Tag: reference check

Categories
31 Days to More Effective Compliance Programs

One Month to More Effective HR in Compliance: Day 4 – The Reference Check

Hiring the right people for your team is critical to the success of any organization. Unfortunately, it can also be a costly endeavor if the wrong hire is made. According to a survey of 2500 companies, one bad hire can cost an organization more than $25,000 in lost productivity, low morale, and other associated costs. In some cases, the cost can be even higher, with one energy service company estimating the cost of a bad hire at $400,000.

With these staggering costs in mind, it’s clear that companies need to invest in the hiring process to ensure they get the right people. Reference checks are an important part of this process, yet they are often overlooked. This was discussed in a recent episode of One Month More Effective Compliance Program. The episode featured Kevin Ryan, who believes that reference checks are an underutilized part of the hiring process and a key internal control for human resources.

Reference checks are the only way to learn things about prospective employees that can’t be found on a resume. Unfortunately, companies often can’t or won’t give out much more information than confirming dates of employment. To get a more robust appraisal, one should dig up people who will speak candidly about the candidate. Search firms are particularly good at this, and companies should emulate this practice. Asking direct questions to acquaintances can provide direct responses 75% of the time.

The Department of Justice has recognized hiring as a best practice for compliance programs since 2004. According to Kevin Ryan, companies should take the time to get to know the candidate and ask questions that will reveal their values, beliefs, and motivations, as well as their ability to work with others, take direction, and think critically. He recommends that companies take three steps in the hiring process: resume review, in person interview, and reference checks. While the resume is good for establishing the basic qualifications for the job, it doesn’t provide much else.

The hiring process is the first step in operationalizing a compliance program. Reference checks are an important part of this process, as they can help to ensure that the candidate is a good fit for the company. Investing in the hiring process is essential to ensure that the right people are brought on board and to avoid costly mistakes. The Department of Justice has recognized hiring as a best practice for compliance programs since 2004, and reference checks are an underutilized part of the hiring process and a key internal control for human resources.

Three key takeaways:

  1. The hiring process is the first step in operationalizing your compliance program.
  2. The DOJ spoke to hiring as part of a best practices compliance program as far back as 2004.
  3. Reference checks are an underutilized part of the hiring process and a key internal HR control.

For more information, check out The Compliance Handbook, 4th edition, available on LexisNexis.com.

Categories
31 Days to More Effective Compliance Programs

Using the Reference Check to Operationalize Compliance


As far back as 2004, in Opinion Release 04-02, the DOJ realized this was an important part of an overall compliance program when it approved a proposed compliance program that had the following requirement, “Clearly articulated procedures which ensure that discretionary authority is not delegated to persons who the company knows have a propensity to engage in illegal or improper activities.” One tool that is often overlooked in the hiring process is the reference check. Many practitioners feel that a reference is not of value because prospective candidates will only list references that they believe will provide glowing recommendations of character. This leads to a pro forma reference check.

The hiring of someone who will perform business activities in compliance with anti-corruption laws such as the FCPA will continue to be as much art as science because the hiring of quality employees for senior management positions is similarly situated. But that does not mean a company cannot work to not hire those persons who might have a propensity to engage in bribery and corruption if the situation presented itself. The hiring process is just one more tool that can be utilized to build an effective and operationalized compliance program.

Three key takeaways:

  1. The hiring process is the first step in operationalizing your compliance program.
  2. The DOJ spoke to hiring as part of a best practices compliance program as far back as 2004.
  3. Reference checks are an underutilized part of the hiring process and a key internal HR control.
Categories
Adventures in Compliance

The Illustrious Client and the Reference Check

We are back with fan favorite Sherlock Holmes week. In this week’s podcasts on Adventures in Compliance, I will focus on the first five stories from The Casebook of Sherlock Holmes, mining each story for themes and lessons related to the compliance professional, leadership and business ethics. In today’s offering, I consider The Adventure of the Illustrious Client and its relationship to the humble reference check. Join us tomorrow as we continue our week of stories from The Casebook of Sherlock Holmes by looking at the The Adventure of the Blanched Soldier and learning to ask for help.