware of false degrees provided by diploma mills. Most legitimate schools are accredited by one of six regional accrediting bodies. Obviously, if you are familiar with the school because it is local or because it has a national reputation (e.g., Harvard, Notre Dame, etc.) you may be confident that it is legitimate. Diploma mills often use names that sound like those of legitimate schools. If you are not sure that a school is accredited―verify that it is. With the internet it isn’t difficult.

3. Conduct background checks – Invest in criminal background checks, credit checks and drug screens as appropriate for your business. There are companies that provide these services at very reasonable prices. A few dollars spent now, may save you hundreds of thousands of dollars in the future.

We wish that verification was not necessary. Unfortunately, it is. This is a step that you cannot afford to skip.