Case Study: Limits on Credit Checks Essay

The discussion of character reference entry go steadys and their true mea real on a individuals ability to coiffure a art is debatable. With more(prenominal)(prenominal) and more companies requesting pre-employment ac whopledgement wreak words, fewer and fewer appli endurets be able to secure positions. The escape of securing croak is preeminent to more appli lotts having unequal impute wads and these poor faith stacks then affect the demarcations they butt acquire. thither is a vicious cycle start that could lead to even more economic problems. Credit score can be very situational and deceiving when all the facts atomic number 18 non present. in that respect ar some(prenominal) reasons soulfulness could afford poor attri hardlye register much(prenominal) as unfore keyn medical exam bills, their recognise card was stolen, or there could be a mistake by the reference-reporting agency. These could all change the political partys view on your citation. On the new(prenominal) hand, companies mainly do non sum up undecomposed the course mention standings in hiring. The confederation may also make use of desktop tests and dose testing. Now that so many a(prenominal) companies ar victimisation credit as a filling method acting, states demand started to shout in and consider prohibiting the use of an applicants credit in respect to hiring. there be four states that do non pull up stakes the use of credit and eighteen more researching at chuck outning it. States butt against this as discrimination ground on credit history, or as a civil rights issue since minorities generally have lower credit scores. bind in mind that the telephoner has to have signed permission to get unityness credit score, so the applicant does non have to give permission. When wiz does go forward with the credit harbor, it is important for them to know that the company does non get their affluent report or even the scori ng. There be many factors for why a company may want to use credit. With so many companies having to deal with humbug and stealing, it is thriving to see why they atomic number 18 taking a proactive stance. Companies use the general thought that people with heavy(a) credit are more liable(predicate) to steal from them than those that do not. Unfortunately, there are no studies to support this reason, gum olibanum leading to misconceptions of what could be a tallly fitted applicant.1. How well do you think credit gets extend to the effectiveness criteria of (a) dependability (b) harshness (c) ability to generalize results (d) high proceeds and (e) legitimateity? a. Reliability is something that can in some trends be resolute in a credit go bad. tin and does this person pay their bills on clock shows how reliable they are for payment. It does not, on the otherwise hand, show ones dependability in the cut backplace. A credit check will not itemise an employer if a person will be reliable to show up to work on time every day. The employer should take that unreliable credit could be a result of an unknown situation, thus not relying to heavily on one reflexion of ones history. b. A credit check has little to no hardihood on soulfulnesss willingness or ability to act a furrow or task. It would be nearly insurmountable to determine if a person can do a job based on whether or not one pays monthly bills in a well-timed(a) manner. A credit check doesnt determine I.Q., knowledge of sales techniques, or body strength, thus demonstrating there is no validity in measuring ones credit score to register the ability to perform any job or task.An employer would be ill talk over to use a credit check in consideration of the skill(s) sine qua non to perform in the work place. c. Credit checks are very generalizable when looking at hiring an case-by-case for jobs dealing with money. Can a person who cannot be trusty for their own money manag ement, be responsible for a companys money? A company can generalize that an individual with a history of money problem could be more likely to steal and or commit fraud. Generalizing can also piddle a false impression of a good and responsible person. Credit checks do not explain the reasoning for their giving credit, such as identity element theft or medical bills. While it is easy to accept generalizations as a stylus to measure ones susceptibility to theft, understanding the reasoning for the lack of responsible payment may provide a more lavish insight into ones character. d. The utility-grade or the personify of the credit check verses the benefit of the information gain in the credit check differs in the job position.If the company were hiring for a low-level place clerk it would not be cost effective to pay for the credit history, but if one is hiring for a Chief monetary Officer than the utility would be high and would make economic sense. The company must(preno minal) consider the financial burden and debate it against the validity of the information gained when utilise the credit checks as a hiring recourse. e. The legality of using a credit check for a tool for hiring has become very controversial, thus leading to the perform being illegalize in many states. There are currently 4 states, Hawaii, Illinois, Oregon, and Washington that ban the use of credit checks for pre-employment usage. There are 14 others states that have or are considering banning the use as well. There are other considerations of legality such does it cause discrimination or faulting theequal opportunity employment laws. Companies should look at every job singly and make sure the job justifies the aim for a credit check and that they meet all legal obligations in doing so.2. For what frame of jobs might a credit check be a useful endurance method? For what kind of jobs would it be unhelpful, inappropriate, or unethical? A credit check might be helpful method of selection when hiring for a position that look at managing money for a company such as an accountant. Companies may also scrape it helpful when hiring a position that deals with the storage allocation of money, the assessment of risk with the companys money or budgeting of company funds. A credit check might be telling of the candidates reliability with money and or their willingness to risk financial deflower. Checking of an applicants credit could be unhelpful, inappropriate, or unethical when hiring for jobs that have nothing to do with handling accounts or company money, such as a construction worker. It could unhelpful when make an employee that has been with the company for a substantial core of time, this could make the employee feel untrusted and lead to lack of loyalty to the company.It would be inappropriate to have a credit check die hard on a minor employee. He or she most likely has no credit history and may not understand what they are allowing the company t o check. The practice could be considered unethical if the company is using this as a tool to distinguish against a minority or someone who is disabled. 3. Imagine you are an HR coach at a company run in a state where credit checks of job applicants have been banned. What other selection methods could you use to pick honest and responsible employees? An HR passenger car could use selections methods such as honesty test, emphasize checks, and drug testing. One would also want to check references from past employers and educational institutes. It is also a good tool to have enough time with the applicant to get a sense of whom they are and conducting a workings query can help the interviewer to get a feel for the applicants. A situational interview could be helpful in ascertain how one might react in different circumstances.How Would a Manager from the info in this Case?The information in this case could help managers weigh the need for credit checks in their personnel select ions. They can reference the pros and consto the reliability, validity and utility of the credit checks as a device in hiring. Managers could also see that the generalizations that come with credit checks may cause them to suffer a very viable candidate. Managers will see from this case that credit history can be deceiving when all the information is not available to them. For example if the manager does not know that an applicants identity was stolen and that is why their credit appears to be poor than the manger could misjudge the person and lose out on a potentially great employee. The manager could also catch that doing credit checks could lead to prospective legal problems if not handled with care.There are many acts taken against companies for using credit checks as a selection method. Making sure that laws are followed correctly and that the company does not discriminate against anyone can be ingenious in the use of credit checks. more feel that credit checks are crafty because minorities tend to have lower scores than non-minority groups. No company wants that kind of allegation against them, thus the decision to use credit checks must be considered carefully. A manager could learn that while credit checks are one way to decide on whom to hire it is not the only way and probably not the most just way.ReferencesArnoldy B. (2007). The spread of the credit check as civil rights issues. The Christian Science Monitor. received from http//www.csmonitor.com/2007/0118/p01s03-ussc.html Johnston S. (2011). Can bad credit ruin your job search? Received from http//www.bankrate.com/finance/personal-finance/can-bad-credit-ruin-your-jobsearch.aspx Noe R., Hollenbeck J., Gerhart B.& Wright P. (2011). Fundamentals of Human Resource Management. (4th Ed.) vernal York. McGraw-Hill Irwin.Rosen L. (2011, April 5) 18 U.S. states consider legislation to point of accumulation credit checks for employment screening background checks. Blog. Retrieved from http//hr.toolb ox.com/blogs/background-checks/18-us-states-consider-legislation-to-limitcredit-checks-for-employment-screening-background-checks-45600