Risk vs reward in recruitment – 3 key risks to limit your exposure

Every organisation is unique, and each has its own ‘appetite’, or limit, for how much risk it’s willing to bear. But when it comes to new recruits, how much risk is your business taking on?

When Myer hired Andrew Flanagan as its General Manager for Strategic and Business Development, it was a plum executive position with a $400,000 package. Flanagan won the position based on his, seemingly, impressive experience and references.

During the announcement, however, Myer boasted that Flanagan had previously worked for Inditex – a claim the company immediately refuted.

It quickly transpired that Flanagan’s CV was a fake, and Myer voided his contract on the spot. But how did it reach that point? Why wasn’t the deception uncovered during the recruitment process, and how had it worked three times before?

Daniel Chilcott, General Manager of Learning and HR Services at Programmed, has some crucial advice on how companies can manage their risk appetite with new hires.

Risky business

A key part of effective business control is effective risk management. Every day, business owners face potential health and safety issues with their employees, changes in the financial landscape, bad debtors and, more recently, cyberattacks – not to mention technological developments and new recruits.

“One thing that’s largely not accounted for, certainly from a public perspective, is the financial cost and burden of injuries to a workplace,” says Chilcott, ticking off a long list of potential challenges. “Then there’s risks associated with things like mobilisation of contracts, unmet budgetary expectations, growth in competition and difficulty attracting new talent.”

Daniel Chilcott Photo

Daniel Chilcott, Programmed

But while some risk is unavoidable, organisations can ‘fix their appetite’ for risk by limiting their exposure. For example, through a comprehensive and standardised approach to screening, employers and recruiters can minimise their chance of being duped by fake CVs or making unfortunate (and costly) mis-hires.

A low standard in applicant screening can lead to all sorts of issues, says Chilcott, whose business is built around recruitment. He says the proper checks help his company place candidates with confidence and mitigate common risks, such as:

Undisclosed police records

According to Chilcott, it could be “catastrophic” for a business to appoint somebody who might have an undisclosed, and undiscovered, police record to a potentially sensitive position.

“We have a couple of facility contracts in prisons, which means of course that our people are in prisons and around prisoners all day,” he says. “If somebody has a police record or they’ve been in that type of environment themselves, they certainly shouldn’t be going back there as employees, so that highlights the importance of police checks.”

If you’re appointing someone to a position of trust, or for roles or volunteer work where they’ll be around vulnerable people (such as children or those with special needs), make sure you minimise risk to your business by conducting the proper checks.

Falsified experience or education

Resume embellishments are nothing new, but they are getting harder to detect.

“These days, people are getting craftier and candidates can present full qualifications from universities that have been scanned and re-published, and you would never pick that they’re not the genuine copy until they’ve been verified with the institution,” Chilcott says.

A new hire who isn’t qualified or competent to perform a role – such as a fraudulent engineer tasked with designing a bridge, doctor attempting to diagnose sick patients or solicitor offering critical legal advice – won’t be good for business, so take a proper look at someone’s background and education to identify false information or credentials in advance.

Work rights violations

Employing an applicant who doesn’t have the correct right-to-work documentation is a major risk, with potentially costly consequences for employers, even if it was an innocent mistake.

“It seems like a minor detail in the recruitment process, but if somebody purports to have the correct documentation and our hiring managers take their word for it, once that’s detected – and it will be detected – it can have massive implications in relation to financial penalties,” Chilcott says.

VEVO visa and work-entitlement checks are an easy way to verify that you are contracting, referring and employing legal workers, while regular re-checking will ensure you’re the first to know if anything changes.

As with all screening practices, it’s about limiting risk and maximising the potential reward of a safe and happy hire.

Implementing a standardised approach to screening in your workplace can significantly minimise the risks associated with recruiting.

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