I help organisations mitigate people-related risks, which are one of the biggest business risks.
The mitigation process includes conducting finance-related checks such as credit checks, bankruptcy checks and financial regulatory checks (“Asking for job seekers’ credit report is also discriminatory” by Mr Shah Pakri; last Saturday).
Employers globally conduct such checks, not just for new hires, but even for existing employees on a regular basis.
While there are clear reasons for these checks on employees in finance-related and management positions, staff in other roles or functions also undergo such evaluation.
This is due to various reasons.
- A candidate with a considerable amount of debt obligations or credit delinquencies might get distracted from fulfilling his job obligations to the employer’s expectations.
- A candidate’s lack of financial responsibility and financial management will show through these checks.
- If a candidate does not declare a bankruptcy or financial situation at the beginning of the interviewing process, and this is discovered only through a background screening check, then it reveals a lack of integrity and ethics on the part of the candidate that has to be noted by the employer.
- Some aspects of a candidate’s character can be inferred in terms of responsible decision-making and accountability.
Most employers who engage background-screening partners do not base the hiring decision on financial checks alone. This is done holistically along with crime-related checks, identity checks, employment history and performance checks and education verification.
Typically, these checks are carried out only after a letter of consent abiding by the Personal Data Protection Act is signed by the candidate.
Hence, the candidate would be prepared for the outcome and should have a contingency plan, in case there are discrepancies against the candidate.
This article appeared in The Straits Times on 8th August 2016 with the headline “Why employers run credit checks on potential hires”.