Why Companies should Perform Background Checks that Include Education Verifications
In May 2012, Yahoo! Inc. announced that recently hired CEO Scott Thompson had left the company after a discrepancy in his academic credentials included in the company’s Securities and Exchange Commission filings and biographies was revealed by a simple Google search. This embarrassing and well reported episode calls into question how a major company such as Yahoo! could miss an obvious mistake in an academic background when performing due diligence and serves as a reminder why companies should perform background checks that include education verifications.
Thompson was found to have a discrepancy in his educational record after a letter from Third Point LLC, owners of close to 6 percent of Yahoo! shares, to the Yahoo! Board of Directors pointed out that while numerous biographies and securities filings claimed Thompson held a Bachelor’s degree in accounting and computer science, a “rudimentary Google search” revealed that his degree was in accounting only. (See: http://www.prnewswire.com/news-releases/third-point-llc-letter-to-yahoo-board-of-directors-regarding-discovery-of-discrepancies-in-educational-records-of-ceo-scott-thompson-and-director-patti-hart-150048865.html.)
In addition, while checking on Thompson’s academic credentials, the letter indicated that Third Point LLC also “discovered another apparent discrepancy regarding the academic background” of the chair of the search committee that found Thompson. In the end, both Thompson and the head of the search committee left Yahoo!, and the company was left embarrassed by the incident.
This high profile episode demonstrates once again that employers of all sizes need to carefully screen and evaluate credentials and backgrounds. If it can happen to a publicly held firm that is a household name and known across America, then Human Resources professionals for all firms need to be on guard for credential fraud. It also shows that due diligence is not just needed for the “rank and file” hiring, but for executives as well.
Whether an “an inadvertent error” or done on purpose, studies have found resume’ inflation in the highly competitive job market is not uncommon. A 2009 white paper ‘Should Employers Consider Outsourcing Background Checks?’ from payroll and HR outsourcing firm Automatic Data Processing, Inc. (ADP®) found that 46 percent of employment, education, and/or reference checks turned up discrepancies. (See: http://www.adp.com/tools-and-resources/calculators-and-tools/~/media/PDF/ADP%202009%20Screening%20Index.ashx.)
However, a 2010 survey from the Society for Human Resource Management (SHRM) ‘Conducting Reference Background Checks’ revealed that while more than three out of four businesses polled – 76 percent – conducted general reference checks on all job candidates, less than half – 49 percent – always verified the degrees claimed by job applicants. (See: http://www.shrm.org/Research/SurveyFindings/Articles/Pages/ConductingReferenceBackgroundChecks.aspx.)
The Yahoo! case is the most recent example of education fraud and shows the need for all businesses to conduct education verifications during background checks. Another example of education fraud is the rise of so-called “diploma mills” and “degree mills” that offer – for an affordable price – a real degree from a fake college or a fake degree from a real college.
The Accredibase™ Report for 2011 revealed a 48 percent increase worldwide in the number of known fake diploma mills – described as “largely online entities whose degrees are worthless due to the lack of valid accreditation and recognition” – in the previous year. The report found the United States was the world’s diploma mill capital with a 20 percent increase in known diploma mills, and California was the state with the highest number of diploma mills. Overall, the Accredibase™ database identified approximately 5,000 suspect educational institutions and accreditors worldwide. (See: http://www.accredibase.com/index.php?section=871&page=4493.)
The rise in diploma mills means that education verifications where employers verify the academic achievements and certifications claimed by job applicants have taken on an important role in employment background checks. In the current economy, the number of diploma mills is likely to increase as desperate job applicants knowingly or unknowingly do business with companies that offer fake degrees and false credentials for a price.
As an example of just how serious this issue has become, a Human Resources professional can try this simple exercise: First, go to a site such as one maintained by the State of Oregon that tracks bogus schools and degrees mills. (See: http://www.osac.state.or.us/oda/unaccredited.aspx.) Then go to a business connection site such as LinkedIn, and go to the advanced search page. Search under a fake school in the advanced search section, and a surprising number of fake degrees may appear being claimed as legitimate educational accomplishments.
Educational credentials are an important part of an employer’s decision making process in hiring and educational achievement and can tell an employer a great deal about the job applicant’s ability, motivation, and qualifications. Many employers feel educational qualifications are a critical factor in predicting success on the job, and for many positions education is a prerequisite in terms of subject matter knowledge or for obtaining the appropriate license for the position.
However, some job applicants may be less than truthful about their educational backgrounds, including outright fabrications such as making up degrees from legitimate schools they never attended or claiming degrees from schools they attended but did not graduate from. For some job applicants, getting a college diploma apparently no longer requires years of hard work, taking tests, paying tuition, or even reading a book. All a person needs is a credit card and a web browser in order to buy an authentic looking diploma that mimics real colleges, universities, and even high schools across the United States. With these fake diplomas, anyone can instantly “graduate’ from nearly any school in America.
Adding to the challenge, some diploma mills have created fake accreditation agencies to falsely vouch for the phony schools. In the United States, schools are generally accredited by private organizations recognized as legitimate accreditors by the Council for Higher Education Accreditation (CHEA) at http://www.chea.org/. The U.S. Department of Education has also created a website where employers can search for accredited schools at http://www.ope.ed.gov/accreditation/search.aspx.
Employers should not take the educational accomplishments of job seekers at face value without ensuring that the applicant has actually obtained a degree, and that the degree is from a legitimate educational institution. To help businesses understand the importance of checking the educational records of job applicants, I wrote an article ‘The Basics of Education Verifications,’ which is available at: http://www.esrcheck.com/wordpress/2009/12/16/the-basics-of-education-verifications/.
In addition, to ensure there is not uncertainty about an applicant’s need to be honest, an employer can consider modifying their application form to say, “List all educational accomplishment and credentials that you wish the employer to consider.” That ends any debate on whether a particular educational accomplishment is part of the job description. Since an employer will also typically have a section in the application form putting an applicant on notice that any material misstatement or omission is grounds to terminate the hiring process or employment, no matter when discovered, applicants are on notice that honesty the best policy. The bottom line for employers, of course, is that honesty is an essential function for any position in an organization. In addition, recent scientific research has confirmed what Human Resources professionals have known for years – that if a person is dishonest in the way they get a job, there is a strong likelihood they will be dishonest once they are in the job.
In terms of dealing with diploma mills, employers can also rely upon professional backboard screening firms to assist in the process. A good screening firm will have access to both “white lists” of known accredited schools, and “black lists” of known diploma mills.
Another related area where an employer must be careful is claims of past employment. Verifying past employment – even if HR only gets the start, end date, and job title – is critical to the hiring process. It can be argued that past employment checks are just as important as criminal record checks, since often times “red flags” are discovered when calling past employers. Unfortunately, due to fear of litigation, many firms make the mistake of believing that past employment inquiries are of little value because a past employer will not tell you the “good stuff” about the candidate, such as job performance or skills. However, just verification that the applicant had the job and the job title claimed is critical. It confirms the applicant’s honesty and past information, and demonstrates “due diligence,” which can be an employer’s strongest defense in the case of a negligent hiring lawsuit.
Just as there are diploma mills, a new phenomenon is fake past employment services that will create a very authentic web site for a fictional employer and provide a phone number for a new potential employer to call so that the fictional job title and past salary can be confirmed. Generally speaking, such a scam will not get past a good background screening firm with procedures in place to verify whether a claimed past employer rally exists, and that does not use a phone number supplied by an applicant.
The bottom line for employers: Trust but verify. An employer has an obligation to execute due diligence in the hiring process, and if an employer hires someone that is unqualified, dishonest, unsafe, or unfit, that can create a legal and financial nightmare that is become a large distraction from a firm’s mission. Just ask Yahoo!
By Attorney Lester S. Rosen, Founder & CEO of Employment Screening Resources (ESR)
Attorney Lester S. Rosen is Founder and CEO of Employment Screening Resources (ESR) – http://www.ESRcheck.com – ‘The Background Check Authority’ and nationwide background screening firm accredited by the National Association of Professional Background Screeners (NAPBS). Rosen is the author of ‘The Safe Hiring Manual,’ the first comprehensive guide to employment screening, and is a nationally recognized background check expert who is a frequent speaker on due diligence issues. He was the chairperson of the steering committee that founded the NAPBS and served as first co-chairman.