The Background-Check ChallengeThe Background-Check Challenge
Outsourcers protect themselves from identity theft by finding out all they can about employees, but gathering information can be challenging
July 15, 2005
In many cases, the type of work the employee will be doing will dictate how thorough the background check should be. Management consultant Hill & Associates, for example, offers three levels of service. Tier 1 might be administrative or support staff who won't have access to sensitive information. These employees are screened at the most basic level, which generally consists of criminal record, education, and previous employment. For middle managers, the company might add bankruptcy and conflicts of interest. For senior managers and executives, the company also might want information on past business conflicts, credit checks, and other information.
"For Tier 3 employees, we'll do a little industry intelligence by talking to people within that person's industry and circles to find out if there are any skeletons in the closet," says Charles Champagne, director of marketing and strategic development at Hill & Associates.
Depending on the difficulty of obtaining information in a particular country and the degree of thoroughness an employer requests, background checks can cost between $30 and $1,000 per employee. That compares with $100 or less for similar background check in the United States, largely because of the difficulty in obtaining information in many countries.
"Information is much more difficult to obtain offshore," Champagne says. "You can't just tap into databases for every kind of check; you have to have somebody go to the courthouse or university or police station."
The amount of time a background check takes grows exponentially when done outside the United States. While a background check within the United States takes three to five business days, it's not uncommon for one in other countries to take about 10 days. In addition to the difficulty of obtaining information, the time lag also may be attributed to the location of records, different holiday schedules, and weather closures.
The lack of a standard identifier like the U.S. Social Security number also complicates matters overseas. India has a PAN number--basically a tax identification number--but only issues such a number to workers, making them useless for checking recent graduates or people with spotty work records. China has an identifier of sorts, "but it doesn't get you much," Champagne says. Hong Kong has ID card numbers, but they're held in strict confidence. And some countries dictate to an employer how long they can store an employee's background check, how it is transferred to the United States, and how it's used.
And because background checking is more of an art than a science, no company can guarantee that results will be 100% accurate. The reputable ones have instituted extensive quality-insurance programs to provide the most thorough and accurate information possible.
"We can't guarantee that there isn't a skeleton in the closet, but we document very clearly where we found the information and the source," Champagne says. "We've mitigated the risk, not eliminated it."
The laws governing privacy and information access vary from country to country. India makes it relatively easy to obtain information, while Japan has strict privacy regulations. Hong Kong has a fairly strict information-protection act, and European countries adhere to Safe Harbor regulations, which prohibit the transfer of personal data to non-European Union nations that don't meet the European standard for privacy protection.
Employment law also varies among countries and can impact background checks. China has strict laws pertaining to background checks, hiring, firing, and competition, while in Europe, almost everyone is unionized, making firing very difficult without cause. Because of this, "you had better not make a mistake," Greenblatt says. And some countries have work councils that decide the level of background checking that can be performed, how that information is viewed, and what weight can be applied to it in making a hiring decision.
Because of the significant legal differences among countries, whoever is performing the background checks for a specific country should have expertise in that country's laws, Greenblatt says. "It's very important for any multinational to know exactly what to do from a legal perspective," he says. "The last thing you want to do is violate local ordinances, which can result in a line manager or executive being arrested."
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