Will a bad credit report cost you a job?

Will a bad credit report cost you a job?

In the November 26, 2019 Ask The Headhunter Newsletter a reader questions the value of a credit report when judging a job applicant.

Question

credit reportIs a credit report from the big three credit reporting agencies (e.g., Experian) a good proxy for determining if a job candidate would be a security risk? Should a candidate be given the opportunity to explain and provide background about any items on a credit report that may appear as a negative to a potential employer? Or, should the credit check stand as a pass/fail test that a potential employer uses to determine if a candidate might be a security risk?

Nick’s Reply

You’re not asking how to avoid getting rejected for a job because of your credit report, but whether I think this would be justified or wise on the part of employers. We’ll stick to the topic here. If there’s enough interest, we can tackle the “how to” another time.

While we might make a case for employers doing credit checks on job applicants, it makes no sense to me why employers rely on such information to judge whether an applicant might be a security risk — especially not on a pass/fail basis. I haven’t seen any statistics on the actual correlation, much less any suggestion that credit records predict security worthiness. (If someone’s got statistics, please share in the comments section below.) The real risk to the employer is that it loses an otherwise excellent candidate to an assumption that credit behavior correlates with job performance and security worthiness.

Does a bad credit report make you a bad hire?

It might seem silly to make the comparison, but do we reject applicants who’ve been divorced because they are more likely to be bad business partners? Do we reject software developers because they don’t do proper maintenance on their cars? What about people with disabilities? Are they risky hires? Oops. The law protects them. Do you see where I’m going? I think employers should stick first to judgments about whether a candidate can do the job effectively, and second whether they fit the social norms of the organization.

In the U.S. there are laws that govern the use of credit checks on job applicants. Of course, these vary by state. I like Alison Doyle’s rundown on job applicant credit checks.
The challenge is how to assess those characteristics. While I’m not opposed to psychological testing and correlational evidence to make judgments like these, I think HR departments screwed the pooch long ago when they deftly transferred liability for hiring judgments to tests and indirect metrics of character. I believe this is a huge cause of HR’s “talent shortage” problem. These indirect assessment methods cost employers good hires. (See Big Data, Big Problems for Job Seekers?)

Employers need to teach hiring managers how to make better assessments and judgments of candidates directly and personally. It’s an interview skill. But how many companies teach interview skills?

Is your credit report a valid and reliable metric?

I agree that, if a credit check is to be done, the applicant should be allowed to explain the report – but that opens another legal can of worms. The applicant could potentially sue the employer for rejection based on misinterpreting the information. This, of course, is why the employer might use a credit report as a pass/fail metric without disclosing it to you. (For more about this, read my good buddy Suzanne Lucas’s warning to employers, If You Run Credit Checks on Your Job Candidates, Now Would Be A Good Time To Panic.)

Is there any defensible reason for basing a hiring decision on such a data point? It’s hard to make the case that it’s valid except as an indication of credit worthiness (and even that can be questionable). It’s worth looking up “validity” and “reliability” in the context of making assessments. Does a credit check really measure what you need to measure?

Employers have explaining to do

Here’s how I think I prove my point. I’ve never heard of an employee being terminated because the employer checked their credit report. If credit checks are such valid and reliable indicators of security worthiness (or any other job-related requirement), why don’t employers run reports on all employees annually to decide whom to terminate? I think HR has a lot of explaining to do.

Employers try too hard to offload candidate assessment to indirect metrics, and they do a lousy job of justifying themselves. In most companies, it seems HR’s first objective is to offload liability. I think the better practice is for employers to make their interviewing and reference checking more rigorous. To avoid unreasonable risk, make managers very good at interviewing and judging job applicants.

My snarky suggestion to job seekers is to ask a snarky but justified question if an employer brings up a credit check. “Can you show me empirical evidence that my credit report is a valid and reliable metric for judging me as a worthy hire?”

You’d be surprised how many successful people I’ve placed who had questionable “background checks.” It takes a lot more to really judge someone – or you miss some great candidates!

Have you missed out on a good job (or a good job applicant) over a credit check? Have you outwitted a negative credit report when applying for a job? Do you believe credit checks tell employers anything useful about a person? Is someone’s credit report a worthy pass/fail test for hiring?

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What’s the magic in a letter of recommendation?

What’s the magic in a letter of recommendation?

In the November 19, 2019 Ask The Headhunter Newsletter a reader wants help writing a recommendation letter.

Question

recommendationI am writing a letter of recommendation for a co-worker who is interviewing for a new job. It’s sort of a quid pro quo situation. Both he and I are somewhat unsure of how to write one, especially when doing it for a co-worker.

I have looked online, but most of the advice is for a supervisor, not a peer. I don’t supervise him; I just collaborate with him occasionally. I think he’s an excellent worker, but I’m not sure how to write about it in a letter. I want to make sure I’m doing it correctly. I’ve never had the opportunity to write — or even to see — a real letter of recommendation before. Can you help me? Do you have a template? What’s the magic in a letter of recommendation?

Nick’s Reply

Recommendations are a powerful part of hiring and job hunting, but few people know how to use them effectively. The worst type of recommendation is the insincere, canned one.

A recommendation must be honest

I’m glad you think highly of your co-worker, because if you didn’t, I’d advise you not to write a recommendation. The power of recommendations lies in honesty. No one should feel obligated to recommend anyone else.

There is nothing wrong with saying to someone, “I’m sorry, but I don’t feel I could write you the recommendation you’d need to get the job you want.” If that seems rude, consider that a proper recommendation puts your neck on the line. It affects your reputation. If the person you recommend blows it, you will look bad and your reputation may be damaged in your professional community. And that’s as it should be, or the practice of making recommendations becomes worthless.

Recommendations create reputations

On the other hand, a carefully considered recommendation that results in a superlative hire reflects very well on the person doing the recommending. Credible, repeat recommendations that result in great hires can elevate your reputation to star status in your field, making you a go-to person for hiring referrals. That’s the best place to be when you go job hunting yourself.

But let’s get on to your situation.

Your personal guarantee

Producing a written recommendation for a co-worker is no different from doing one for someone you supervise. In both cases, remember that your main purpose is to provide a personal endorsement. A recommendation (or a reference) is a personal guarantee that the person you recommend is good at what they do: they are reliable, honest, and worthy of the job in question.

Yes, that’s serious stuff. That’s why we don’t write recommendations for just anyone, or just to be polite and friendly.

(For a special approach, see Referrals: How to gift someone a job and why.)

Get an interview

Your objective in writing a recommendation is to get the employer to interview your subject. That means your comments must be relevant and compelling, which in turn means your recommendation must fit the specific job. If the candidate can’t explain what the job is all about, then you can’t and shouldn’t write the letter.

Canned comments or a stiff, formal letter will not get anyone a job interview. My advice is to write simply, naturally, and casually. Avoid two-dollar words and phrases. Be friendly, blunt and brief.

What to write

Don’t follow a format. Just write naturally, covering a few key topics:

  • Who are you? What do you know or do that makes your comments relevant and compelling? You might be an expert in the work in question. Provide a very brief summary of yourself in order to establish your credibility.
  • How do you know the person? Do you know his work? Did he work for you, or with you?
  • What’s his work ethic? Is he self-motivated, or does he require close supervision?
  • What are his relevant skills and knowledge? Be specific.
  • How does the person stand out? Why should the employer drop everything and interview him?
  • What benefit do you think the person would bring to the employer? Can you offer any proof?

Don’t worry about templates. Don’t regurgitate someone else’s words. If you need a format, pretend you’re having lunch with the employer. Write what you would say. Be honest, or don’t provide the recommendation.

Endorse

As you wrap up your letter, make the one statement the reader is looking for: a clear endorsement. Use words that you are comfortable with. For example:

“I wholeheartedly recommend John as a smart, reliable worker who delivers what he promises.”

Finally, make the statement that says more than any other:

“If I were a manager, I’d hire Karen in a minute. As a co-worker, I hope I can work with her again.”

That’s the best endorsement in the world.

What’s better than a recommendation?

There’s something much more powerful you can do. Wait a day or two after sending the recommendation, then call the employer to make sure they received it. Reiterate your main message: “I’d hire John/Karen myself if I could.” This call is so unusual that it will always get the employer’s attention. Be careful, of course, not to seem like you’re trying to exercise undue influence. (See also The Preemptive Reference — it’s better than a recommendation.)

Recommendations are an important way of meeting other people in your industry and establishing a good reputation. (Networking, anyone?) That’s why it’s important to be selective about whom you give a recommendation. Recommendations and references are the glue that makes an industry stick together.

Do you recommendations even matter any more? What makes them work? What’s the best recommendation you’ve ever gotten (or given)? How do you advise this reader?

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Do you want a job, or higher pay?

Do you want a job, or higher pay?

pay

 

No sign of a recession, but wage growth is flatlining.

Source: The New York Times

pay

The first story: Jobs are plentiful and unemployment low. Most everyone who wants a job can find one…The second story: Wage growth is flatlining. For most of the last few years, pay to American workers has been rising at steadily increasing rates…But that rate of increase now seems to have leveled off or decreased. The year-over-year rate of growth in wages peaked at 3.4 percent in February and has receded to 3 percent in October, according to the latest numbers…

So most people can find a job and more people are working, but employers are not having to increase compensation much to recruit and retain people. This isn’t what economic models suggest should happen.

 

Nick’s take

Do you want a job, or higher pay? Because the U.S. Department of Labor says you can’t have both. News articles focus on big growth in new jobs but then can’t explain essentially flat pay in a market with high demand for labor. Meanwhile, companies are spending less and pocketing more: “compensation in private industry rose 3 percent in 2018, and only 2.7 percent in the 12 months ended in September.” Nothing’s changed. (See B.S. on the jobs numbers.)

What’s your take?

  • Are you making more money?
  • How much does your CEO make as a ratio compared to you?
  • Why don’t the Department of Labor numbers make sense?
  • When will job applicants wise up?

 

 

 

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Resumectomy: Surgery for job seekers

Resumectomy: Surgery for job seekers

In the November 12, 2019 Ask The Headhunter Newsletter a reader proposes resumectomy to save the patient.

resumectomy

Question

Does it occur to anyone that there is something wrong when a very good (flawless) resume or LinkedIn profile returns nothing, no interviews, no jobs — not even a thank you for applying? Why do we use them? I’m looking for an alternative to a resume. Is there an alternative?

Nick’s Reply

People have been asking me about resumes a long time! Let’s try something. This is one of the oldest articles on Ask The Headhunter: Resume Blasphemy. It’s an exercise. It suggests an alternative to resumes. I’d like to ask everyone to please read it — it’s pretty brief. Then come back and continue here.

Have a resume, put it away

Everyone should have a good resume, and it should be clear, concise and easy to read. It should list places you’ve worked, job titles, education and time periods. Brief descriptions of what you did at each job are best.

That’s it. No fluff. No branding. Your resume is not a “marketing piece.” It’s a document that fills in the blanks about you for a hiring manager you have already had substantive contact with. Otherwise it’s just a dumb piece of paper or bucket of bits. Put it away until you talk with the manager.

Don’t use your resume “to get in the door.” Ten million other resumes are ahead of yours. And almost nobody reads them.

The purpose of the Resume Blasphemy article is to nudge people away from resumes as a job-getting tool. There is no such thing. You are the job-getting tool.

Resumectomy

Of course, I get loads of arguments, opinions and  “yes, buts” about my position on resumes. (My favorite is, “I know an algorithm is going to process it, but you can’t win if you don’t play.”) That’s why I’d like to ask you all to strap on a rubber apron and some gloves.

Let’s cut the resume open. Let’s do surgery. Maybe we should just remove most of it, do ya think? A resumectomy. Don’t mind the splatter. It’s all good.

3 Questions

Three questions for everyone:

  1. Do you even use a resume to get a job? If not, then what?
  2. If you do use a resume, what do you put on it that gets you in the door and gets you hired?
  3. What do people put on their resumes that sinks their efforts to get a job?

(If you’re a hiring manager, we’d all love to know how you’d answer those questions from your side of the desk.)

Okay, scalpel.

What’s that in there, in the resume? Is it alive? Is it beating? Or is it just mush? Should we take it out? Is a transplant in order?

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