Pre-Employment Screeners 2003 Conference

Pre-Employment Screeners 2003 Conference

The second annual 2003 Pre-Employment Screeners Conference sponsored by The Background Investigator.

Steven Brownstein and Phyllis Nadel put on an even better conference than last year. The attendance was up about 50 percent to about 235 people. The speakers were good and the networking was keeping everyone very busy. Even the food was better this time

Speakers:

Les Rosen of Employment Screening Resources,  lrosen@esrhire.com  gave a concise presentation on the FCRA and the challenge of meeting the requirements for all 50 states. This is a very complex issue. You cannot use one release form for clients in all 50 states. And should you handle an applicant that is going to work in KY, is being interviewed in NY for a company headquartered in CA??

Craig Cadell from Reference Pro talked about the opportunities to better manage workload and costs by outsourcing your references.

Hans Van DerLeden and Dave Machowsky gave a presentation about the challenge we all face: Speed, Accuracy and Cost. Their point was there comes a place where it is difficult to maintain the accuracy when we are all getting beaten down pretty hard on price. My personal opinion is that the pressure to achieve more speed, more accuracy and a lower cost is a natural occurrence in a free market economy. There will always be price pressure.But Quality does sell too. Their point that was made is that we must educate our clients that they just can’t get a search done in every county for a few dollars. Sure you can get it done in Chicago for a couple of dollars but to supply all 3200 counties requires good local researchers who must get paid enough to care enough to do the job correctly. Similarly, it is inappropriate to sell a multi-state database search (ala NBD, Rapsheets, Backgroundchecks.com, etc.) without educating the customer of the limitations of that methodology.

Patti McGowen gave a nice presentation about the difficulty and complexity of doing county criminal searches;and she did this as a last minute fill-in for another speaker that could not make it.

Mike Dores educated us on database searches. He is a natural speaker. Very educational.

Susan Larson came in from a town of 88 people in South Dakata to educate us on the directions the courts are taking to automate and the national efforts to standardize.

Cherie Smith Homa and Peter Wilson of KPMG did a great presentation on Mergers and Acquisitions and company valuations. They were so ‘right on’ that I thought they were giving my spiel!!!!

Michael Klee of Mesirow Financial gave a presentation on Insurance needs for our industry.

Some of the fun things that happened included Les Rosen asking me to come upon stage for a little magic. He asked for my tie, cut it in half, and made it come back into one piece. Nice trick. Then he managed to “return” my watch and wallet to me. Surprise!! Les has many talents.

Another big laugh came during the company valuation presentation by Cherie Smith Homa when she declared, “size does matter!” Of course she was referring to the fact that the bigger the company the greater the potential value.Well, the crowd began to snicker and that turned into a good laugh for all.

Then there was the waitress at lunch the first day who managed to drop a plate of chicken on someone’s back, spilled the ice tea in another lap and managed to otherwise ignore us when we needed her. We were convinced a BAT (Blood Alcohol Test) was probably in order for her.

NAPBS (www.napbs.com). There was a short meeting updating the status of the organization. Ten new companies committed on the spot to membership bringing the total to over 210. The spring meeting/conference for theNAPBS will be March 28-30, 2004 in Phoenix. This will be mostly an organizing meeting for the newly elected Board of Directors and the Committee members. Look for news on the website. And, be sure to visit the Members Forum section of the web site.

And now to the news and near-news:

First Advantage, which is on an acquisition quest, is appointing a new leader for this function. This is Andy McDonald, former owner of EHP, the drug TPA. Since Andy sold his company to First Advantage, he has been their leader for the substance abuse screening operations. The former head of acquisitions will be returning to Pequot Private Equity Partners.

An interesting note is that the conference was even attended by a couple of end users, who are doing their own background checks.

Patti McGowan, formerly of Pre-Screen America has split off and started her own company.

The credit bureau’s buying out their affiliates has caused a couple of ripples. First, it is more difficult to get competitive pricing on credit reports (hey, if you have a good deal with a local bureau, please let me know). Second many of these former local bureaus are moving their efforts into other arenas, including Background Checks. These companies are usually well funded and they are capable of strong growth.

I heard of a couple of more “pure wholesalers” who are recognizing the squeeze on margins at the wholesale level and are moving into Retail. This is just basic economics, a natural market force. The retailers try to go direct to the courts to improve their “speed, accuracy, cost” equation and the wholesalers and court retrievers will naturally recognize the greater margins by going direct to the end users. Hey, its business!

A growing “pain” is these web-auction bids that are being done by some major end users. Bristol Myers Squibb,after asking on their RFP for “your best possible price” then put the contract up forbids on the internet. Price pressures again.

One of those companies offering a multi-state database, was offered over 10 times earnings and turned it down because they felt if they waited, they will be worth more. This company was not actively trying to sell itself. This underscores the value of such suppliers. The real challenge for these suppliers is maintaining their margins. If they all have pretty much the same sources of publicly available information, the danger is that the basis for competing for business will be on price, thereby cutting earnings.

NBD and Clearstar joint ventured for NBD to run a Mini-Clearstar system for start- up companies to be marketed directly by NBD.

Looking for work?

I talked to several people who are looking for sales people, sales management, an experienced operations person for a good-sized company, even a CEO. I am not a recruiter (maybe I should add this to my list of consulting services), but if you know of people interested, they may contact me.

It seems everyone I talked to was very positive about most everything. Business was good, sales were up, the general economic forecasts look more rosy, technology was helping them do a better job and keeping costs inline.

If you have any additional questions, please feel free to call.

 Disclaimer: I am just reporting what has been published or what I have heard, that I have not been asked to keep confidential. No claim is made to the accuracy of the statements made in this email.