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The trust dilemma of continuous background checks

First, background checks at startups, then Huaweis finance chief is arrested, SoftBanks IPO is subscribed, and I am about to record our next edition of TechCrunch Equity. Its Thursday, December 6, 2018.
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The dilemma of continuous background checks


My colleague John Biggs covered the Series A round for Israel-based Intelligo, a startup that provides Ongoing Monitoring essentially a continuous background check that can detect if (when?) an employee has suddenly become a criminal or other deviant. Thats a slight pivot from the companys previous focus of using AI/ML to conduct background checks more efficiently.
Background checks are a huge business. San Francisco-based Checkr, perhaps the most well-known startup in the space, has raised $149 million according to Crunchbase, driven early on by the need to on-board thousands of contingent workers at companies like Uber. Checkr launched what it calls Continuous Check which also actively monitors all employees for potential problems, back in July.
Now consider a piece written a few weeks ago by Olivia Carville at Bloomberg that explored the rise of algorithmic auditors that actively monitor employee expenses and flags ones it feels are likely to be fraudulent:
U.S. companies, fearing damage to their reputations, are loath to acknowledge publicly how much money they lose each year on fraudulent expenses. But in a report released in April, the Association of Certified Fraud Examiners said it had analyzed 2,700 fraud cases from January 2016 to October 2017 that resulted in losses of $7 billion.
Heres a question that bugs me though: we have continuous criminal monitoring and expense monitoring. Most corporations monitor web traffic and email/Slack/communications. Everything we do at work is poked and prodded to make sure it meets policy.
And yet, we see vituperative attacks on Chinas social credit system, which . monitors criminal records, looks for financial frauds, and sanctions people based on their scores. How long will we have to wait before employers give us good employee behavior scores and attach it to our profiles in Slack?
The conundrum of course is that no startup or company wants (or can) avoid background checks. And it probably makes sense to continually monitor your employees for changes and fraud. If Bob murders someone over the weekend, its probably good to know that when you meet Bob at Mondays standup meeting.
But lets not pretend that this continuous monitoring isnt ruinous to something else required from employees: trust. The more heavily monitored every single activity is in the workplace, the more that employees feel that if the system allows them to get away with something, it must be approved. Without any checks, you rely on trust. With hundreds of checks, policy is essentially etched into action if I can do it, it must meet policy.
In China, where social trust is extremely low, it likely makes sense to have some sort of scoring mechanism to substitute. But for startups and tech companies, building a culture of trust of doing the right thing even when not monitored seems crucial to me for success. So before signing up for one of these continuous services, Id do a double take and consider the potentially deleterious consequences.

If I was a startup employee, I would think twice (maybe thrice?) before traveling to China


The trust dilemma of continuous background checks
Photo by VCG/VCG via Getty Images
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