By: By John Chenetra April 24, 2018

When insider-driven frauds are on the increase, there is merit in trying to curb that risk through systematic checks on employees. However, background checks most often fail in India.

Background checks are an indispensable component of any employee screening mechanism, and they are gaining mainstream acceptance worldwide given the fact that up to 50% of all job seekers admit to falsifying crucial details on their applications.

These checks are put in place to assure the company on behalf of whom the process has been initiated that the candidate they’re looking to hire isn’t just well suited to the job at hand, but even whether they are who they say they are.

Given the current sensationalist media atmosphere, the actions of a single incompetent, malicious, or corrupt employee will result in untold financial, legal, regulatory, and publicity repercussions for the company at which he is employed; whether or not it is even a relevant detail of the case at hand.

This, and the fact that trust is a fundamental requirement for any employer- employee relationship are the reasons for any company to consider implementing rigorous background screening processes; despite the short-term costs they entail.

Here are just some pressing questions about an employee that a well conducted round of screening can effectively determine:

Identity: Is the candidate really who he says he is?

Character References: Can anyone in the industry vouch for the candidate’s diligence, integrity, and work ethic?

Criminal History: Does the candidate have any record of criminal behavior?

Personal Finances: Has the candidate accumulated personal debts that may pressure him into resorting to fraud?

Work Experience: Has the candidate really been affiliated with the organisations he claims to have worked with? If so, what were his reasons for leaving?

India, like much of the world is moving towards implementing a strong network of background verification processes that will add transparency and accuracy to this vital aspect of recruitment. And while the industry is slowly moving to a more proactive as opposed to a reactive approach to these screening processes the prevalent norm is for Human Resources (HR) to conduct reference checks from past employment based on the information provided by a candidate.

The authentication of residential addresses, educational certificates, and criminal records on the other hand are typically outsourced to third party companies that specialize in background verification’s.

There is by no means any parity in the quality of the background checks conducted across sectors. As a general rule, the screening processes implemented by companies in the IT, ITES, Finance, and FMCG industries are significantly more rigorous and effective than those applied by their counterparts in the Telecommunications, Manufacturing, Retail, Hospitality, Healthcare, Travel, Education And Entertainment spaces.

Despite the advancements in technology, processes, and identity verification mechanisms in recent years, India as a country presents several fundamental issues to any effective background screening efforts Here are just some of the challenges that manifest when conducting a background check in India.

Lack of a centralized data repository

There is no universal database in place from which an agency conducting a background can simultaneously draw a candidate’s criminal, educational, legal, and financial status. These individual checks must therefore be conducted separately by approaching different organisations like universities, courts, police stations, and banks, which make them a complicated procedure.

This lack of a single source; i.e. a centralized repository of data, and the inherent difficulty of sourcing such data from inherently bureaucratic organisations is the primary reason why background checks in India often fail, or are inconclusive. That being said, the government’s latest initiative in the form of Aadhaar is proving to be a promising fix to this issue.

Complicated, time consuming process

Due to the lack of a centralized repository of data, organisations conducting background checks are compelled to separately approach various government bodies like courts, universities, and police stations as well as private institutions like past employers and banks in order to create an accurate assessment report on a potential candidate.

Aside from being a very complicated procedure, this is also very time consuming process that can take anywhere between weeks and months. In the cases of urgent vacancies the general tediousness of waiting on responses from government agencies can severely affect a company’s productivity by leaving senior positions vacant until the candidate receives a clean chit.

This unsettling reality forces companies to have to choose between quickly filling in vacancies and safe hiring procedures, which very precarious situation given that an HR department’s job is primarily to fill in vacancies, with background checks being an ancillary role.

Large and heterogeneous population

India has a population in excess of 1.2 billion people, and simply collecting data on such an immense demographic is a herculean task, let along sieving through the said information to pick out facts relevant to an individual applicant. This fact is further compounded by the reality that India has a massive geographical area with innumerable cultural, regional and linguistic differences which are unique to the country alone.

Despite the numerous barriers to the employee screening process, not to mention the monetary costs, background checks are still worth the initial inconveniences by virtue of the security they assure the company.

With new forms of white collar crimes emerging it is up to companies to take the initiative not merely to protect their interests, but also to prevent these scandals from ever emerging in the first place.

We owe it to our investors, employees, customers, and society as a whole because our failures to prevent frauds due to negligence or cost cutting measures reflect poorly not just on ourselves, but on the country itself.

So long as insider driven frauds like the PNB scam continue to emerge almost daily, India’s reputation as a place to do business will be permanently tarnished.

About the author: John Chenetra is President, SecUR Credentials, a due diligence firm which is listed on the National Stock Exchange. A former Army officer, Col Chenetra has spent many years in corporate roles including Verifacts Services and TopsGrup Risk Intelligence.