11.2% of Student Loan Recipients Aren’t Career Worthy

Eleven point two percent of you are going to be angry at me for saying this but it has to be said.  Eleven point two percent of you will cry foul, unfriend me on Facebook, block me on Twitter [Shameless self-promotion goes here: @SteveOzanCFE], and block me from your feed in LinkedIn.  Eleven point two percent of you may even hate me for the rest of my natural life [which if we’re going by statistics should be approximately another 48.7 years].

That’s because according to The Wall Street Journal 11.2 percent of you are not paying your student loans on time (http://goo.gl/26ZL3).   Which, is none of my business, I’m not your financial planner or your credit score, I won’t be there to hold your hand when you get a car loan [let’s be honest no one’s getting mortgages right now].  What you decide to do with your money is your own business;  except when it’s not.

It’s not just your prerogative when you go out to apply for the first good job that’s in your field to start your career, the one that you’ve been working towards since junior high school [or for you not as driven during the last semester at college].  That’s because when you go to apply for that job, especially in such a difficult market, you need more than a perfect resume’ and cover letter, and a flawless interview where you walk with the interviewer patting your back.  You need to also pass the background check and drug test.

If you can’t pass the drug test I don’t really understand what you’re doing reading this blog or what you thought was going to happen when you got a job offer and they asked you to pee into a cup or draw blood for analysis.

The background check, more likely than not for a position worth having, is going to have a credit check section.  Goldbeck Recruiting website sites that 91% of companies polled check credit worthiness for a position dealing with financials and 46% check credit worthiness for CFO and CEO positions (http://goo.gl/vEZib).  46% seems low considering you’re handing over the financial information for the entire corporation, a lot more damage can be done at the top than an accountant can do on their own [Enron, WorldCom, and on and on].

The reason given most often for the credit check is simple enough; if the company is going to allow the employee to make financial decisions for them they want to make ensure the person’s own house is in order before they allow the potential employee to make the same type of decisions for a much larger, more complex organization.  If you can’t balance your own check book should you be an accountant manager at a major Fortune 500 company? I’d like to think not.

However, my (and plenty of others) reasoning goes far beyond the cursory check to make sure they can do the job.  To the fraud investigator it is a matter of will they do their job?  If 11.2% of you out there aren’t paying your student loans on time the collectors are going to start calling you.  If they can’t work something out with you (and in these cases it doesn’t seem that they have) then they start to call other people you know.  This risk of outing your own financial irresponsibility is a huge weight on anyone’s shoulders.  It’s also part of the fraud triangle.

Creesey’s Fraud Triangle requires there to be a “need” that cannot be shared by the fraudster.  If they’re behind on their student loan payments, creditors are calling them-demanding payment, and they can’t claim bankruptcy to avoid the payments of these loans the fraudster may feel as if there’s no other choice but to take advantage of the position they are given.  I said may, it’s not a certainty that the person with a bad credit score and non-payment of student loans is going to for certain steal from their employer but in the job market in it’s current state of bloodletting there are other applicants out there that don’t have that problem [the  other 88.8%].

There’s plenty of backlash against this type of screening as Catherine Dunn at Law.com points out here (http://goo.gl/LnJyA) that certain states are placing a ban or at the very least a barrier to the implementing of wide spread credit checks before employment.

This view however is short sighted in the fact it’s not addressing the real problems involved with this issue at all.  When you look at the problem, it’s the inability of young professionals to pay off their enormous student loan debt that they took on to get the education they sought out to get these jobs and the ever increasing cost of such an education coupled with the Great Recession to make those positions exceedingly sparse for the new graduates to obtain.

Those are the problems at hand.  Not the screening of job applicants for financial responsibility, something that is necessary for their current roles they seek.  Law makers would do better addressing the skyrocketing cost of education and the job markets over clamping down on the screening of applicants for the few positions out there as it’s an effective tool to reduce the amount of potential fraudsters within the ranks of potential employees.

For those still seeking employment it’s not a place that is enviable, choosing between cutting back on essentials and paying for student loans.  Have your priorities in order however as a quick solution may end up costing you as a job seeker much more in the long run if you miss out on the job opportunity you’ve been seeking for so long.

Two Week Vacations; Pro-Innovation & Anti-Fraud

Two week vacations are good for you and your employer.  I don’t suggest running up to the CEO and telling him this yourself, but there’s been lots of recent research has shown the benefits for both parties involved.  If you’re lucky your boss reads this blog [since Saudi Arabia’s defense ministry, India’s parliament, and criminals inAustralia already do].

First let’s address the positives of an extended vacation for the employee.  Not that long ago The Economist (http://tinyurl.com/3j3vwtw) discussed employees  on sabbatical that were encouraged to travel during their time away and came up with an assortment of amazing ideas that were able to improve their company’s business model:

Marc Benioff got the idea for Salesforce.com by looking at enterprise software through the prism of online businesses such as Amazon and eBay…  Salesforce.com is now worth $19 billion…  Mr. Benioff had his lucrative epiphany while on sabbatical—swimming with dolphins.

So for the employee they are able to get out of the office, explore the world at large, and come back to their office rejuvenated with ideas that occurred to them naturally outside of the workplace when they were able to reflect upon what could be improved and implemented.  This type of innovation is vital to staying ahead of the competition and avoiding stagnation, something your company and you both want to avoid.

However there are plenty of arguments against giving all your employees that much time off if you simply want them to come back with fresh new ideas.  If the lowest man on the totem pole at your company is begging for an extended amount of time off to infuse new ideas into the business platform this may be troublesome since the mail still needs to be delivered, the trash needs picked up, the phones need answered, and so on.

That being said the second, and honestly more important reason, to have employees stay away from work for an extended amount of time (two weeks or so) on a yearly basis is it works as an excellent means to detect potential fraud.

Take a look at Jérôme Kerviel, (http://tinyurl.com/4x5zmry) someone who was able to commit a seven billion [you read that right… Billion] dollar fraud against Societe Generale, the second largest banking institution inFrance.

Kerviel previously worked in the back office area of the bank, learning the bank’s internal controls to prevent fraud; then stepped out of the back office and onto the trading floor where he, while never missing work, was able to commit the largest bank fraud on record.

Jonathan Marciano with Ernst & Young points out (http://tinyurl.com/3vehn2j)

“The profile of a typical fraudster is a long serving, trusted employee, who works long hours and is reluctant to take their annual leave. Without doubt, one of the most simple and cost-effective anti-fraud measures is to ensure employees take at least two consecutive weeks holiday.”

The fraudster that is always present, always working through vacations, sickness, and family emergencies is able to cover up their tracks far better than the an equally dedicated employee who every summer takes two weeks off to go swim with dolphins with their friends and family before coming back with new ideas on a business model that could revolutionize your business model.

While the employee is out of the office it allows for the employer to review their transactions, review their processes, and research any issues that may have come up over the course of the last year.  Does something seem suspicious or out of place?  Was a guideline overlooked? Was something that appears to be a mistake end up costing the company a substantial amount of money? If so did anyone else benefit from this type of “mistake”?

As the employer this needs to be investigated by a skilled risk management professional who can make an assessment of the person while they are not there to potentially cover up their footprints.

I agree with Ernst and Young’s suggestion to make sure that employees are out of the office for an extended amount of time once a year to allow for the risk management team to ensure that the employee isn’t taking unnecessary risks with the company’s capital or robbing the company blind.

However, I feel the need to add a specific caveat to this policy.  If the employer only requires that the employee take two weeks off sometime during the year the fraudster can act accordingly as well.  The fraudster simply takes the last two weeks at the end of one year and the first two weeks of the next year.  The fraudster is then able to work, without being questioned for the next two years straight [practically] before having to take more time off, plenty of time to commit whatever fraud they have planned [and then some].

Therefore, it is vital that the employer makes the employee take off the extended amount of time during the same time of year each year.  Without doing so the company is still opening itself up to unnecessary risks and worst of all the fraudster-employee has a month head start running from prosecution while still on the company’s pay roll in theory.

So go out and enjoy the last of your summer.  Return with new, insightful ideas of how to revolutionize your business model.  While you’re away the company will know what a dedicated employee you truly are, and both you and your employer can finish the year strong.

 

“Take the Money and Run” (and 24) VS. The Reid Technique and Reality

Super Agent Jack Bauer (Kiefer Sutherland, “24”) threatens the subject by telling him if he does not give him the information needed, and all of it, he will cram a wet towel down the subject’s throat.  Eventually it will start to clot with the esophagus and be ripped out, taking the lining of the person’s throat with them.

This would get someone to talk.  This may not get them to say the truth, but people are going to talk to save themselves from that type of horrific pain [I can only assume].  However, this post is not about the morality of torture, and whether it’s better to harm one person to save the lives of millions [that’s been done plenty since September 11, 2001].

This blog post is focusing on interrogation techniques and how they can’t be applied appropriately in “Take the Money & Run” (or “24”).  In “Take the Money and Run” two contestants are given $100,000 in a briefcase and are given an hour to hide it.  After the hour is up the investigators (two interrogators and two field officers) try to find the missing briefcase within 48 hours.  Winner gets the cash while the loser gets nothing.  (http://abc.go.com/shows/take-the-money-and-run).

The rules (http://abc.go.com/shows/take-the-money-and-run/faq/) state that the contestants must stay together during the hour they have to hide the briefcase and that after that the contestants will be held for 48 hours where they will be questioned.  Additionally:

“The contestant must answer the questions they are asked and may not use an answer that is gibberish or impossible. In exchange for having to do that, they may lie and be as creative as they like about it, as long as it is plausible.”

Since the “Take the Money and Run” contestants have to talk or they are disqualified they are compelled to say something.    However, they haven’t committed any crime and they know at their core that this is a game.  Since it is a game the contestants won’t react the same way as a criminal would in a real interrogation [24 is not a real interrogation anymore than Harry Potter is like real high school].

The Reid technique of interrogation (http://www.reid.com/) is a systematic approach to questioning a real suspect, and an effective one at that.

The Reid Technique of interrogation consists of essentially three steps.  (1) Custody and isolation.  (2) Confrontation (i.e., the suspect’s guilt is assumed), and (3) minimization (i.e., the interrogator tries to gain the suspect’s trust and provides face-saving excuses for the crime).”

Now take the situations in “24” and “Take the Money and Run”.

(1) Both shows provide custody and isolation.  For “Take the Money and Run” the subjects are incarcerated.  In “24” Jack Bauer is holding the suspect down and otherwise is all alone.

(2) Confrontation.  “Take the Money and Run” loses the upper hand here since the interrogators know the contestants did it but there is no actual guilt involved.  No crime has taken place.  So as the interrogators dig in and ratchet the guilt up, the contestants don’t comply with the necessary emotional leverage that a true suspect would be compelled to show.

In “24” there’s a lot of assuming of guilt, Bauer is going to throttled the guy if he doesn’t start talking, the bad guy knows he has something to hide, his only decision is whether to lie or tell the truth.

(3) Minimization is the crux of the Reid technique.  This is where all your time and energy placed into the investigation will pay off.  If this were a true interrogation instead of a mock execution (24) or mock interrogation (Take the Money and Run) this is where the interrogator can finally start to, metaphorically, dig their screws into the subject.

The Reid technique teaches interrogators that all this lying and deceit is unnatural for the body’s homeostasis; it wants to be released BUT the criminal doesn’t want to come out and say they are a horrible human being.  This dichotomy is what sets up how you proceed.  Instead of allowing the interrogated subject to deny the claims of guilt you give them an escape hatch for example:

(a) They committed the arson but didn’t know anyone was inside, they didn’t mean to kill the person – or –

(b) They were fighting with the person and the victim ended up killed, it wasn’t planned or anything

It downplays the motive and in effect allows the subject to agree to the fact that they committed the crime in return.  It’s a beautiful thing and works extremely well.

By this point in time “24” has given up on any resemblance to an interrogation. [It’s exciting TV but nothing else; please remember that people.]

However in “Take the Money and Run” the interrogators are never achieving the same type of leverage.  No one is going to feel bad about playing a game and hiding $100,000.  People may feel bad about lying to another person, but when it doesn’t involve an actual misdeed it doesn’t react the same way in the body and it’s not going to get a reaction that’s quite as strong.

Additionally instead of trying to get a confession and from that confession the details of the crime (like where the briefcase is) everyone involved knows that the person did it and they only have to hide the where for 48 hours.  The interrogation could go something like this:

Interrogator: “I think you took the money to help pay for your kids college, everyone will understand that, the market’s are bad, school’s expensive, and you want the best for your family, that’s why you took the briefcase.”

Interrogated: “Yes that’s why I did it.”

Interrogator: “….”

See when you take out enough of the context of the criminal investigation and have to supplant it with rules and remove any motive the investigation in and of it can’t be as successful.

In a real life situation these interrogations would work themselves out completely differently.

Jack Bauer would be pulled from the field and fired [sorry Mom and Dad but its true].

In a real-life situation where there was fraud or theft you have a situation where the suspects are most likely not going to talk without a lawyer, there’s no upside.  Chances are high that if they’re running with $100,000 in a briefcase this isn’t their first time in custody and they are well aware of the pitfalls involved with speaking with the police.

If they did however speak to the investigators the interrogation techniques described could work.  You can make the subject feel guilty about the money that was taken [for all they know it was going to an orphanage inSomaliathat was going to feed the children harmed by the famine].

The investigator can lie all they want and so can the subject; that is compelling.  However “Take the Money and Run” is not that show, it’s a great premise that can’t be executed.  The investigators aren’t able to play with their best tools (Reid Technique) and can’t play off the suspects true underlying emotions since the money they’re hiding is ABC’s.