Business & Employee Background Checks – Know Your Partners, Employees & Vendors.

fingerprints

If you run a business, you have lots of worries.  Aside from the normal concerns like competition, pricing, R&D/marketing, location and customer service,  security issues  have become increasingly important.   Instinct can only take a business owner so far in assessing the work relationships in which he becomes involved.   A businessperson can run up against:

  • Employees with compromised criminal/civil litigation histories
  • Prospective partners who are less than truthful about their business (and related personal – divorce, child support, etc.) histories
  • Theft
  • Fraud
  • Embezzlement
  • Scams
  • Unscrupulous suppliers/subcontractors

In looking at the statistics of employee theft alone:

“In a recent [2014] survey of small businesses, a University of Cincinnati criminal justice researcher has found that only 16 percent of those that have experienced theft by employees actually reported that theft to the police.

That’s even though 64 percent of the small businesses surveyed reported experiencing employee theft.”

Increasingly, security tech companies pitch IT monitoring systems and control to business owners as the most effective means of controlling today’s work environment as it relates to corporate crime.  Now let’s look at the reality:

detection

The vast majority of business thefts, embezzlements and frauds are uncovered by tips, audits and by accident. Accepting these statistics as fact borne over time, what does the employer do proactively and reactively with workplace crimes?

Employee Background Checks Provide the Answer

Certainly there are many free online tools of which prospective employers can avail themselves to research their employees backgrounds, but such a search should just be a cursory check, pre-hire. Working with an experienced investigator will yield formerly-hidden information as the professional background checker knows what to look for and where to look for it  – often in databases that are not easily available to the general public and through a process of key data analysis that can only be borne of experience, inclination and talent.

Here are the types of things a business owner can and should be looking into for the protection of his business:

Criminal Background Checks

Any time your business is dealing with someone you don’t know, you should run a quick check to see if they have any history of criminal activity. It’s very simple to find out about criminal records, FBI records, prison records and sex offender status.  There is access to their entire criminal history if there is one. With violence in the workplace such a major issue, a simple criminal check can be a very effective way to avoid problems before they happen.

Background Check for Employment (Pre-Employment Screening)

If you’ve got a small business, you should be pre-screening each person you consider hiring. No matter how professional, or how harmless, they appear.

A small print shop franchise in Florida hired an especially friendly fellow as their bookkeeper after the owner got too busy to handle it himself. The new employee didn’t offer much in the way of references but he sounded like he knew what he was doing and – big plus – he agreed to work cheap. The owner figured he would save money hiring the guy. He figured wrong.

The bookkeeper drained more than a hundred thousand dollars out of the company before they found him out. Turned out he’d previously been charged with embezzlement.  This is something a criminal background check would have quickly turned up. (Tip: Your investigator should know the positions sought by would-be new hires.  If a crime is directly related to the employee’s duties, [e.g., previous theft charges/accounts payable job], that history would certainly be a direct factor in the hiring decision.)

Background Check Existing Employees – Make it a Condition of Employment

You shouldn’t check only new hires. Over time, employees can develop habits and get involved in activities you’d never suspect. So you should regularly check on existing employees. Note: this is something you should get legal advice for – but generally if it’s a condition of employment and you let them know in writing, it’s not invading privacy. You entrust employees with company funds or materials that can be stolen, or negotiating and purchasing power that can be abused. Keeping an eye on existing employees is just being prudent.

Run a Background Check on Each Company or Individual You Do Business With

You should investigate every supplier or contractor who serves your business. If the possibility of harm exists, then you need to know if someone you’re in business with is likely to harm you. You can check credit, check backgrounds of the owners and managers, check the company itself for any past criminal or questionable activity.

Run a Background Check on Each Partner With Which You Intend Do Business.

Here at BNI we’ve worked with numerous matters involving prospective and current business partners.  Our clients come to a realization during our investigations that either the partner is upstanding or s/he is seeking a working relationship that is covertly dishonest due to personal and professional issues, (i.e., expensive divorces, costly child support litigation, past debt, etc.)  Especially those who are very close to your business  – your means of support –  should be thoroughly vetted and, moreso after the partnership is active and red flags begin to appear.  Our intent and focus during partnership investigations are on collecting information that can be used in potential criminal and civil litigation.

I’m not relating anything in this post that you, as the business owner, have not already considered or experienced but I’ll add the important point that with today’s tech tools, conducting this type of business due diligence is cost-effective and results-effective and is easily set up on an as-needed scheduling basis.

Given the increasing transiency and mobility of our work relationships, it is smart to proactively protect your business, rather than the latter, often very expensive clean-up required in the aftermath of personnel failure.

BNI Operatives: Situationally aware.

As always, be safe.

When Partnerships Go Bad: Recognize the Signs & Take Proactive Steps

partnership break
(A compilation effort with the permission of businesshowto.com.) 

If you’re in a business partnership or a longstanding working relationship that isn’t working, ask yourself these questions. Then, if you need to change or end the partnership, we’ll provide you with a short to-do checklist towards that end. 

A client, we’ll call her Linda, had a business that was struggling financially and operationally. She was totally disgusted because her partner of  several years was no longer carrying his weight and didn’t seem to understand the gravity of the situation. She was stressed at the continued havoc that this partnership was causing in nearly every aspect of her life.

What to do? Her realized that her first commitment had to be to herself. Linda had to take command of this situation. She decided she wanted to give the business and her partner one last chance.

She created Job Roles for herself, her partner and each of her staff. Because of the longstanding relationship between her and her partner, we agreed it was best if a qualified consultant meet with the partner and her to present things up to this point.  NOTE: Using a third-party (like an attorney or mediator) can offer a different perspective to a known problem.

The partner was cordial and listened politely, as had been expected. But, of course, he didn’t really GET IT that things had to change. Linda gave it four months under the new plan. Unfortunately, she had to bite the bullet and make the decision to end the partnership.  Linda realized that with several changes to the business operating methods,  she didn’t actually need a partner. She had been carrying the business alone for several years anyway.

If you can answer yes to one or more of the following it may be time to take command of your business and make the necessary changes.
  • You’re feeling like you’re carrying more than your share of the work.
  • Your partner seems to have lost interest in the business.
  • You find more and more to disagree about.
  • There have been changes in your partner’s life that are interfering with his ability to function in the business.
  • Your interest in the direction of the business is different from that of your partner.

In Linda’s case, she had been performing nearly 100% of the work towards the end of the partnership, her partner had been unfocused for quite a while and he had allowed an enormous amount of drama occurring in his personal life (ex-wife divorce and child custody issues, an inexplicably rapidly formed new relationship, losing decades-long friendships with several close friends, etc.) to spill over into the business.   Although well-experienced with personality changes in people, the level of disconnect that the partner had to the business and the welfare it provided for Linda and other employees was shocking even to us.  Finally, he made the gross mistake of insisting on hiring his unqualified new girlfriend – in a position that required unimpeachable skills and confidentiality.  That’s when Linda finally realized that the partnership was truly over.   He’d simply lost his perspective on the type services that the company provided – those requiring absolute trust.

Here are the steps I suggest you take if you’re seriously considering making changes to your partnership arrangement:

1. Review your Partnership Agreement.

Your partnership may exist in the form of a Partnership or a Corporation. Either way, you have a legal entity that binds the two of you.

Have your attorney review your documents and tell you exactly where you stand from a legal perspective. This is important so you will know your limitations as you begin to plan.

If you have a written agreement about Roles and Responsibilities for each of you, assess whether it is still appropriate or needs to be updated.

2. Decide and document exactly what you want for your business and yourself.

Being in a state of dissatisfaction is the spur that will get you to take action. But you don’t want to take action until you’ve thought through exactly what you’re trying to achieve. Consider probable and possible outcomes for different scenarios to help you finalize a plan.

3. Create and write a plan to accomplish your goals.

The most positive thing you can do is create a plan for yourself and the business as you see it and be prepared to present that to your partner. If dissolving the business is in your plan, be prepared with both the reasons you want to leave…and what you plan to do in the future. You’re not just leaving the business; you’re going into something else.

4. Schedule a time to “talk business” with your partner.

A change of venue from your typical meeting might be helpful. Sitting down over lunch or coffee could be a good place to start.

Be prepared for whatever response comes back to you. It can be anywhere from thankful to downright hostile. It will likely require some time for your partner to think through the ramifications of your proposal. Be forewarned; it’s very difficult for people to make changes unless not making changes will jeopardize something of value to them. The bottom line is you don’t want to back down from what you want. Compromise only if you’re still OK with the terms.

If your partner is looking for an excuse to blame you for the ills of the business, you may hear about it when you bring up the subject. I know it’s tempting, but be careful not to get into a blaming match. The objective is to present what you want for the business and yourself, and your plan to make it happen. Outlining how you see their role in the business is totally appropriate. Then it’s up to them to agree or respond with another suitable option.

5. Be willing to walk away.

If you cannot come to terms, or if you do and the partner does not keep his agreement, you must be prepared for a change in business status. You may decide to close the doors, sell the business, sell your share to the partner, buy him out or any other option that will allow you to move forward with YOUR plan.

We all know it’s not easy to give up on something you’ve worked so long and hard to achieve. It’s a lot like a marriage that’s gone bad. At some point, however, you have to make the decision not to be the victim of circumstances any longer and make your move to position yourself for a better future.

On a final note: have a thorough assets search (personally and professionally) conducted. Linda found out that her now former partner had actually not followed through on many business aspects she’d thought performed and had also converted important assets to himself.

Good luck with your decisions and the outcome.

BNI Operatives: Street smart; info savvy.

As always, stay safe.