Background Checking Services and Blood Pressure Machines

There are 3 reasons why these two seemingly very disparate things are being linked here:

1. Both background checking services (e.g., for employment candidates) and blood pressure machines (e.g., ones used at home) have an inherent “black box” quality. Customers/users generally trust their accuracy and reliability but don’t often -- or can’t easily -- verify it.
2. If the basis of the background check or blood pressure reading is faulty, the customer/user would not know it, perhaps resulting in inappropriate actions or making the wrong decisions.
3. The consequences of taking the wrong actions or making the wrong decisions when using background checking services or blood pressure machines can result in both huge problems and missed opportunities.

In the case of background checks, “the basis of critical information” indirectly refers to the business model used by the relevant services provider. A business model, or how an organization creates and delivers value to its customers, is one of the most important things for enterprises to get right. While most people would stand behind this fundamental business principle, it’s frankly puzzling that so many customer organizations don’t place more emphasis on the business model used by the companies servicing them. This is even more puzzling when the product or service is “information for key decisions” that is rarely verified and unfortunately, totally suspect at times.

Applying the Learnings of HR Outsourcing’s Early Adopters

Dozens of organizations had a fairly rough learning experience during the “growing up” of the HR outsourcing industry. These early HRO adopters had unexpected challenges after partnering with an HRO vendor that promised cost savings and shorter cycle times, but achieved them mostly through less high-touch, less people-centric service delivery models. In many cases, Master Services Agreements needed to be re-calibrated. After all, customer advocacy and critical thinking (key value adds) require experienced people who know and understand their customers’ challenges, business nuances, rhythms, etc. A trained and capable external staff that truly functions like an extension of their customers’ operations requires certain resourcing commitments and appropriate processes, tools and mentality. This is all a function of business model, and if the hallmark of that model is simply being the lowest cost provider, high marks usually won’t be earned for quality or customer advocacy.

HR outsourcing eventually matured as a viable service delivery model, largely by ensuring that people, expertise, technology and customer interactions were all brought to bear in the right amounts, and in the right way. Another key element in making these engagements more successful was greater levels of transparency, specifically around HOW value was being delivered. While Recruiting, Benefits, Payroll and Training/Learning Management Outsourcing have now all reached higher levels of customer business impact and satisfaction, the same can’t necessarily be said about the Background Checking domain.

In fact, competitive pricing pressures have forced an increasing number of providers in this space to embrace the same approaches that caused many of the earlier HR outsourcing engagements to fail: minimal customer interaction, minimal customer advocacy, minimal critical thinking, inexperienced staff, etc. Often in its place we see processes and technology that seem to be “doing the job”… But are they?

Know Your Sources, and Your Sources’ Sources (and Methods)

While it’s perhaps impossible to find comprehensive statistics on how often background checks turn up inaccurate information, a review of court records by ABC News found recent lawsuits on behalf of hundreds of people against the major criminal records database companies, alleging that background checks contained inaccurate information about criminal convictions. According to government reports and consumer lawsuits, infrequently updated databases used by many background checking firms often contain inaccuracies that include criminal convictions for people with expunged records and/or overturned convictions -- or arguably, worst case -- no convictions at all. This has resulted in the Federal Trade Commission recently issuing significant fines against major screeners and public records “data brokers” -- some in the millions of dollars -- for not utilizing appropriate means to verify the accuracy of information provided back to customers.

One of the most cited lawsuits in this arena was brought by New York City resident Kevin A. Jones, who applied for a doorman position in 2012, and by all accounts, aced the interview. The offer made to Mr. Jones was quickly rescinded however, due to what was reported by one of the largest background checking companies … specifically multiple convictions and two stints in jail. In actuality, Mr. Jones had no criminal history whatsoever. Jim Francis is the attorney Mr. Jones engaged to justifiably sue his would-be employer for not disclosing the information behind the decision so it could be challenged. He works for one of the many law firms specializing in these cases. When the attorney contacted local courthouses and pulled actual records, he found all those convictions belonged to a man in upstate New York with the same first name, last name and birthday, but with a different middle initial and a completely different address.

Mr. Francis stated … “there was plenty of information available in the actual public record that proved he was not the person who was the subject of these criminal records, but the background checking firm didn’t get these records.” Returning to the point made above about the importance of knowing your service provider’s business model, Mr. Francis clearly concurs, as he also stated … “the cause is the business models in the background screening industry that promote speed and value of sales over accuracy and care.” And it’s not just faulty business models behind this. Incomplete data in applicant or employer documents, transposition errors, corrupt data files in systems all compound the problem.

There are literally thousands of cases out there similar to that of Kevin A. Jones. Two others found on the web within seconds of searching are Leonard Smith, victim of a background checking firm’s faulty process and technology that confused him with a sex offender in prison at the time; or James Hines, who was confused with Michael James Hines, a convicted sex offender in a different state. According to Bob Sullivan, a technology correspondent with NBC, national criminal history databases have a 41% error rate. Moreover, there are more than 7,000 courts in the United States that maintain criminal records, and there is no national criminal record database that contain all these records. Perhaps more importantly, even if there was such a database, it would only be as good as its last update.

Which brings me to …

The Only Model that Evidently Works

The commoditization wave that has swept over the background checking industry in recent years has resulted in virtually all of the largest services providers striving to compete on the basis of price and volume processing – necessitating less frequent updates and less staff-intensive delivery. So where does this leave customer organizations that don’t want to pay the consequences of the high error rates plaguing the industry? It certainly seems that mid-tier services providers in this space who place more emphasis on quality and customer advocacy than being the highest volume processor would be a logical place to turn to. Some of these vendors, such as the one I’m most familiar with -- PeopleG2 -- utilize such means as a very large network of field researchers covering relevant court filings around the U.S., in addition to keeping staff judgment and critical thinking in the mix in order to avoid some of the aforementioned industry disasters.

Concluding Remarks from an Industry Insider

Three decades of leveraging optimized processes, data and technology in support of people-related decisions, including serving as a global practitioner, product strategy and HR outsourcing executive, and current advisor to the background checking firm PeopleG2, perhaps qualifies me as an “industry insider.” In that context, I will offer this up as a key recommendation -- or business imperative -- for any organization that screens employment candidate backgrounds:

Pay close attention to your service provider’s business model, specifically whether speed and sales are apparently emphasized over quality, accuracy and reliability. One way of determining this is to just ask your service provider the following … How up-to-date and reliable is the information you are reporting to customers; e.g., how frequently are your databases updated, what reasonability checks are employed to ensure the accuracy of source data, and how often are court records checked when reporting results back to customers?

In an effort to personally confirm how one of the largest vendors in this domain operated, I recently had an opportunity to ask their HR executive these questions. The person deserved credit for being honest and forthright in stating that … “updating more frequently was something being looked at.” Based on that answer, it would seem that the alarming trend of background checking-related lawsuits and fines will not be slowing down anytime soon; and that service providers with a different type of business model would be worthy of serious consideration.

Steve Goldberg HR Technology & Transformation Industry Advisor

4 Things You MUST Remember When Launching a ‘People Analytics’ Initiative

1. Focus on HR data integrity (first) until the vast majority of people analytics consumers explicitly express confidence in the data behind the planned analytics. There could well be a history of cynicism in your organization around HR and Talent Management initiatives – PARTICULARLY those that relied on data integrity perceived as suspect (best case) or totally unreliable (worst case). Achieving and sustaining high HR data integrity requires a multi-faceted program unto itself, one which is arguably as important as launching any analytics dashboards. You can employ multiple data scientists, statisticians and the best analyzing software, but once the data is perceived as faulty, you are probably pouring money down the drain with even the most impressive analytics. [Contact me if you want to discuss what an effective HR data integrity assurance program looks like: SBGConsultingLLC@Gmail.com]

2. Ensure that the people analytics team has the appropriate mindset and displays the appropriate behaviors through formal training. I am not referring to statistics training. While that is important, an air-tight regression analysis can be performed by a college intern. The training I am referring to is training which emphasizes the importance of “thinking and acting like a scientist.” This means not having many preconceived notions about what the data will likely tell you. If you do, and the notions are strong, the data relationships are probably so obvious it’s not worth the time to develop the predictive frameworks and syndicate them (e.g., employees in the last year of a vesting schedule have a much greater chance of leaving within 6-12 months than employees in the first year.) Scientists tend to first eliminate non-predictive relationships between commonly grouped data elements -- vs. narrowly (and in a “self-fulfilling prophesy” type of manner) focusing on proving their hypothesis.

3. Remember that a single metric rarely tells a story as it is largely out of context. This is the value of analytics, which by definition, highlights the predictable relationship between different items. As an example, seeing that turnover is trending up, or employee engagement is trending down, and reacting to such metrics in isolation, will likely be a pointless exercise that adversely impacts management and/or HR Department credibility. In contrast, as an example, look to identify which types of training in conjunction with where an employee sits in their compensation range or relative to market: (a) will likely drive voluntary turnover up, and (b) even trump the turnover-related predictive value of having a poor people manager as a supervisor/manager.

4. Remember that the ability to reliably predict what drives or impedes employee productivity … as measured by revenue per employee or other means more relevant to your organization … will likely have a significantly greater financial impact on your organization than reducing employee turnover or improving employee engagement, although they are all related. This is where it gets complicated, but also where people analytics can really “earn its keep” … e.g., determining with confidence when these 3 logically, intuitively linked data points will NOT be correlated or predictive of each other, and discovering what else is going on.

Steve Goldberg March 2015

10 HR Technology / HCM Systems Capabilities that Drive Value Creation

HR technology solutions have unquestionably come a long way in “technology attribute areas” like configurability, usability, inter-operability and lower cost of ownership. Fortunately for business users of these solutions, business benefits and impacts now extend beyond the virtues of the tool or platform itself … thanks to advances in facilitating workforce collaboration, leveraging embedded analytics, enabling more robust workforce planning, achieving a more integrated, cross-functional talent management model, etc.

That said, here are 10 analytics-related capabilities that many end-customers would say they are still waiting for --- particularly as it relates to true Line Manager Enablement. These capabilities are much more about managing Human Capital risks, problems and opportunities -- than about the automation of a standard HR business process.

1. Provide guidance as to when it is best to fill a staffing gap by using a temp or contractor, training an incumbent, transferring or redeploying another employee, or hiring a new employee.

2. Identify “enrolled employees” (good performers who could be excellent if they were more emotionally connected or engaged) and what actions/programs should be considered.

3. Identify “key employee retention risks” and viable options for stabilizing those situations … [Note: A retention risk might be someone in the last year of stock option vesting who is paid under market in a business unit with below-average engagement].

4. Highlight employees or business units experiencing a “trajectory change” in productivity, engagement, retention, etc., and business-related variables that could be causing the change.

5. Highlight instances where the value of certain competencies (e.g., consultative selling) are becoming much more important to the organization; and related to that, identify otherwise good-performing employees who may consequently need to retool, be redeployed or replaced.

6. Highlight key employee situations where “non-financial rewards” would offer a very favorable “perceived value-to-cost ratio” … [Note: Non-financial rewards such as assigning a coach or mentor, or allowing an employee to be exposed to different parts of the business also typically have a cost attached].

7. Provide guidance as to where to look for possible talent management-related reasons for declining sales, declining customer service ratings, longer product development cycles, losing more high-performing employees to competitors, etc.

8. Provide a broad and realistic perspective on “organizational readiness” for such events as a shift in business strategy, change in product / services mix, M&A transactions, etc.

9. Identify situations where changing an employee’s role, manager or business unit might convert that employee from a good to very good or excellent contributor.

10. Highlight where a particular HCM metric or KPI is “actionable now” … or if it’s more appropriate to investigate further (with related metrics) before taking action.

Kotter's Book "Leading Change" and Overcoming Complacency

I was recently asked to recommend a business book to some colleagues, one that related to guiding companies on transformational initiatives. Upon thinking about business books that had made a lasting impression, a common theme emerged: They were all books that helped in navigating the reasons why many corporate undertakings, such as ERP journeys, might fall short of potential or veer off-course.

Realizing that a common topic explored in the various books coming to mind (e.g., Who Moved My Cheese and Sacred Cows Make the Best Burgers) was that of organizational change management, the book "Leading Change" by John Kotter rose to the top as the obvious choice.

Leading Change was written around the same time the internet was taking off, but it’s still the most recommended and read book on change management out there because none of the ideas embedded in Kotter’s 8-stage process for creating major change have lost relevance or (practical) applicability.

While some of Kotter’s eight stages are labeled using fairly obvious principles of change management such as creating the guiding coalition (or core change management team plus enlisted change agents), or establishing a sense of urgency, it’s the layers of not-so-obvious but critical insights and implications that Kotter explores within each stage that make the book come to life.

Take establishing a sense of urgency for example … One of many memorable quotes from Leading Change is … “Never underestimate the magnitude of the forces that reinforce complacency and that help maintain the status quo.” Kotter’s surrounding comments highlight that while senior executives are usually the key players in reducing the forces of inertia, it can also be a competent individual in a middle or lower level role that is equally instrumental in creating some of the conditions needed for an organizational transformation.

This point clearly ties back to Kotter’s stage about creating the guiding coalition, as diversity of roles, levels, personalities and organizational alignments are all essential for the change management team to effectively channel “case for change” messages back to the masses, and “reactions to change” back to the change team.

Finally, on the topic of combatting complacency with a sense of urgency, Kotter’s comments in the book about the downside of current or past successes, or a lack of a visible crises, or insufficient feedback from customers contributing to the complacency factor really resonate; and should help guide all those interested in coming out on the positive side of a change management effort.

Steve Goldberg, October 2014

3 Things you should Never Shortchange when Embarking on an HR Technology Rollout

1. The “what's in it for me” perspective of each class of user; e.g., employees, applicants, HR specialists and business partners, line managers, executives, relevant external partners, etc.

Keep in mind that HR Systems have been getting procured and implemented for decades, and often times, neither the organization nor the products being implemented were totally ready. Organizational readiness can relate to other strategic initiatives going on that are perceived as more important; or perhaps there was a need to (first) change the HR processes being automated as they were deeply flawed. Moreover, historically, it often took several releases from HR software vendors, and responding to customer feedback, before usability and depth of functionality reached acceptable levels. These factors could certainly contribute to a “negative bias” against HR Systems across different stakeholders and end-users, exacerbated further by how aggressively systems in the past were promoted as the missing piece in truly leveraging a workforce for competitive advantage. These potential negative biases or lack of receptivity to embracing the new system can be countered by framing the business case and designing all end-user communications in the context of “what’s in it for me?” This is obviously part of a much broader Change Management framework and program.

2. The importance of end-users being in control of, and accountable for, data quality.

According to industry research firm IDC, worldwide spending on HR software has now surpassed $5 billion USD annually, propelled in-part by organizations jumping on the SaaS (Software-as-a-Service) bandwagon. SaaS-delivered HR solutions allow customers to avoid the costly and disruptive upgrade cycles associated with on premise-installed enterprise software, make for much more predictable spends on HR Technology, and also enable customers to more readily share their experiences from using the software - as the SaaS model generally means they will all be using the same version of the software. Arguably, though, outside of effective change management, the biggest “Achilles’ heel” that continues to compromise business benefits that could be achieved from these investments is inadequate attention to data quality. A data ownership / accountability and integrity assurance plan must be a central part of every HR Technology rollout; and ownership should ideally be in the hands of the person who has the biggest vested interest in the data being correct!

3. Focusing on business drivers, how they might be changing over time, and how the HR Technology platform or software suite aligns with those drivers.

Successful organizations are usually very fluid, or to cite an over-used cliché, the only constant is change. When planning an HR Technology rollout, both planned and potential changes must be considered and factored-into the enterprise solutions being brought in; e.g., how scalable and adaptable is the software to a broad range of events and/or business decisions that might occur. Whether the change driver is a decision to expand into new markets, pursue a growth through M&A strategy, a move to outsource non-core functions or capability sets, or simply invest more heavily in talent management and employee retention / engagement programs, the software vendor’s current offerings and planned product roadmap must be evaluated against these possible scenarios to ensure on-going fit.

Steve Goldberg HR Technology & Transformation Advisor