International Recruiting: Applicant Screening in Developing Markets

Screening techniques honed in developing markets provide valuable lessons for talent management everywhere. Originally, the push for screening in the developing markets was driven by the multinationals, but now local employers are increasingly recognizing the need for background screening.
By Fay Hansen ——————————————————————————–
The White House sent Steve Casteel to Iraq for two years to recruit 200 people to rebuild the Interior Ministry under the Coalition Provisional Authority. In Iraq and in his previous position as chief of intelligence for the U.S. Drug Enforcement Administration, Casteel learned how to screen candidates in Latin America and the Middle East.

“Recruiting in Iraq is not that different from recruiting in Jordan or Egypt, or China, for that matter,” Casteel says. “You can use any databases that are available–military and police data, for example–but in the end you have to rely on local contacts to research an applicant¡¯s reputation and history in the community. You can¡¯t just use a Western approach.”

Casteel is now senior vice president for international business development at Vance International Inc., an investigation and security consulting firm based in Oakton, Virginia, with 3,200 employees worldwide. His approach to screening and background checks will become increasingly relevant as globalization accelerates in 2007 and corporations pursue a broader mix of geographies and less familiar locations.

Business reports indicate that companies will continue the trend toward staffing new facilities with local nationals instead of expatriates.

“Multinationals have found that they can reduce costs and eliminate many problems by hiring locals,” Casteel notes. “Shell, for example, has moved to local hiring in Nigeria.”

As Shell has discovered in Nigeria, however, recruiting in the developing nations requires extreme due diligence.

“By far, the biggest risk in recruiting in less-developed markets is corruption, most likely in the form of political corruption but also, in some locations, organized crime,” Casteel reports.

In 2005 alone, Shell Nigeria investigated 74 cases of employee fraud and ethics violations, ending in the dismissal of 24 career and contractor staff, warning letters to 49 employees and delisting for six contractors. In addition to the recruiting difficulties that arise from corruption among candidates and employees, Shell is also plagued by local scam artists who make bogus offers of employment at Shell Nigeria and then shake down job seekers for money or personal financial information.

Digging deeper
“The biggest weakness among companies that are recruiting in the developing countries is their lack of knowledge about the local market and their willingness to rely entirely on cheap background checks,” says Bob Sikellis, managing director and associate general counsel at Vance. “In the U.S., the quality of standard pre-employment screening is good enough for entry-level positions. But outside the U.S., the quality is abysmal. The databases are simply not available.”

Instead, companies must develop the capacity for deeper pre-employment investigations, often working with local partners. Even then, the company must know which local security companies do quality work.

“In Iraq, there are 52 security companies, and you need one that has local operations in the city where you need to recruit,” Casteel notes.

“Companies need to be very cautious and do full due diligence on the security companies they choose to work with,” Casteel says. “Just because a local vendor seems to take a Western approach and shows up in a business suit does not mean you will get high-quality work. This is true anywhere.”

The client company should ask the security firm exactly what information they will provide.

“And, as the Hewlett Packard case demonstrates, the security firm should also explain exactly how they will get that information,” Sikellis says.

The fact that negligent hiring lawsuits are uncommon abroad does not reduce the need to screen applicants carefully.

“To focus on the potential for negligent hiring lawsuits or other legal actions is a dangerously narrow approach,” Sikellis says. “Outside of the U.S., the ability to remove employees is so limited that you want to be extremely careful about who you hire. In many countries, a company that removes an employee faces long unemployment payments and other significant costs.”

Local demand
Originally, the push for screening in the developing markets was driven by the multinationals, but now local employers are increasingly recognizing the need for background screening, according to Chuck Papageorgiou, executive vice president of international services for First Advantage, a risk mitigation and business solutions provider. The company, based in St. Petersburg, Florida, employs 4,500 people, with 1,200 outside the U.S. devoted to employee screening.

Papageorgiou reports that screening by local employers in the developing markets has accelerated during the past three years, driven by different factors in each country. In India, for example, the rise of diploma mills has generated a new focus on education credentialing.

In other developing countries, concerns about cyber-crime, corruption and terrorism have spurred local employers to institute screening policies along with the multinationals that operate there.

In addition, developing-market BPO providers that work for financial institutions must screen applicants to meet their contractual obligations.

“Some of the contracts are very explicit,” Papageorgiou says. “This is spreading to other industries, especially design firms and manufacturers with high-value intellectual property. Also, more companies are screening all management applicants because they see credentialing managers as very important.”

India¡¯s outsourcing industry has been rocked by cases of data theft and fraud. KPMG¡¯s 2006 survey on fraud in India reports high levels of deception in CVs, fueled by unethical practices at placement agencies. In March 2006, Wipro cleaned house after discovering major screening shortcomings in the placement agencies it used.

The National Association of Software and Service Companies, the trade group representing the Indian IT software and services industry, launched a national skills registry in early 2006 that provides information on employees¡¯ backgrounds. Job candidates authorize release of the information to employers.

Papageorgiou does believe that other nations will soon follow with the same level of self-policing.

“But we are seeing professional associations in some countries building membership rosters, and we can work with this information to verify certifications,” he says.

According to Papageorgiou, companies in India are also plagued by scammers posing as recruiters who demand money and personal financial information from job seekers.

In both India and China, candidates and employers can no longer rely entirely on familiar village contacts to make recommendations. Dramatic increases in worker mobility in recent years leave candidates and employers more vulnerable fraudulent practices

Living with limitations
In some countries, full accurate screening is simply not possible.

“We deem screening in these countries as ¡®nonreliable¡¯ for background information,” Papageorgiou says. “The limits on the amount of information available about candidates may enter into site location discussions, and some companies may decide that they cannot expand into these areas.”

“There are many ways to get information in many countries if you are willing to break the law, which we are not,” Papageorgiou says. “We advise clients of these restrictions and then use research teams to gather as much information as possible on criminality, for example. The key is to make sure that the client is well aware of the limitations.”

In India, the crime rate is relatively low and some information is available about most job applicants.

“If all the education and employment checks are clean, it is highly likely that the candidate is clean,” Papageorgiou says. “In other locations, a clean check may not mean the same thing.”

In China, educational and professional qualifications, employment history and employment performance history can be secured, but criminal record checks are more difficult.

First Advantage is developing statistical models that provide some indication of the probability of criminal records and other negative factors for specific groups of applicants. These models are in place in some locations and in development for others.

First Advantage abandoned the idea of screening candidates abroad from offices in the U.S., and now has offices staffed with its own employees in the Philippines, Singapore, China, Japan, India, New Zealand, Australia, Canada and the United Arab Emirates. It will open an office in South Korea by the end of 2006 and new offices in Europe, Africa and the Middle East in 2007.

The international portion of First Advantage¡¯s screening services now represents 25 percent to 30 percent of its total screening revenues. The company expects 20 percent growth in the international portion in 2007.

“In this industry, it is extremely expensive to have a physical presence on a worldwide basis, but there is a competitive advantage in expanding our international presence,” Papageorgiou says. “In addition, the market for screening is relatively saturated in the U.S.; the real growth in screening is abroad.”

For clients, the biggest advantage in using screening firms that have a physical presence overseas is speed and more control over compliance. Also, firms with offices abroad may be more effective in managing costs because they utilize their own staff and operations.

In any developing market, screening must be tailored for the specific risk level, legal environment and infrastructure, and executives should be aware of any limitations.

“When a company moves into a new location, it must develop a market-entry strategy,” Sikellis says.

“Recruiting should be part of the discussion and HR should have a seat at the table.” Sikellis says. “HR executives need to analyze the personnel risks and maintain a close relationship with legal counsel while they do this.”

About the Job Outlook 2007 Survey

The Job Outlook survey is a forecast of hiring intentions of employers as they relate to new college graduates. Each year, the National Association of Colleges and Employers (NACE) surveys its employer members about their hiring plans and other employment-related issues.

From mid-August through October 4, 2006, NACE collected data for the Job Outlook 2007 survey. The survey was provided to 1,137 members; there were a total of 267 usable surveys, a 23.5 percent response rate. This report focuses largely on the results of that survey.

Of those responding, 52.4 percent were service sector employers, 37.8 percent were manufacturers, and 9.7 percent were government/nonprofit employers. In addition, 38.6 percent of respondents were from the South, 25.5 percent were from the Midwest, 21.7 percent were from the Northeast, and the remaining 14.2 percent were from the West.

Job Outlook 2007 Spring Update (data collected late March through early April) will offer a final update on hiring for 2006-07 graduates. Results will be available in mid-April.

How to Stand Out In a Job Interview ¡ª Tips on Getting the Job You Want

by: (ContentDesk) ¡ª With the busy hiring season just ahead, now is the time to think about preparing for the interviewthat can land you the job you want in 2006. To get that coveted offer, the interview must be considered one of the most important steps in the hiring process to create a relationship with a potential employer. With the right preparation, qualified candidates can take the driver¡¯s seat and position themselves as the top pick for the position.

Jill Donnelly, president of CareerWomen.com advises, Practice, practice, practice. Many questions, such as those inquiring about your experience and qualifications, should be expected. By creating the right storyline to anticipated questions, your delivery will sound natural and confident. Remember, if you are qualified, the interview is where you can win or lose the game. To get the job you want, CareerWomen.com¡¯s top five tips to impress interviewers are:

1. Be the qualified candidate

Know why you are qualified for the position by matching your experience to the specific requirements of the job ahead of the interview. By offering examples that match your qualifications to the exact position, the interview will be a breeze for you.

2. Prepare by doing your homework

Do your homework on the company as well as the position. Get up to date on the company¡¯s current business issues so you can address any questions about direction and opportunity. Develop a list of questions prior to the interview to demonstrate your interest and curiosity about the company.

3. Speak with confidence

This is not the time to by shy and timid. Be confident about your professional accomplishments and talk about your results. Talk about yourself through your previous employer¡¯s words to give your claims needed validation. If you have some work samples you are proud of that are related to the position, why not show them off?

4. Act like a professional

This may seem like common sense, but you¡¯ll be surprised how many people forget this completely. Common courtesies will take you a long way at setting the right professional impression. For example, dress appropriately for the position, be sure to turn off the cell phone and most importantly, be on time!

5. Be a good communicator

Listen and be appropriately enthusiastic. Listen to the questions before you answer. If you interrupt, it could send a warning flag that you are not interested. Lean forward, listen carefully and be sure to make direct eye contact.

Additional resources to enhance professional development and advance women¡¯s careers can be found at http://www.CareerWomen.comincluding career development tools, career and employment news, professional associations and employment opportunities across the US with some of the best women-friendly companies.

Recruiting in China

An “adventure” is what Dave McCann calls the quest to recruit and retain good workers in the rapidly changing economy and market in China.

“The opportunities are great, but they create HR challenges,” says McCann, who is based in Beijing and has responsibility for HR activities for PricewaterhouseCoopers throughout China. The country may have a population of 1.3 billion people, but there’s a war for talent as fierce as in many parts of the Western world, he explains.

Carrie Conlon, director of human resources for Nanjing Interbrew Breweries in Nanjing, says China is undergoing significant changes and wants a market economy. “But they don’t have the talent,” she explains. “They haven’t recognized the need to train people to go into that type of economy.

And managers are particularly hard to find. “The challenge is finding managerial talent,” she says. “You can’t find a marketing director to save your soul.”

The reason: While many Chinese professionals have good technical educations, few have managerial training because in the past managers were promoted based on their political party allegiance. “There never had been any selection criteria; it was not attached to skills,” she says.

While managers are in particularly short supply and attracting good ones can present a special challenge, the truth is that recruiting for any position in China can require a whole new outlook. In some cases you may need to rethink what you know about finding and hiring talented workers because, when it comes to recruiting, China has its own particular rules of the road.

Do’s and Don’ts

As in other countries, companies operating in China can use campus recruitment, job fairs, newspaper advertisements, search firms, internal referrals and the Internet to search for the right talent. But, “in terms of hiring, there are more than a hundred ‘do’s and don’ts,'” says P.O. Mak, president of the Hong Kong Institute of Human Resource Management.

“First of all, you have to know where you are and what kind of people you wish to hire. And then, a thorough knowledge of applicable law is important,” says Mak.

Given the complexity of the market, Annella Heytens of Watson Wyatt urges U.S. companies to develop a well-thought-out recruitment strategy that spells out screening and interviewing methodology.

“Do not look for the perfect candidate–he or she does not exist,” Heytens says. Other mistakes: being inflexible with the benefits package and taking too long to interview or make an offer, in which case, “You may lose a good candidate,” she warns.

In addition, she warns not to market the company too optimistically or negatively. “Be realistic when describing the working conditions,” she says, because new workers “may not stay too long if you misrepresent the company.”

When interviewing, don’t be fooled by “a perfect accent and Oxford English,” Mak warns. “You still need to probe into values and experience. In the older days, many firms hired people primarily because of language proficiency. Don’t do this anymore. I put values first because unfortunately–due to education systems, culture and norms–we tend to see a big gap between ‘our’ values and ‘their’ values, and this can make or break a working relationship.”

Conlon warns that Chinese interviewees “may not be polished. Be cautious not to make a judgment on that.”

Unlike Heytens, Conlon advises conducting several interviews because people in the Chinese culture tend to be less direct than in Western cultures, and they “take a long time to say what they want to say. Bring them back, so they feel comfortable and you get the information you need. Tap into their true potential. The system is not geared to helping people know their own potential.”

Michael Colozzi–general manager for Portola Packaging Inc. in Shanghai–agrees. “Everyone I hired on my immediate staff I interviewed five times,” he says. “In two cases, I gave people minor assignments to prepare presentations. I tested them. I let everybody know I was extremely serious.”

Camille Elliott, who returned from Beijing last year to work as a recruitment manager for PricewaterhouseCoopers in the San Francisco area, also made use of multiple interviews in China. In fact, Elliott would regularly ask a Chinese native and someone from the West to interview and assess a candidate’s ability to balance Western and Chinese styles of management. The Chinese management style tends to be very directed, she says, and Chinese managers “tend not to have the coaching skills that you as a Westerner would like to see.”

This lack of managerial skills can be overcome, says Colozzi. Chinese managers “don’t like to make decisions without having 100 percent of the facts,” he explains. “In the United States we’re not reluctant. If we make a mistake, we clean up the mess and start again,” he says. But he has found that Chinese managers can learn to make direct decisions “and you’ll be amazed at how creative they are at solving problems.”

Conlon adds that references are easy to obtain in China. “You can call up a previous manager and ask for a reference. People have been pretty open.”

Use of Exit Interviews Grows, Gets More Sophisticated

Companies are using exit interviews to decrease turnover, often by comparing their results to engagement surveys. They’re also finding exit interviews useful in luring ex-employees back.
By Eilene Zimmerman
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he HR metric of the moment may be employee engagement, but many companies have also placed a new emphasis on employee disengagement by reinventing the exit interview and acknowledging there¡¯s much to be learned from a departing employee. The development and implementation of these surveys is increasingly being outsourced, and the data compared with other workforce surveys.

Vendors that provide these services say demand is rising because outsourced exit interviews are often more comprehensive and strategic than internally devised surveys, which can be incomplete or haphazard. Beth Carvin is CEO of Nobscot, a Web-based software provider whose products include WebExit, which was introduced in 2001. She has seen growth in both the number of her business’s clients as well as her revenue of between 20 to 50 percent a year since then. “Exit interviews are the one process that companies haven¡¯t really figured out how to do well,” says Carvin.

Like Carvin, Diane Irvin has seen demand for her firm¡¯s exit interview services grow rapidly in the last few years. Irvin, senior vice president for the HR research and consulting firm Strategic Programs, says the Denver-based company has been growing more than 70 percent a year for the past three years, largely due to its exit interview work. “Right now it¡¯s trendy to do employee engagement surveys, but to engage employees you have to understand them. Comparing your exit data to your engagement data helps you do that.” Irvin and others in the exit interview business find employees are both more likely to participate and to be more honest when someone unconnected to their employer asks the questions.

Nobscot, Strategic Programs and most other vendors provide clients with detailed reports that correlate responses from departing employees and analyze data, breaking it down by age, seniority, gender and other demographics. The number of questions ranges from about 35 to 70. For larger organizations, the questions are generally quantitative rather than qualitative, although most surveys contain a section for open-ended comment.

Since January, Black & Veatch has been comparing data from its newly designed exit interviews with its workforce engagement surveys in order to accurately gauge how employees feel about their jobs. The engineering consulting firm hopes the information gleaned from its surveys will help senior management find ways to increase employee productivity and, ultimately, profits. The company may discover, for example, that supervisors need a specific kind of training or development to better manage their teams.

Michael Harris, a professor of human resources at the University of Missouri-St. Louis¡¯ College of Business, says that¡¯s a smart move. “Think of your employee as your customer,” he says. “Most companies want to measure customer satisfaction, but it¡¯s important to also find out why your customers are leaving.”

Black & Veatch changed its old set of exit interview questions–which B.J. Holdnak, vice president of organization effectiveness describes as “kind of hit or miss”–to a standardized survey that identifies high performers and categorizes the reasons they leave. Black & Veatch¡¯s exit survey also tracks demographics. “Are younger people leaving us more often than those with a longer tenure? If so, why? Is it compensation? Their team? The environment? The culture? We are looking for patterns,” says Holdnak.

Some of the same questions asked in Black & Veatch¡¯s exit interviews are also asked in their engagement survey, so that the responses of those currently in the workforce can be compared to those who are leaving.

Richard Wellins, a senior vice president at human resources consulting firm DDI, says asking exit interview questions before people actually exit–in engagement surveys–can help a company prevent people from leaving. “The idea is that the questions you ask for a current employee are very similar to what you ask a person who is leaving. For example, on an engagement survey you might ask, ¡®Do you feel you have opportunities to expand your knowledge and learning? Are we meeting your needs for learning and growth?¡¯ and on the exit survey it¡¯s the same questions, only past tense,” says Wellins.

Richard Harding, director of research at Kenexa, says this kind of comparison across surveys is relatively new for businesses. “You¡¯re looking not just at why people are leaving, but why they are staying,” says Harding. “Then you give your managers actions they can take to keep their people. Just doing exit interviews after someone leaves is like shutting the door after the horse has left the barn.”

Expansion plans
Black & Veatch has an aggressive expansion plan in place, a response to dramatic growth in worldwide energy and water markets that began about three years ago. Its work is concentrated in those industries, says Holdnak, and the firm wants to capitalize on the opportunity for growth by hiring people that are a good fit and will stay put.

“We are going to have to increase the number of people we hire and retention is also going to be an issue. If [energy and water] markets are better, people are more likely to jump ship,” says Holdnak.

Black & Veatch hasn¡¯t been collecting data long enough to know how it will use the information to make changes, but as the firm grows, a big concern is fostering a globally inclusive corporate culture.

Between 30 and 35 percent of Black & Veatch¡¯s 7,000 employees work outside of the U.S. “Having policies and processes that resonate with employees in different countries across a variety of cultures is a challenge for us and we¡¯re hoping the data we get from these surveys will help us achieve that,” says Holdnak.

Increasing participation
Sutter Health, a healthcare network based in Sacramento that serves northern California and Hawaii, overhauled its exit interview process when it developed a nursing retention and recruitment plan four years ago. The data is being used to help stem the turnover of newly hired nurses, which is very high compared to Sutter¡¯s general nursing population, says Diane Lahola, director of workforce planning and retention at the company. Turnover of new nursing school graduates is high throughout the healthcare industry, says Lahola, and Sutter wants to find out “what it will take to create a more satisfactory work environment for nurses, because the cost of turnover is very high and they are difficult to recruit.”

Sutter¡¯s affiliates–the members of its network–have been allowed to either internally redesign their exit interviews or contract with third-party vendor Strategic Programs. “It made sense to use a third party because you tend to get better participation rates and more [candid] data,” says Lahola. The first year, between 40 and 50 percent of affiliates outsourced exit interviews; this past year 75 percent did. Lahola says for affiliates who conduct the interviews themselves, participation among departing employees is between 0 and 12 percent. With a third party, average participation is about 70 percent.

The new exit surveys give Lahola more accurate information than she had previously. “A lot of times someone will say they are leaving because they are getting more money across town, when the real reason is that you can¡¯t pay them enough to work for their manager,” says Lahola.

In an effort to get at the true reasons employees leave, Lahola compares exit data to the data she gets on annual employee opinion surveys. She was surprised to learn this fall, after the most recent opinion survey, that the orientation and assimilation period was a sore spot for new nurses. It wasn’t the structure of the orientation program itself. It was other things, such as current employees not being prepared for a new employee¡¯s first day on the job. “Although it wasn¡¯t happening at all our affiliates, I didn¡¯t realize the degree to which this was a problem,” says Lahola. “New nurses and other employees would show up for their first day and staff may not have been prepared to orient and assimilate them.”

Also surprising was the issue of competitive pay. Employees currently with the organization are actually less satisfied with their pay than those who leave. “That tells me people aren¡¯t leaving because of money,” she says. “And I can drill down by affiliates to see where the problem is most acute.”

Sutter Health¡¯s affiliates are just starting to make changes based on the exit data. New nurses are now surveyed about their work experience at the 30, 60 and 90-day mark and several affiliates have begun mentor or buddy programs. Another reason nurses were leaving, says Lahola, was a perceived lack of career opportunities, despite the fact that Sutter offers a variety of programs that allow employees to move from one affiliate to another or attend management and leadership programs. “We need to connect the dots better to show employees these opportunities exist,” says Lahola. “Now we focus on that in all of our communications.”

Sutter does hear from employees in other ways. Hundreds of its employees are currently on strike over a number of issues; the Service Employees International Union has said employees want “a voice in staffing decisions, a training fund and protections for speaking out for patients.”

Hiring alumnae
Jeppesen, an Englewood, Colorado company that provides aviation data such as maps and flight plans, redesigned its exit interviews in 2000 with the help of an outside vendor. Information from the exit surveys spurred the company to offer more training for managers and change the way management jobs are posted. “There was a perception here that people got jobs through who they knew rather than what they knew,” says Alice DiFraia, the company¡¯s director of human resources and organizational development.

The changes had a profound effect: by 2003, turnover was down to six percent, which was DiFraia¡¯s goal, and the company stopped performing exit interviews. This year, however, turnover began rising again–it¡¯s 12 percent now–and the company has reinstituted the interviews.

Data from exit interviews is also used in less obvious ways. United Risk Partners, for example, a firm that does background checks, is finding that about 40 percent of companies also use it to conduct exit interviews. Craig Lawrence and Marco Confuorto, partners in the suburban Chicago firm, are both trained investigators and use the interviews to gain information about a company that management can¡¯t find on its own. “From a risk management standpoint, you can find out things about sexual harassment, drug and alcohol abuse, intimate relationships and criminal activity,” says Lawrence. “To investigate a criminal allegation you would have to hire an investigator to go under cover for a 90- or 120-day investigation. Exit interviews are a way to obtain inside intelligence about operations without having to make those significant investments.”

Boomeranging–getting highly valued employees who leave voluntarily to return–can also be facilitated via exit interviews. Exit questions for those employees focus on what it would take to get them to stay. Beth Carvin of Nobscot recalls an insurance company client that was able to do just that. “They called an employee who had left to say, ¡®All the great things you liked about working here are still here, and the things you didn¡¯t like? They are gone.¡¯ They hired this guy back within two weeks,” she says.

Richard Harding of Kenexa says because employees sometimes find the grass isn¡¯t necessarily greener at another company, doing exit interviews a few weeks or even months after valued employees leave can help a company find out what it will take to bring them back. Harding says Kenexa asks departing employees if they’d consider returning to the company, and under what conditions. About two-thirds say they would consider returning if the circumstances changed. Often, employees don’t say they want more money–they just don’t want to work for the same manger.