Should the hospitality industry be taking the threat of of staff fraud more seriously? Nick Huber looks at the growing trend of pre-employment screening.
You don't need to be a security expert to realise how vulnerable hotels are to employee fraud and other forms of subterfuge.
Whether it's the risk of theft of items from a celebrity guest's room, skimming money from credit cards, or siphoning off money from a departmental budget, unqualified or unsuitable employees can cause serious damage to hotels' reputations and finances.
Research by security and risk management consultancy Kroll found that hotels, bars and restaurants, categorised under the leisure and travel industry sectors, are more likely to be a victim of staff fraud or theft than other industries (see table).
Background screening of staff - already standard practice in the US hotel industry - is becoming more common in the UK, with hotels paying companies to verify candidates' employment references, credit history and even check for a criminal record.
HOW IT WORKS
Background screening can cost from £15 per candidate, but charges vary depending on the type of checks an employer wants to make and whether the candidate is based in the UK or overseas.
The screening process, which normally takes around 10 days, involves contacting previous employers to check references and job titles, and also for criminal records and credit history, if requested.
Before a job offer is made the hotel will ask the candidate for their consent to run a background check. The candidate fills in and signs a form giving their personal details (name, previous addresses and employment history dating back around five years, and also details of their academic and professional qualifications).
"A lot of the information will already be in the CV, but a CV is not a legally binding document and can be very ambiguous," says Lucy Hill, background screening consultant at Kroll.
The Kroll research into job applications found widespread "inconsistencies" between the information provided by a job candidate and the information found by verification checks
Kroll found inconsistencies in the information provided by candidates in 21% of screenings conducted in the first quarter of this year. The most common lies uncovered by the vetting included exaggerated or fake qualifications; lies about employment history - including extended employment dates; inflated job titles; and not giving the real reason for leaving previous employers.
In particular, exaggerated qualifications appear to be becoming more common. In the first quarter of this year Kroll found 71% more false statements in candidates' job applications compared with the same period in 2008.
Why the big increase? Hill attributes the increase to two factors - one, the economic downturn has led to more people competing for fewer jobs in the hotel industry; and two, employee background checks are becoming more common in the UK. Other security and regulatory risks to hotels, such as identity theft and the employment of illegal immigrants, are also increasing the demand for staff vetting.
David Chernick, chair of Protecting Employers From Insider Threats, a network of police, counter-fraud and security experts and organisations and background screening professionals, says UK hotels are starting to share tips on combating employee fraud, illegal immigration and identity theft.
"The catering and hotel trade is particularly vulnerable to people who are working illegally, so businesses are having to check people's passports and rights to work," he says. "Some of the hotels are starting to scan someone's passport to check that it is not a fake passport."
Identity fraud is a major problem in the UK, with tens of thousands of fake IDs seized each year, Chernick says. Passport checks can be done relatively quickly by hotel staff, ideally with the support of a document expert. Some computer systems can automate identity checks.
For many hotels, outsourcing their employee vetting is like a form of insurance that covers a major risk to their business that is too big to ignore.
The main benefits of background vetting - protecting the reputation of a company by weeding out potentially dodgy employees at an early stage in the recruitment process, and saving time for hotel human resources staff - can be significant but are also hard to quantify.
Regional director of human resources, Europe at the Savoy, Eugenio Pirri, says its parent company, the hotel group Fairmont Hotels & Resorts, runs background checks on prospective employees, including checking for a criminal record and verifying employment history.
The screening may also include a credit report, education/certification verification and motor vehicle record check, if appropriate.
"We do the background check to ensure the protection of employees, guests and company property," Pirri says. He adds that Fairmont conducts the background checks in accordance with all local legislation.
"The background check is completed in advance of the new colleague joining the team, so there is no additional time requirement, only the addition of a new step in the recruitment process," he says. "We believe this to be an integral part of our recruitment procedure."
Before the background check is made, consent is first sought from the applicant as part of the offer of employment contract, as well as a separate document where the applicant agrees to participate in the process.
After consent is received the vetting process is done by entering information online. A report on the background check is usually sent to the Savoy within a few weeks.
But the Savoy's background screening hasn't uncovered any nasty surprises, according to Pirri. Should the screening uncover something suspect - information that raises concerns over the ability of the candidate to do the job, or evidence that they have lied in their job application - the director of human resources will contact the candidate to advise them of the results of the check and that they have not met a condition of the offer.
Should the applicant be unable to provide a satisfactory explanation to the background check results, the Savoy's HR director will rescind the job offer, informing the client in writing.
In-depth background screening may not be necessary for all candidates, however. That decision will depend on how important to a company the job is, and whether that employee will have access to finances or budgets in their role.
"I am sceptical about the need for credit checks except if the [employee] is dealing with money and is in a real position of power," says Angela Baron, adviser at the Chartered Institute of Personnel and Development. "Lots of young people graduate from university with huge debts, but will this affect their trustworthiness or their ability to do their job? Probably not."
LABOUR MARKET LIES
Kroll has uncovered both small and whopping untruths when vetting candidates for employers. Some of the more colourful lies include:
â- A candidate said he had been working in the family business for a few years, when in fact he had been in prison. A Kroll media search found out that the candidate had been in prison because he had shared a cell with mass murderer Fred West at some point and on being released sold his story to a newspaper. This was then picked up in a media search.
â- A reference from a previous employer revealed that a candidate had been selling their employer's confidential information during their last three months of employment.
â- A candidate faked a letter from her school which confirmed all her amazing exam grades. Her downfall was faxing the letter from her family's newsagents, so the number and newsagents name were printed on the top of the letter.
â- One candidate screened was applying for a position with financial responsibility, but reference checks revealed the candidate had previously been caught stealing.
INCIDENCE OF FRAUD BY INDUSTRY
|Type of fraudÂ||Incidence in travel, leisure and transportation||Cross-sector average|
|- Theft of physical assets or stock||- 43%||38%|
|- Internal financial fraud or theft||- 28%||19%|
|- Information theft, loss or attack||- 23%||16%|