Recently, everyone has been talking about Andrew Flanagan and his appointment at Myer as a senior executive. That wasn’t the news though, it was where he was terminated on his first day! This was after it was discovered that he had not worked as the Managing Director of Inditex as he had claimed on his CV. Myer found this out when Inditex – owners of Zara – advised that he had never worked for them. How embarrassing for Myer, but more amazing to me is the fact that Andrew Flanagan thought that he could get away with it – in the world we live in now, where information (not all of it correct) is at our fingertips and social media is infused everywhere. (According to a KPMG Fraud Survey in 2008 – ‘25 – 40% of all resumes are falsified’.
So how can we avoid this happening to us?
The issue here is that someone has not done their job properly by completing detailed reference and background checks on Mr Flanagan. Had they done so, he would have not even been interviewed, as a reference check beforehand would have picked up the inaccuracy. Believe me, these sorts of shenanigans happen in small business too. I know that at least 10% of my client base have experienced employee-related fraud amounting to about $1 million dollars (and these are the clients prepared to admit it!)
So what is the difference between reference checks and background checks and what can we learn from the debacle above?
Reference checks are generally calls to the previous two or three organisations that the candidate has worked for, to their previous manager to confirm their role, tenure and performance. Today, some companies have a policy to avoid defamation suits to only confirm the role and tenure and that’s OK (a tip here is to always ask what the company policy is to giving references) – generally it is more about what people don’t say rather than what they do – as in, if they are brief that would start to ring alarm bells for me and make me probe even more. (Another tip is to get independent confirmation that the individual did actually report to the manager stated – otherwise you might find out that you are actually chatting to their best mate!)
Background checks include Police Checks, Credit Checks and Entitlement Checks (Right to Work status). They can also confirm education history, academic qualifications, driving history and more. These checks are not overly expensive – especially given that you are about to welcome this candidate into your business with a high level of access to sensitive information or cash. At a bare minimum, I would complete a Police Check, Credit and Entitlement Check. Remember, if you employ someone that does not have the ‘right to work’ in Australia, you are exposing yourself to significant fines and potentially the inability to sponsor employees in the future.
Like my mother said “liars always get found out” but sometimes it’s too late and the damage has been done. Protect yourself, your team and your business by completing reference and background checks on your employees.
Natasha Hawker owns Employee Matters Pty Ltdd an HR Consultancy that assists small to medium businesses with their HR functions to make them more efficient and profitable. Their offering includes HR Management, Recruitment, Training, Coaching, and Exit Management – find them atwww.employeematters.com.au