The dark side of recruitment – a deceptive proposition

Recruitment fraud_1On account of a firm’s rather average financial performance, Alex*, a manager there was supposed to sensitize his team about the probability of increments for the year being lower than the expected ratio. Considering that the top performer from his team, Alan* would not take well to the proposition, Alex advised him, in confidence, that he was going to compensate him through another route instead. This was to make up for the potential salary hike deficit. He then handed him an applicant resume and asked him to claim a ‘referral bonus’ for the candidate, from the human resources (HR) team.

Thereafter, the candidate was selected through an initial screening done by HR and an interview with Alex. Obviously, Alan felt privileged that his manager held him in such high regard to have devised an alternate route to reward his efforts.

But was this an appropriate way of rewarding performance?

Post the candidate’s appointment within the same team, in the course of time; Alan divulged how he had been compensated by way of the candidate’s referral. But he had a surprise in store. “Just keep it with you, but I paid Rs 2 lakhs to join the company“, said the new joinee in a hushed manner. This was clearly unexpected and it was then Alan realized then that he had unwittingly been used by the manager, Alex as a conduit to commit recruitment fraud.

The disparity in the job market with regard to availability of jobs versus applicants for any position is inverted, thereby creating a possibility of misuse or abuse by those who may be placed in a position of power. The old adage that ‘power tends to corrupt and absolute power corrupts absolutely’ connects well in this case, with many organizations seldom having controls and checks in place to monitor the recruitment process at a granular level.

The magnanimity of the re‘crook’ment issue

Recruitment frauds are on the rise as the amount of job applicants outnumbers the job opportunities available in many industries. To set the context, industry reports suggest that around 1.5 million engineers graduate every year in India who then scout for the 2,50,000 to 3,00,000 jobs available in the organized sector. The magnanimity of the issue is therefore huge as applicants could easily be misled due to the intense competition in the market. Furthermore, even the more wary section may fall prey to deceptive techniques, as fraudsters now use advanced and innovative methods to commit frauds.

It is therefore, necessary for organizations to revisit their existing controls to identify and address existing and potential vulnerabilities in this area.

Recruitment fraud could arise at any junction within the hiring ecosystem. Perpetrators could be within or outside the organization and could commit frauds either individually or in collusion, which makes it more challenging to address.

Key fraud risks in the recruitment arenaRecruitment fraud_2

Guarding your gates

A proactive fraud vulnerability review of the recruitment process helps organizations in prevention and early detection of recruitment fraud. Key steps of a fraud vulnerability review include;Recruitment fraud_3

The key to success – Forensic Data Analytics

According to EY’s 2016 Global Forensic Data Analytics Survey titled, ‘Shifting into high gear: mitigating risks and demonstrating returns’, 68% of Indian respondents stated they get positive results or recoveries from the FDA tools that they use. Some prominent fraud indicators that should be considered while performing forensic data analytics in the recruitment space include an assessment of:

  • The age of the candidate as reflected on the CV corresponds with the minimum age required for a particular qualification/degree
  • Gaps in the stated work experience profile
  • All test scores achieved as compared with the minimum threshold/passing scores
  • Candidate recruitment without a business case requirement
  • Approvals obtained from unauthorized persons (differing from the usual person from whom it is obtained in normal course)
  • Unusual volume of business being given to a particular recruitment vendor
  • Awarding contracts to rejected or black listed vendors
  • Change in contractual terms within a short span of time after awarding the contract


Many organizations have begun “mystery shopping”, a technique used to detect potential “crooks” (internal or external) in their recruitment supply chain.

Additionally, a drawback that has been indicated in various studies, demonstrates that a person who makes a corrupt payment, tries to recover the same in some form from the organization. This could be done either through misstating travel bills or performance metrics in order to “recover” their initial investment. Apart from this, such frauds can potentially lead to severe reputational impact for the company.

It is therefore necessary for companies to nip this issue at the earliest to ensure the workforce of tomorrow is not left with a sour aftertaste of these repelling actions.

*Names used in the above article are fictitious.

Follow @EY_India and track #EYForensic for regular updates