April 15th, 2024 | Sterling
The 2024 HR Roadmap: Identity & Fraud
In the ever-evolving landscape of HR and talent acquisition, staying ahead of the curve is not just a strategic choice; it’s a necessity. And as we enter 2024, the HR landscape continues to transform, presenting new challenges and opportunities for businesses to attract, retain, and develop top talent.
Sterling’s 2024 HR roadmap will be covered across 3 different articles that delves into eight key trends shaping HR and recruitment this year:
1. Identity & Fraud
- Protecting your organisation starts with identity verification
- Building a global Workforce requires accurate screening
- Understand the need to focus on digitalised identity wallets
2. Organisational Culture & Candidate Experience
- Building your company culture through strategic and streamlined hiring
- Enhancing the candidate experience
3. HR Technology and Talent Mobility
- HR technology to enhance workforce capability
- Continual vigilance vs staff moonlighting
- Staying compliant in the face of global talent mobility
As we shed light on these trends, lets look at how they might shape the way we businesses approach HR, recruitment, and background screening in 2024.
1.1 | Protecting Your Organisation Starts with Identity Verification
There has been a well-documented surge in identity fraud since the pandemic; in the US, the Federal Trade Commission’s Consumer Sentinel Network reported that the number of cases more than doubled from 2019 to 2020, and it is predicted to continue to grow in 2024.
The financial and business services team at Sterling has observed this increase in identity fraud attempts over the past few years in APAC and European markets, as well as a growing level of complexity to the frauds. One particularly sophisticated form of identity fraud involves a coordinated effort, where individuals collaborate to place a criminal accomplice into a specific job role. These fraudulent job placements are often brokered on a secondary or ‘black’ market, allowing individuals who have never been interviewed or properly vetted by the hiring team to assume critical positions within organisations, presenting many risks and causing significant financial, reputational, and workplace issues.
The increasing level of global identity fraud represents a significant threat to the integrity of the hiring process. To counteract the issue, organisations will need to implement robust identity verification measures, reference checks, and credential verifications. Implementing stringent identity verification processes at various stages of the hiring process serves as an initial defence against fraudulent attempts. This involves verifying the authenticity of candidates’ identities through a combination of biometric data, official documents, and advanced technology to ensure that the individuals being considered for employment are who they claim to be.
Reference checks and credential verifications play a crucial role in the second line of defence against identity fraud. Thorough reference checks involve contacting previous employers, supervisors, or colleagues to validate the candidate’s work history and performance. Credential verifications ensure that educational qualifications and professional certifications listed on a candidate’s resume are accurate and legitimate. Together, these measures contribute to a comprehensive screening process that helps organisations safeguard against potential threats posed by individuals with fraudulent intentions.
As identity fraud schemes become more sophisticated, organisations will need to adapt by implementing multi-faceted strategies to protect the integrity of their hiring processes. By incorporating robust identity verification protocols, thorough reference checks, and meticulous credential verifications, businesses can fortify their defences against the risks associated with identity fraud.
1.2 | Building a Global Workforce Requires Accurate Screening
Along with a growth in identity fraud, we have concurrently seen an alarming increase in the prevalence of fake educational certifications. The rise of degree mills, forged documents, and fake certifications has created a pressing need for organisations to implement processes to protect against the risks associated with fraudulent educational credentials.
Recent cases have included a man who used forged university qualifications to secure finance and audit jobs for over 10 years, a man who used a fake diploma and impersonated referees when applying for jobs, and three separate instances of individuals in India allegedly trying to fly to the UK using fake educational certificates. The issue has become so significant that Singapore has taken proactive measures to appoint accredited background screening agencies to enforce for all employment pass applications as of September 2023.
The repercussions of hiring individuals with falsified educational qualifications can be substantial and multifaceted. Beyond the immediate financial costs associated with a bad hire – estimated to be between 15-21% of the employee’s salary, depending on seniority – the impact can extend to lost revenue, decreased productivity, and a negative bottom-line effect. An unqualified employee who fails to fulfil their job description can set off a costly ripple effect within an organisation, consuming valuable time in hiring and training, decreasing morale and productivity in affected teams, and placing additional stress on supervisors and managers.
To mitigate the risks associated with fraudulent educational credentials, organisations should implement comprehensive educational verification checks. These checks can involve thorough examination and validation of a candidate’s educational qualifications, ensuring that the degrees, diplomas, and certificates listed on their resumes are legitimate and earned from accredited institutions.
By incorporating such measures into hiring processes in 2024, organisations can minimise the detrimental impact of hiring individuals with misrepresented educational credentials and build a workforce with genuine qualifications and capabilities.
1.3 | Identity Wallets – The Need for a Strategic Focus
With the need for authenticity as organisations focus on combating fraud, it is no wonder that Identity wallets are gaining traction globally. Identity wallets serve as secure digital repositories for individuals to store and manage personal and professional credentials instead of using physical identity documents.
Juniper Research predicts that the number of digital identity apps in use in 2025 will be over 6.2 billion. Leaders in the Asia Pacific are contributing to this uptake by implementing government-issued identity apps across the region. Singapore introduced Singpass, a digital identity solution, in 2003 which is now used by over 3.5 million residents, whilst Australia, Malaysia, Thailand, and the Philippines have similar identity programs that allow residents to create one identity wallet to access several government services.
In the context of recruitment, identity wallets when properly implemented can allow candidates to share relevant verified information directly with potential employers.
The Society for HR Management gives this description, “the wallets work by enabling job candidates to consolidate and pre-verify credentials such as university degrees, employment histories, licenses, certifications, talent assessments, badges or work samples in one immutable digital block, or wallet… When recruiters are hiring for jobs and request a candidate’s credentials, applicants who have created digital wallets essentially give recruiters a digital “key” to unlock and view their wallet on a network.”
The result being increased candidate control over how their data is accessed or shared, enhanced transparency, lower risk of personal data being altered or hacked, and a faster hiring process for recruitment teams.
Identity wallets for recruitment purposes are yet to be broadly used but industry vendors are beginning to develop and introduce software to the market. For example, Sterling is partnering with digital identity network ID.me in the US to develop an identity wallet which will verify candidate authenticity.
Identity Verification is a vital step in the set-up of any type of identity wallet as these apps will only be useful if the information stored within pertains to the correct person. Comprehensive security features will therefore be necessary to prevent deepfakes and other fraudulent behaviour. If implemented effectively, identity wallets can add an extra layer of security to the hiring process, mitigating the risk of identity fraud and enhancing the validity of the information gathered during background checks.
As we look forward to a solution that seamlessly combines information from government-issued identity wallets with HR digital wallets to provide a holistic view of every candidate, we can adopt a two-step process where digital wallets or background screening can give information about a candidate’s work history and educational background, while a separate check is conducted for identity verification, either via government sources or other screening solutions.
The rise of identity wallets in background screening does not negate the vital role of HR professionals in the overall recruitment process. Human screeners are still very much involved in the process to lend a human touch to assess cultural fit and understand the context of a candidate’s experiences.
With the introduction of identity wallet solutions for recruitment, hiring practices are likely to be transformed in 2024 and beyond. This combination not only streamlines the verification process but also empowers candidates and enhances the security and authenticity of the hiring process.
Join us for part 2 next week, as we chat about the role of culture and candidate experience in the 2020s.
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