Top Trends in Background Screening - Lester Rosen, Employment Screening Resources

Top Trends in Background Screening - Lester Rosen, Employment Screening Resources
Credit reports, social networks and international background checks - these are three of the hottest topics in employment background screening, according to Employment Screening Resources (ESR), a CA-based firm.

In an exclusive interview, Lester Rosen, President and CEO of ESR, discusses:

The top 10 trends in background screening in 2010;
Specific challenges for information security leaders;
How to improve your organization's background screening process.

Rosen, a retired attorney, founded ESR in 1996. In 2003, that firm was rated as the top screening firm in the US in the first independent study of the industry in research report prepared by the Intellectual Capital Group, a division of He is a consultant, writer and frequent presenter nationwide on pre-employment screening and safe hiring issues. His speaking appearances have included numerous national and statewide conferences. He has qualified and testified in the California. Florida and Arkansas Superior Court as an employment screening expert on issues surrounding safe hiring and due diligence. He is the author of The Safe Hiring Manual-The Complete Guide to Keeping Criminals, Imposters and Terrorists out of the Workplace." He is also the key presenter in the webinar Avoid Negligent Hiring - Best Practices and Legal Compliance in Background Checks.

TOM FIELD: What are the top trends in background checks in 2010?

Hi, this is Tom Field, Editorial Director with Information Security Media Group. I am talking today with Les Rosen of Employment Screening Resources.

Les, we have talked in the past and you have actually done a webinar on the topic of background checks. It is a pleasure to catch up with you again.

LES ROSEN: Thank you. It is a pleasure to be talking to you again.

FIELD: Les, for people that are encountering you for the first time, why don't you tell us a little bit about yourself and your work please.

ROSEN: Well, thank you, I would be happy to. I am actually a retired attorney, and I entered the background screening business. It has been about 10 years ago now that I founded Employment Screening Resources. We are considered, in my view, a leading background firm in the United States and internationally. We published a book, the first comprehensive book on background checks called The Safe Hiring Manual, which is widely used through the screening industry and by employers as a sourcebook for background checks. We have innovated technology in the background screening area. Our mission is to keep workplaces safe and profitable on behalf of both employers and the consumers working with employers of all sizes from start-ups to divisions of Fortune 500 companies across the United States.

FIELD: Well, Les, it has been over a year since we have talked, and I guess we would agree that it has been quite a year?

ROSEN: Well, it really has been, and obviously we all realize that we are in the most dramatic recession since the Great Depression. Obviously. there have been layoffs and less hiring, and the impact on the background screening industry as a whole of course has been less hiring and we are in an industry that responds to hiring.

In some ways, the screening industry is in fact a leading indicator, as we will know before anybody else how the labor market is doing because we do the background checks when firms are hiring. What we of course find as a result of that, number one, is that the firms that are hiring, they are at least doing replacement hiring. Whatever hiring they are doing, they tend to be even more selective and more careful because each hiring decision is important, has economic implications, there are a lot of candidates to choose from, and then we also see that firms are looking at ways to lower costs.

One way, for example, is through use of technology, by leveraging technology to make the process much easier and faster, and in fact our firm, along with others, has pioneered paperless systems where everything is done electronically. So that has a big impact, but I am happy to report that we are projecting an increase in hiring and we hope that goes well for the entire economy.

FIELD: That's good news. Now Les, one of the things we have seen, particularly in the banking industry, is a rise in insider crimes. That makes me wonder -- because organizations certainly are attuned to this and they know that insider crimes are going up -- are they screening smarter as a result of this?

ROSEN: We find that they are. There are still some organizations, particularly in C-Suite and executive level that are still hiring on the good old boy or good old girl network, and we are finding that because there has been some very high-profile cases of CEO's and CFO's and executives who have just bluntly have faked their resume or lied about their past or hidden things, that has come as a shock to a number of other organizations. So firms are now taking that old adage of the 1980's of trust but verify. So we are seeing that there is a larger emphasis on screening.

We also know, and I think HR departments in the banking industry and other sensitive industries have realized the obvious, that when you have an employee problem, quite often it is caused by a problem employee. So background screening is seen as cost effective preventative tool to keep the problem employee out in the first place, which hopefully eliminates the problem.

So there is a greater recognition that in the environment, particularly in the banking and financial industries that it is very important to keep out in the first place those people that may cause you issues, and that is not perfect of course, background screening is not a perfect science. Someone could in fact have a great background and then turn out to steal later, so obviously there needs to be controls and everything else that should be in place, but background screening is certainly part of that.

And we also see in organizations that have Sarbanes-Oxley responsibilities that are concerned within a environment of control that there is a general consensus that background checks is a critical function of Sarbanes-Oxley compliance, particularly when it comes to individuals that are involved with IT systems or financial reporting.

So as a result of inside crime and fraud, there is a great emphasis on using background screening as a tool, one of many tools, but it is pretty clearly the first line of defense to try and build a wall to keep the bad guys out. Now that doesn't mean that someone who passed later won't get in later and do damage, but at least you get your biggest bang for your buck by not having the bad apple there in the first place.

FIELD: Now we started this conversation talking about the trends, and I know that you have a new Top Ten Trends list out. What are the highlights of the Top Trends list?

ROSEN: Yes we do. Every year we look at our crystal ball and try to anticipate for the screening industry and for our clients what to expect and what we are tracking in 2010. Some of the things we are tracking that will have impact on employers that I will mention are the issue of credit reports, the issue of social networking sites and international background checks.

A lot of organizations use credit reports. It is important to note that there is a lot of opposition to the use of credit reports. In fact California, for example, for the second year in a row passed a law that would have severely restricted the use of credit reports as a straining tool; it was vetoed by the governor, and we expect that that will be back next year. Hawaii has joined the state of Washington as the two states that do have laws on the books; other states are considering such laws.

The argument about credit reports is that they are used unfairly. In fact in October of this past year, the EEOC (the Equal Employment Opportunity Commission) filed a fairly high profile case against a national employer, not in the financial sector but in a different sector, based on discrimination by using credit reports. So that is a big issue, keeping in mind of course that a credit report for employment does not contain a credit score, but it does have a credit history. So the argument is that it has what lawyers call a disparate impact; it has the effect of being discriminatory so that is going to be a hot issue.

The other hot issue is social networking sites. A lot of employers now and hiring managers routinely will take a look at someone on their favorite search engine or take a look at Facebook or MySpace and try to find out more about a person. We expect to see litigation in the next couple of years using those types of sites without having a well thought out policy and procedure in place and understanding the dangers can really land an organization in hot water and there are issues of discrimination if the hiring manager looks at the site and finds that a person is a member of a protected class and the person is not hired, that exposes the organization to a failure to hire lawsuit. And there are still issues as to invasion of privacy. Just because something is on the net does not necessarily mean that a person does not have a reasonable expectation of privacy, particularly if it is a social networking site meant for social purposes.

Those are all issues that will need to get sorted out. Good risk management would indicate that organization need to think this through before hiring managers willy nilly start looking at applicants on the internet because that is going to be another hot area.

And another area that we have identified out of the 10 is international background checks. I think that is of particular interest to the financial industry because hiring does tend to cross borders, and there has been a perception that international background checks were too difficult or not possible, and more and more resources and availability are coming online everyday that do facilitate international checks. Obviously it is complicated -- there are 191 other members of the United Nations, so there are 191 nations to contend with -- but it is still something that is available for organizations to utilize.

So those are three of the trends that your listeners may want to be aware of.

FIELD: Les, what jumps out at you as of particular interest to information security leaders regardless of what industry they might be in?

ROSEN: Well, for security leaders one of the trends we identified has to do with privacy and data protection. Our view on that is it now goes beyond what we all think of in terms of firewalls and encryption and network vulnerabilities and so forth. We are seeing that there is a potential issue with the physical location of the data in two ways. Some background firms will take the data and actually send it offshore (India and the Philippines are two areas that are often used) so that personal identifiable information (PII) is sent offshore it is beyond the protection of the U.S. privacy laws and that is a concern.

There was a high profile story from 2009 where the BBC, the British Broadcasting Corporation, was able to buy identities very cheaply from an Indian call center. That is not to say that those types of breaches couldn't occur here in the U.S., but at least in the U.S. there are recourses and resources and there are number of privacy laws. Once you go out of the United States, it is the wild west in terms of privacy. So we are seeing that employers and security professionals need and wills tart asking questions like, where is my data going because if you are sending it offshore let's talk about that.

Another danger point in terms of privacy and data protection are some firms will send information to home operators. Now people need a chance to work at home, and if a home operator is taking credit cards and so forth that is a milder risk, but in terms of background screening do we really want people's Social Security numbers and dates of birth read across dorm rooms and kitchen tables across America in an environment where there really is no control? So that is one area where I think security professionals need to be very concerned as to where physically their data is going, and there are frankly some firms that send it to places that I am not sure a security professional would be comfortable with.

Another issue that might be of concern to information security leaders in terms of their actual background screening program is the quality of the background firm, and I am pleased to say that national trade organization for the screening industry, the National Association of Professional Background Screeners, is finally introducing an accreditation process, and hopefully it will be rolled out this year. I had the privilege of being the Chairperson of the Steering Committee that founded the national organization and served as its first Chair, and it is now clearly the voice of the entire screening industry and of course, we strongly suggest that obviously no employer use a background firm that is not a member. But with the accreditation process it finally gives a chance for security information professionals when they are looking to outsource this service, to have a measure of the quality of the firm and whether or not the background vendor or background service provider is meeting the standards of the accreditation. So those are two issues that security professionals may want to be following in 2010.

FIELD: For organizations that are looking to screen smarter this year, what do you find to be their biggest challenges?

ROSEN: Well, there are a couple of challenges. One of them is brought on by the recession. We are seeing that education fraud remains to be a problem, and firms need to be very concerned that education credentials that are claimed are correct. First of all, if there is a school that you are familiar with, did the person actually go there? And if it is a school that you are not actually familiar with, is it a real school or is it a diploma mill? That has gotten very sophisticated; diploma mills now have created fake accreditation agencies that will give fake accreditations to the fake diploma mills and even provide 900 numbers where there is somebody sitting at some secretarial office who will verify that you went to this fake school. We are even seeing a new website that will provide a fake reference. You can create your own past employment history, and this company will verify that it is you.

So there are dangers out there perhaps that are brought on by the recession and people really looking for jobs, so that is a challenge in this environment to make sure that you really know who you are hiring.

And the final challenge is just to make sure that whatever screening that you are doing, that you audit it, and we talk about audit, audit, audit; one of the books I also wrote is called Safe Hiring Audit, which is a 25-point audit of your current hiring practices. So basically what we do find is that a lot of those effective hiring processes occur in house having to do with the application process, the interview process and the process of contacting past employers so organizations can screen and monitor by looking at their entire hiring process.

Just doing a background check all by itself is probably not due diligence; it has to be in conjunction with the entire hiring process, and we know from years of experience that firms that have a well thought out and smart hiring process are very unlikely to send us a candidate where we find anything derogatory, inconsistent or negative. Firms that are a little looser in that department tend to have more people get through the system where we then have to come back and tell them that there is a fake education or fake employment or criminal record that wasn't disclosed. Screening smarter really means hiring smarter, which really means really thinking through the entire hiring process, starting with the time that the job is posted.

FIELD: If you could boil it down Les, what advice would you give to organizations that really want to improve their screening processes?

ROSEN: Well again, it is similar to real estate instead of location it is now audit, audit, audit, so we would recommend a couple of things. Number one - it is just a good practice to audit your current screening solution every year anyway. We have developed, for example, a number of questions that you can put to your current provider just to make sure that it is cutting edge, that it is best practices, that privacy and security is being protected, that they know what they are doing and that they are keeping up with the laws. It is auditing your current practices in terms of your screening vendor.

As I mentioned, auditing your hiring practices and also really making sure for 2010 that you are using the best technology that gives you the most protection and frankly taking a look at those risk factors that could result in litigation, and the risk factors are such things as the overuse of credit reports and looking at social network sites.

So, basically this is probably a good opportunity before the recovery hits and everyone is so busy hiring to audit and take a look at the risk factors in your current process, so that when the economy turns and everyone is involved in the hiring process that you have a good process going forward in 2010.

FIELD: That is great advice. Les, one last question for you. For people that want to see your Top Ten Trends List, where can they find that?

ROSEN: Well, that is coming out at our website. Take a look at our blog that is at our website at, and it will be out next week. In fact, we have been releasing the trends one at a time over the past couple of weeks and we have been blogging about those. The final trends will come out this week along with an overall list, and we certainly hope that the trends are helpful to your readers in terms of focusing on taking a look at these issues and thinking it through and responding if they think they need to.

FIELD: Excellent. Les, it was a pleasure catching up with you again. Thanks so much for your time and your insight.

ROSEN: It is always a pleasure working with you.

FIELD: We have been talking with Les Rosen with Employment Screening Resources. For Information Security media Group, I'm Tom Field. Thank you very much.

About the Author

Tom Field

Tom Field

Senior Vice President, Editorial, ISMG

Field is responsible for all of ISMG's 28 global media properties and its team of journalists. He also helped to develop and lead ISMG's award-winning summit series that has brought together security practitioners and industry influencers from around the world, as well as ISMG's series of exclusive executive roundtables.

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