Recipes for the CFO: How the Books are Cooked! Chapter 3

Welcome to TishTrek - THE JOB BLOG!

Corporate Quote for the Day: "People who fail to live leader behaviors at home will not live them in the office... or anywhere else for that matter". - Tish

One day a global company sent out a $36,000 accounts payable check which represented a 25% fee on a $144,000 base salary for a Sr. Program Management position filled by the in-house corporate recruiter assigned to the Information Technology Applications Department. The check was returned to the Human Resources department because the post office box was no longer in service. The Director of Staffing executed a good faith effort to reach out to the vendor this check was payable to.

To the stunned disappointment of company management, it was discovered that the address associated with the PO box belonged to the company’s Sr. Vice President of Applications Development. He was in business with six members of his department and an in-house recruiter. It was a staggering wake up call to find out these employees had profited to the tune of hundreds of thousands of dollars over a four year period.

Worse yet, the employment candidates hired by this team also profited. It was later discovered that this troop of professionals had traveled in packs throughout their career and - in fact - had executed the same deceptive plan at their last employer where they had worked in the IT department of a NY hospital.

And here's an important kicker: The Employee Referral Program, which paid employees $5,000 for referrals that were hired, wasn't profitable enough. Instead of referring & hiring their candidates through this legitimate corporate staffing program, they concocted the more lucrative bogus/ fake employment agency plan.

These crooks killed cost-per-hire statistics and wasted the time of a lot of people. Recruiters and the external employment agencies who were out there working daily to deliver high caliber candidates had no clue that their candidates never had a chance to be hired by these decision makers & cheats inside the firm.

Think about this: Qualified candidates who arrived at this Fortune 500 company directly, through the employee referral program or from employment agencies not tied to these hiring managers took the time to dress, commute and interview with decision-makers on a hiring team who never intended to actually assess their skills or hire them.

If you believe that every candidate is a potential client or decision-maker of your products, services and market offerings, then you have a responsibility to take every step to protect their interests. Honoring the tenets of equal employment opportunity is a corporate priority across America, so all companies must work to keep candidates from being adversely impacted or rejected in a staffing process for reasons not tied to their skills, competencies, background, experience and credentials.

Kroll International, a white collar investigative firm based in NYC, helped this company solve this crime. Their experts informed company executives that these people often change company names, addresses, and contact information because they are not only in the business of cheating your company, but the tax man too.

In the end, the company ramped up it's vendor management processes and ran Dun & Bradstreet reports on every company paid an employment agency fee over a 4 year period. They also investigated all silent limited partners behind the person or people who carried the 51% ownership stake in each firm. This small step helped lead them to some of the shell companies used to execute these crimes and to the invisable faces profiting.

The company actually stopped executing business with staffing vendors whose invoices and resumes were tied only to PO boxes, (i.e. with no legitimate street addresses or facilities tied to them). This situation played out several years ago, so the challenge now is this: In our evolving age of remote technology, executing business through e-mail and cell phones has become so commonplace that it actually compromises a company's ability to flag any number of suspicious activities on the front-end. That's why vigilance and a complete commitment to world class processes on the back-end of your vendor management programs are more important than ever.

If you manage employees who are doing such things inside your company, then you are accountable. Lax and/or chaotic staffing standards, processes and transactional procedures cannot be an option. Every company owns the responsibility to mitigate risks that deny great employment candidates and high quality vendor partners the legitimate opportunity to compete. The success of your company depends on the programs that generate revenues and protect assets. Are you satisfied that you are doing well in all these areas?

Good Luck!

Best regards,
TishTrek