“Corruption is the enemy of development,” said Pratibha Patil, an Indian politician who, ironically, was accused of misusing government funds several times throughout her tenure. In industry, making ethical claims is no rare event, but proving their validity can be a far more difficult task. Corruption really is the enemy of development, especially in business and especially when you’re trying to enter an emerging international market. You’re going to need to hire executives abroad, and those executives are going to have almost autonomous control of your business dealings there. Hire the right people and your business will flourish. Hire wrong, and internal corruption could put you at odds with the Foreign Corrupt Practices Act (FCPA), resulting in major consequences that could potentially be avoided with a more thorough vetting of employees abroad.
You might never meet that executive you want to hire face-to-face, but you are still going to be responsible for everything they do on behalf of your company. Leveraging Remote Risk Assessment (RRA®) allows people hiring in foreign markets to assess human risk levels so they can avoid running afoul of the FCPA—and being on the hook for millions of dollars in fines due to unethical employees.
Challenges to Hiring in Foreign Markets
Our economy is becoming increasingly global. It’s not just large, multi-national corporations that need to hire overseas anymore, but also mid-sized businesses expanding out of the US for the first time, and even smaller online start-ups. About one-fourth of US based companies report that they’ve hired workers from outside the US, and that number is only expected to grow.
But hiring overseas isn’t as easy as hiring domestically. Information may not be as accessible in emerging markets as it is in existing ones. In the US, it’s relatively easy to get basic information like arrest records and credit checks for workers. In Brazil, India, China, and Russia, you’ll deal with an entirely new set of regulations as well as regions that might not have any electronic records at all. Gathering the information for a background check in these markets is time consuming and expensive. Furthermore, background checks don’t tell you that someone has never committed a crime, they only tell you that someone has never been convicted of a crime.
Consider the recent case of Embraer, an aircraft company based in Brazil. Embraer employees paid out bribes to government officials in several countries through third parties over a period of six years. Embraer has now entered an agreement to pay $205 million in fines to the Justice Department and the SEC, and is still facing litigation in India for similar bribery and graft complaints.
It is crucial to note that Embraer isn’t corrupt at every level. The fines the company now faces are related to the actions of a few key employees and third party agents who chose to act irresponsibly. These employees and agents underwent all the standard vetting processes any Embraer employee goes through. No ethical company would hire people who had a history of bribing government officials, and even background checks couldn’t have shown Embraer that the people ultimately involved in the corruption would engage in unethical practices in the future.
Most people don’t start out committing big crimes. They get away with smaller ones for years, getting a bit bolder and a bit more confident each time until they ultimately cost their employers $205 million in fines for violating the FCPA. The issue that companies now face is that, while they can demand their employees act ethically in foreign countries, they have no way to ensure this will ultimately happen. Background checks simply cannot predict how likely this is to happen. However, new breakthroughs in technology now offer a solution in the form of Remote Risk Assessment (RRA).
Using RRA to Pre-Screen Applicants in Emerging Markets
When screening applicants overseas, most companies complete a phone interview before moving forward with the full interview, but these phone interviews are often treated as a formality. The screener asks about the person’s skills and experience to see if they’re a good technical fit for the position. Questions may be asked about ethics, but unlike technical questions, the hiring manager can’t gauge the accuracy of the applicant’s answers to such inquiries with any real certainty.
When it comes to ethics, it can be tempting for the potential employee to say what they know the interviewer wants to hear. Asking the question, “Have you ever bribed a government official to get a contract?” is going to get a ‘no’ from every single applicant, so hiring managers don’t ask questions like that. After all, the hiring manager isn’t going to be able to assess the honesty of that answer—but RRA technology can.
RRA can gauge the risk of a candidate based on closed-ended questions. This technology uses automated telephone interviews, combined with targeted closed-ended questions to pre-screen applicants. When applicants answer yes or no to the various questions presented, biometric voice analysis is used to determine the level of human risk. This way, hiring managers can allocate more investigatory resources for candidates who show a higher amount of risk.
This is something that can be done quickly and on a large scale, meaning that hiring managers can move candidates through the interview process more efficiently. It’s a way to rapidly expand into emerging markets where time is of the essence, while still performing the due diligence your organization needs to in order to stay in compliance with the FCPA.
Your foreign employees are an extension of you, which means you’re responsible for everything they do. When you’re dealing with emerging markets where business and competition is constantly expanding, you need to be able to hire people who are responsible and ethical and you need to be able to do so quickly. AC Global Risk offers RRA services so you can screen applicants and stay in compliance with the FCPA. Our technology can be used as a decision support tool, in any language, and can screen multiple applicants at once. This means you can expand your business into emerging markets quickly, while minimizing your human risk factors, especially in relation to the FCPA. Contact us for more information on using RRA to support your overseas hiring.