Risk Management in Hiring: Problems & Tactics for Effective China Human Resources
- Greg Hallahan, Pacific Strategies & Assessments
Hiring the wrong person can cost your company time and money, as well as possibly resulting in legal problems. This article looks at some common problems employers might face when hiring in China, before identifying a few basic steps a company can take to mitigate these risks.
Dangers:
- Fraud: employee fraud is common throughout China, ranging from one-off episodes of minor ‘opportunistic’ fraud to long-term systematic malfeasance. The stakes can be comparatively low here and fraudsters know that the buoyant job market allows them a good chance of finding work elsewhere. Beware then of candidates with many previous positions on their resume; they may not just be job-hopping in search of a better salary.
- Intellectual Property Theft: every HR manager should be aware of the very real threats facing their company’s valuable trade secrets. High-profile cases of intellectual property infringements are regularly reported in the international media, and many organizations now have protective measures in place. However, significant damage can also be done to a company’s brand on a much smaller scale as well. Company logos and sales materials are commonly available even to relatively junior staff. Have you ensured your new sales associate doesn’t have significant ties to your major rivals?
- Incompetence: though not as obvious a danger, poor performance of new staff due to inexperience is far more common and often has a bigger impact on your company. Dishonesty in resumes is widespread, ranging from slight exaggerations regarding previous job titles to outright lying about educational achievements. Some estimates place around 30% of resumes in China as misrepresenting the facts in some way, with around 5% of all resumes including forged documentation.
- Legal: The enactment of tough international legislation has created an environment where companies must constantly be aware of their compliance requirements, regardless of where they operate. The U.S. Foreign Corrupt Practices Act, Patriot Act and Sarbanes-Oxley Act may mean your company will be liable if you have the misfortune to hire any employees with links to corruption, bribery, international crime or terrorism. It is therefore crucial a recruitment process has the relevant checks built in, in order to prevent this as far as reasonably possible.
- Pre-employment Screening (“PES”): There are several benefits to implementing an effective PES program. A good screening program tends to encourage self-disclosure among applicants and can even lead some suspect applicants to drop out entirely. Furthermore, if presented properly, a screening program can promote a healthy culture of compliance among employees, sending a powerful message to new staff from their first day onwards. This can also help to validate any subsequent training programs on corporate security.
The following are some straightforward PES measures that companies hiring in China could consider implementing:
- Revise your application form: How much information are you currently asking from applicants, other than a resume? Expand your data intake to include more on a candidate’s personal background, including information on their criminal and civil litigation.
- Verify certificates: Ensure you are provided with copies of all degree and qualification certificates and use the certificate numbers to cross-match with the institutions involved (in China, all degrees and qualifications are verified according to the certificate number, not an individual’s ID number).
- Prepare Letters of Authorization: Ask all candidates to sign a waiver that authorizes your company to verify the information provided in their application form. It is possible to verify information without such a waiver, but having one will significantly cut down the time and expense needed to do it.
- Ask for a Certificate of No Criminal Record: All mainland Chinese citizens can apply for such a certificate at their local police station (???) and, provided they have no criminal record within the police force’s national databases, the certificate will be issued free of charge. A candidate can then present the certificate as part of the application process and your human resources department can verify by phoning the police station listed. This check is unfortunately not ideal however, because a candidate must go in person to their hometown police station, which obviously may not be practical in many cases.
- Check passports: If applicable, ask for a copy of the candidate’s passport, including a copy of the page with the most recent exit or entry cachet. No one in China with a criminal conviction can obtain a passport and all passport applicants undergo a public security bureau background investigation. Therefore if someone is a passport holder you can safely assume they have not committed a crime, from their date of birth through to the date of the last entry or exit from China.
- Manage your HR Manager: too many companies – particularly SMEs – leave all of their hiring decisions to their HR manager. In many cases this saves time and money, but can also foster a situation where the manager in question wields tremendous power. In the Chinese labor market, kickbacks and payoffs are still common and HR managers might be expected to help out their network of friends and family. It is therefore wise to ensure any pre-employment screening is done by an outside party with no vested interest in the candidate’s application (either using a third party screening provider or a different division within your company).
Greg Hallahan is the Business Development Manager for the Shanghai office of Pacific Strategies & Assessments (PSA), an Asian-based risk consultancy company. Contact him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . PSA has been performing comprehensive pre-employment screening throughout Asia for almost 10 years now, working with some of the world’s leading firms to screen their new staff. We process thousands of checks every year, ranging from senior executives at global investment banks to junior IT engineers working for local companies. Go to our website at www.psagroup.com.
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