Ekaterina_Minaeva/Shutterstock.com

The Case For Intense Background Checks For Hires

Research firm Muddy Waters has adopted a distinctive hiring process which relies on outside researchers to poke holes in candidates’ backstories.

Carson Block is a skeptical man. He has made a name (and a good deal of money) finding fraud. Muddy Waters, where he’s director of research, takes short positions in obscure Chinese companies, then publicly releases huge and meticulous research reports of accounting irregularities.

One of his most famous takedowns was Sino-Forest Corp, which saw its shares plunge 74% after Block’s research report was released, and ended up declaring bankruptcy.

But when it came to hiring, Block didn’t have the same skepticism, by his own admission: He doesn’t offer specifics, but he writes in the New York Times (paywall) about having made several serious mistakes in hiring people who “had impressive pedigrees and had enough cunning and charisma to cover up their dark sides.”

“After incidents where people turned out to be less than truthful with me, it became clear that the conventional internal screening process was not enough to weed out potentially dangerous candidates that wear disguises very well, and have nefarious motives for wanting to work with us,” Block explained to Quartz in an email. He said he was heavily influenced by the book Snakes in Suits: When Psychopaths go to Work, which he said “lays bare the all-too-common problem of charismatic people who are harmful to an organization being hired. Psychopathic personalities can be a very significant risk.”

That means a lot for a firm like Block’s, which has relatively few—less than 10—employees. To avoid such hires, Muddy Waters has adopted a distinctive hiring process which relies on outside researchers to poke holes in candidates’ backstories, much as the firm does with companies’ financial statements. Block describes the rationale behind his approachat Dealbook (paywall):

I have since realized that I’m largely unable to determine the honesty of a job candidate at the same time I’m trying to judge that person’s potential to contribute and fit in. This is not a shortcoming. Testing for chinks in someone’s armor is not only fundamentally different from developing a rapport with someone, it’s antithetical.

To avoid mistakes caused by this disconnect, Block doesn’t just run background checks; he outsources the process of looking for holes in candidates’ accounts of themselves, and he prolongs the hiring process to allow for more diligence. “One can find outside experts to look for signs of deception, hidden agendas, and potential psychological issues that a candidate might have,” Block tells Quartz.

While hiring outside consultants to vet candidates is probably a bit extreme, unless you’re hiring some very expensive people, Block has an important point. People lie on resumes and in interviews very frequently.

Mike Cassidy, the director of Google’s Project Loon internet balloon program, is another advocate of the independent third-party check. Rather than calling the references provided by a candidate, who are likely aware of the coming call, he recommends calling other people who know the candidate, to get a less biased view and to check up on specific claims or a track record.

Another increasingly common technique is asking for a work sample, or conducting a sort of tryout. It’s easy enough to pad the truth on a resume, but much more difficult to fake actually being able to do a job. Work samples have also been found to be one of the most reliable predictors of performance on the job.

There’s still the possibility of fraud, or of the sorts of bad hires Block refers to. But a rigorous hiring process and a healthy dose of skepticism can go a long way towards reducing it.

(Image via Ekaterina_Minaeva/Shutterstock.com)

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.