All It Takes Is One Bad Apple:
The Value of Pre-employment Screening and Due Diligence
Doing business in emerging markets requires an acute understanding of the unique risks present and an ability to mitigate those risks. Without such an understanding or ability, any business, is exposed to a variety of threats to their operations, assets and profit line. Having an effective risk management or security program in place allows a business to protect its bottom line and maintain competitive advantage. The business environments in these markets are all very different, each having its own unique characteristics, and Indonesia is no different.
Different Markets - Different Challenges
- Unfamiliar customs, cultures and languages make understanding and controlling risk difficult
- Complex regulations, a different legal system and priorities create barriers to enforcement
- Political and economic change, business closures, rising unemployment and grey markets can create hostile environments
- Obscured conflicts of interest, intricate personal networks, varying levels of corruption and nepotism, all make forging business relationships difficult
Different Challenges - Different Risks
- Revenue losses from counterfeit goods, trademark infringements and grey market activity
- Theft of proprietary information and industrial espionage
- Collusion, corruption and fraud
- Loss or damage to physical assets
- Physical threats to employees and their families
- Damage to business reputation from unethical business practices or local contractors and business partners
Effectively addressing these risks requires any business to possess an acute understanding of the various ethnic, cultural, socio-political and economic factors affecting the business environment.
Security risks to companies are both internal and external. Loss prevention begins internally, with the employee or business partner, only following that, does it deal with the non-employee and external factors. Hiring employees is one of the most critical business decisions a company makes. Recruiting new staff members on the basis of personal recommendations and appearance is not enough. Experience has taught many businesses that if they had objectively and comprehensively screened candidates prior to employment, many malpractices might have been avoided such as:
Conflicts of Interest, Industrial espionage, Theft of proprietary information, Contravention of business compliance issues, Business fraud.
Employment screening is an essential process to safeguard any business from hiring persons who are either unqualified or of questionable integrity.
“Do you really know your company personnel?”
Screening applicants through pre- and post-hire enquiries, is loss prevention in its purest sense. This should not be restricted to employees, as the future problems that choosing an unsuitable business partner or vendor may create, should not be underestimated. To address this issue is due diligence and companies are encouraged to approach security professionals who specialize in this and related security services, with networks extending globally. This places them in an excellent position to screen Asia-based applicants who may have studied or resided overseas or worked at companies that are incorporated or headquartered outside of Indonesia.
The extent of screening is determined by the seniority or sensitivity of the position to be filled; this also applies to JV partners or vendors when checking companies. Screening both existing and new employees at all levels is recommended. Even the lowest level of employee might have access to proprietary information and processes that are critical to the efficient running of the company. Companies should also consider screening personnel being either relocated to or promoted into areas where they will have additional responsibilities.
Objectives – Why Screen?
The overall objective of employee screening is to “protect” a company against hiring personnel who exaggerate or make false claims about their qualifications, work experience and personal background or, identify weaknesses or withheld information that is relevant to employment such as previous criminal convictions or misconduct..
Do you really know the person working for you? Was he/she overpaid in his previous job? Has he/she the integrity, honesty and ability you need? Did he/she train for three years in accountancy as the resume claims?
There is only one-way to find out: Institute a pre-employment or post hire screening program. Of course risk must be commensurate with cost, and complexity and budget will vary from company to company, however initial outlay can assist in reducing potential for large losses. It is a recognized fact that the soul of any organization is its people and the company’s performance improves by providing care and attention to personnel selection. It is recommended that with any program embarked upon, screening or background checks must be adapted to job level or size of company to be checked. Selection of an individual or company must be on an objective basis, not a subjective criteria and uniformity of processing is vital if the program is to succeed, otherwise the program will be piecemeal and vulnerabilities exist.
Readers are strongly encouraged to contact industry leaders in security who can also be consulted on risk management, commercial enquiries, information security, personal protective services, and many other specialist fields offering premier security consultancy services in Indonesia for a systematic approach to asset protection.
PT Hill Konsultan Indonesia