January 2006
Seven Steps To Hiring Honest Employees By James W. Bassett

Lucille Thomas, owner of Sunrise Lawn and Garden had a problem. The anonymous caller said, “Employees are stealing from your store. They’re not ringing the sales and keeping the money.” When Lucille asked for more information, the caller hung up. That night after work, Lucille and her husband inventoried the store and found a large inventory shortage.

Lucille had experienced employee theft problems before. She knew she had to do something before the shortage spiraled out of control. She knew other small-business owners were forced into bankruptcy because they ignored employee theft problems.

Lucille had each of her 15 employees complete an investigative questionnaire for shortages. Analysis of the questionnaires pointed to three employees as strong suspects. One of the employees overheard Lucille talking on the phone to a professional investigator. They were agreeing on a date for the investigator to come to the store and interview the employees. Lucille was saying, “We know who is stealing, and we want them put in jail.”

The overheard phone call became a rumor. When two of the suspects heard about it, they quit on the spot. The third suspect quit when the investigator walked in the door. Lucille got rid of the thieves but was unable to recover any of her loss. She wondered if there might be a better way to deal with employee theft problems.

Screening Prevents Theft

The better way to handle employee theft problems is to prevent them from occurring by identifying dishonest applicants before they’re hired. Applicant screening is critical to your profitability. Less employee theft is just one benefit; reduced turnover, better job performance, less absenteeism and better customer service are the larger benefits gained from applicant screening.

Brief History Of A Bad Hire. Jean was recommended for employment by one of Lucille Thomas’s best friends. Lucille knew she should have done more to check Jean’s background, but winter had just turned to spring and two employees had just quit. So Lucille simply looked over the application, saw no glaring problems and offered her a job.

Hire The Best Candidate Quickly. The best candidates don’t stay unemployed long. They are usually in the running for several jobs at the same time. If you can offer employment to top candidates quickly, you can hire more of the best. The key is to utilize the right screening tools in the right sequence.

Gathering Information About Applicants. There are two basic sources of information about job applicants.

  • The first is the applicants themselves. Take the right ap-proach, and applicants will divulge much of the information you’re looking for. What they tell you Á about themselves will cause you to advance them on the list of potential employees or eliminate them from consideration.
  • The second is outside sources, including criminal record checks, credit reports, drug tests, and work and personal references. This type of information is often more difficult and time-consuming to obtain.

Seven Easy Steps

These seven steps will help you hire the best, most-honest employees.

1 Have each applicant complete a thorough employment application. All employment applications are not created equal! A thorough employment application is worth more than its weight in gold. Your employment application provides your first look at applicants — who they are, where they’ve worked and much more. Most employment applications are incomplete; they fail to ask all the necessary questions.

2Give the applicant an “answer truthfully” pitch. Job applicants are more likely to answer your employment application questions truthfully if you tell them why they should. Instead of saying, “Here, fill out this application,” say something like: “Sarah, I’d like you to fill out this employment application. Please take your time. Make sure your answers are true, correct and complete. Every one of your answers will be checked for accuracy. Be sure to list every job you’ve held in the past five years, including temporary and part-time jobs. Make sure you list the true reasons for leaving each one. If you have been convicted of any criminal offenses, list those too. We have hired many people with criminal records, but only when they were truthful about them. You don’t have to be a perfect person to work here. You didn’t see any employees with halos over their heads when you walked in here, did you?”

Will this pitch magically persuade every applicant to answer every question on the application truthfully? Of course not, but your applicants will give you more truthful answers with this pitch than without it. You may be amazed with what you learn from a comprehensive employment application presented to your applicants with an “answer truthfully” pitch.

3Have the applicant take a pre-employment honesty test. A good pre-employment honesty test will tell you much more than the applicant’s propensity to steal from your company. You can administer the test on site during the applicant’s first visit to your company. Internet scoring yields test results in minutes. These tests are especially important if you hire young people because young applicants have limited employment histories, no credit histories and no adult criminal records because they are not adults. The best pre-employment honesty tests include :

  • Questions that evaluate the applicant’s likelihood to steal in three different ways: by theft admissions, theft attitudes and behavior in hypothetical theft situations.
  • Questions about other areas predictive of employee suitability: work attitudes, work history, customer service attitudes, current alcohol and drug use and undetected crimes.
  • Validity scales to identify those Á applicants trying to “beat the test” by answering falsely to make themselves look like saints.
  • An individualized post-test interview worksheet included along with the test scores. The worksheet lists key questions answered incorrectly with suggested follow-up questions. The follow-up questions will help you evaluate the seriousness of admissions made on the test, make sure you ask all the important questions, which will help you improve your interviewing skills. You can incorporate these follow-up questions into your applicant’s first employment interview.

4Interview the applicant. Steps 1, 2 and 3 will wash out most undesirable applicants without any significant investment of your time. Now, interview those still in the running.

Before the interview, review both the application and honesty test results, making notes about answers you want the applicant to explain.

Begin the interview by briefly introducing yourself and your company. Candidly explain the negatives as well as the positives of the job you are seeking to fill. Ask if the applicant is still interested after hearing the job’s negatives. This step is often overlooked but can increase permanency significantly.

Asking the applicant about his or her work history is extremely important. Talk about job duties — those they liked and those they didn’t. Make sure you get specific and complete explanations about why the applicant left each job in the past five years. Make sure they explain any gaps between jobs.

5Conduct a do-it-yourself credit check. With the applicant’s consent, conduct an Internet search under “free credit report.” You can do this in minutes. Print two copies of the applicant’s credit report — one for each of you. Compare the applicant’s starting pay with his or her debts and reasonable living expenses. This comparison will tell whether they can afford to work for you. Employees whose debts and expenses always exceed their income have a perpetual shortfall to make up. Some will try to make up their shortfalls by stealing your merchandise or money.

6Conduct quick and easy criminal record checks. Tell the applicant he or she can expedite the hiring process by stopping at the nearest police station to obtain a copy of his or her own criminal record. Tell the applicant you will reimburse the costs.

Few applicants who have criminal convictions will return with copies of their criminal records. They prefer to seek employment elsewhere. Some states have put criminal records online. Applicants’ criminal records can be accessed free, in minutes. If you have free and immediate access to applicants’ criminal records, move this up to Step 2, as soon as the applicant completes the employment application.

Contrary to popular belief, criminal record checks alone will not insulate your company from negligent hiring lawsuits. You must also document the other steps in your hiring process that made your employee’s assault unforeseeable. These other steps include interview notes, information from references, test results and credit checks.

7Reference checks. Many companies’ personnel offices will provide only minimal information about former employees, such as beginning and ending dates of employment and positions held. If this is all you get, record this information on a reference check form and file it. This file will prove you performed this part of “due diligence.”

Supervisors know their former subordinates well and may be willing to talk to you if they are called. Supervisors also feel obligated to help former employees who did a good job for them.

The Personal Reference section is not the only source for personal references on the applicant’s completed employment application. Here are some common questions found on applications that often yield useful references:

  • Have you ever worked for our company before? If yes, a former supervisor or co-worker can be a great source of information about the applicant.
  • Do you have any friends, relatives or acquaintances who work for our company? Current employees who know the applicant can be very helpful.
  • Have you ever been convicted of a criminal offense as an adult? A “yes” answer may mean the individual is still on probation or parole. If so, the applicant’s parole or probation officer might provide some useful information.
  • How did you find us or how did you hear about this job? If the applicant answers “referral,” “former employee,” “current employee” or even “employment agency,” you get another potential reference source.

    Finally, call the people the applicant names directly as personal references. Some frustrated reference checkers will tell you that personal references will say nothing but good things about the applicant. Not so! Asking the personal reference questions you would ask a work reference can produce interesting results.

    Establishing A Process

    Establish a specific applicant-screening procedure, starting with a comprehensive employment application and a pre-employment honesty test (for one example, go to www.theftstopper.com). Make sure all steps in the hiring process are followed on every applicant.

    Hiring the best will make your life easier and profits bigger. Hiring undesirables will cost you money and make your life miserable. You can reduce employee theft drastically by following these seven easy steps.

    James W. Bassett

    James W. Bassett is president of the James W. Bassett Company in Cincinnati, Ohio. He helps companies make better hiring decisions and consults on employee theft problems. He can be reached by phone at (513) 421-9604 or on the Web at www.theftstopper.com.