DALLAS (June 17, 2009) — For years, corporate recruiting executives and managers barely checked candidate-provided references – much less criminal, civil or credit records before making employment offers. Now, in a country known for not finding the middle ground if it had a map, a compass and a finely tuned sense of direction, companies are eliminating otherwise qualified candidates who are out of work. The reason? They are behind on their bills and some are in bankruptcy trying to save their homes. Why? Because they are out of work.

Today, 33 percent of all companies are using credit checks as part of their employment screening process. Use of credit record checks in the pre-employment process is up by 55 percent over the past five years, according to a June 7 story in the LA Times authored by Tiffany Hsu.

According to this dispatch, companies are finding the so-called red flags in criminal records 9.5 percent of the time. Employment verification issues are a problem 48.1 percent of the time and problematic credit reports raise red flags 42.9 percent of the time.

I am not opposed to comprehensive background reporting. My firm, JohnMarch Partners, is known for its rigorous background checks. There is no shortage of candidates who have consistently demonstrated bad judgment. They have made decisions that were illegal or ethically questionable. At JohnMarch Partners, we look at criminal, civil, and driving records in all jurisdictions where our top candidates have lived or worked. We look at credit histories as well. Of course, we validate credentials, prior employment and we require eight references – two superiors, two peers, two subordinates, and two personal references. We also check secondary references – those individuals with whom the candidate has worked in the past but are not listed on the candidate’s own reference list. We insist on this three-dimensional review to be sure the candidate’s story “hangs together.”

I want to focus in on the use of the credit report. If the candidate will be a C-suite or senior level executive, the credit report findings are important. If the candidate will handle money, it is very much an issue. However, for others, we look at the credit report to corroborate bad behavior – fraud, theft, or a history of bad judgment. We know that otherwise good people can encounter tough times, especially now, in this devastating depression brought on by runaway government spending, incompetent regulatory enforcement, the greed of the entitled investors and a total lack of accountability on the part of the leaders we elected.

In our searches we have encountered executives with otherwise impeccable records who have run into a buzz saw of plummeting real estate prices and job loss that was related to the economy, not performance. To use a credit report to deny employment to someone whose record is otherwise acceptable is to misuse this tool. Employers should look for patterns of bad behavior or repeated poor judgment, not circumstances out of the candidate’s control.

It is a highly competitive job market. Employers are certainly well within their rights to make the argument that they should not have to take on new employees with financial problems, even if they were caused by the aforementioned incompetent oversight by a list of leaders that is long and “distinguished.” That is certainly their prerogative.

I believe that there is a more rational roadmap when making employment decisions. Check the references. Get the 3-D perspective concerning performance. Check for drug use and criminal or civil issues. Look at the credit report. If there are no patterns with bad judgment or behavior, then rely on reasonable judgment.

John G. Self is Chairman and Senior Client Advisor of JohnMarch Partners. He is a Co-Founder of the Firm. A former investigative reporter and crime writer with more than 30-years of healthcare leadership experience in public relations, national marketing, business development and as Chief Executive Officer of hospitals and consulting firms, Mr. Self is highly regarded for his keen insight into operations, business culture and for his ability to consistently select the right leaders. You can contact Mr. Self at 214.220.1234 or JGSelf@johnmarch.com. Or you can follow him on Twitter at Self_JohnMarch.

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