The Background Verification Problem

Every company I know has a story about that hire. The one who looked great on paper, interviewed well, joined with confidence, did some good work, and then proceeded to burn the place down.

What nobody talks about is where that person came from. And what the previous company knew about them. And why nobody asked.

We don’t ask.

That’s the whole problem. That’s this entire post.

Let me tell you what a bad sales employee can do to a manufacturing business like mine.

We sell through distributors. Our sales team is the bridge between us and the distributor network. They visit distributors, take orders, manage relationships, solve problems. It’s a trust-heavy role. The distributor trusts the sales guy. Sometimes more than they trust the company.

Now imagine a sales employee goes rogue.

He starts making commitments he has no authority to make. “Main karwa dunga special price approval, aap order de do.” He promises a price that doesn’t exist. He dumps 3x the material on a distributor, telling them he’ll personally help get it sold. He routes a sale through a distributor to an unverified dealer - on his own personal guarantee to the distributor.

The distributor doesn’t question it. Why would they? This is the company’s guy. He’s been visiting them for months. He drinks chai at their shop. He has the company’s visiting card.

Then management finds out. We restrict him. He clashes with us.

Maine zabaan di hui hai. Meri beizatti ho jaayegi. Mujhe itna toh power hona chahiye?

He leaves.

Here’s where it gets fun.

He joins a competitor. Within a week. Maybe he even takes his entire team with him.

No recommendation taken from us. No call. No email. Nothing.

And the first thing he does at his new job? He calls our distributors - the same ones he built relationships with using our brand, our products, our trust - and tells them: “Inka payment rok lo. Mera naya company ka maal le lo.”

Let that sink in.

The guy who caused the damage is now actively weaponizing it. He’s telling distributors to hold OUR payments while he sells THEM someone else’s products. Our money - crores of it - stuck with distributors because of fake commitments made by a person who no longer works for us, but whom the distributors still trust.

And the new company that hired him? They have no idea. They didn’t ask.

This isn’t one bad apple. We’ve had multiple sales employees like this over the years. Each one followed the same pattern. Make fake commitments. Dump excess stock. Guarantee unapproved deals. Clash with management when caught. Leave. Weaponize the relationships at the new job.

Every single guideline in our Sales Values document exists because someone did the wrong thing first.

“Never force any item or order on a customer” - because someone did.

“Never promise customers anything you cannot deliver” - higher payment terms, special pricing, unlocking accounts for billing, replacement support after warranty expiry - because someone promised all of these. Without approval.

“Do not do business with relatives, friends, or personal associates” - because someone did.

“Do not accept money, gifts, or commissions from clients” - because someone did.

Every line in that document is a scar. A lesson that cost us real money.

And on the other side, our customer guidelines document exists because distributors have used some of these situations - created by rogue employees - to dispute legitimate payments with us.

“Do not make cash payments to anyone” - because some sales employees took cash payments, did not enter it into the system, and left.

“Do not sell goods to anyone without your consent and knowledge. The responsibility of the payments is yours, not sales employees” - because they did and the payments got stuck.

Now, you’d think - ok, so you learned your lesson. You now do background verification before hiring, right?

Yes. We do.

We send a detailed BGV form to the candidate’s previous employer. 16 questions. Performance rating. Attendance. Punctuality. Exit formalities. Legal cases. Disciplinary actions. Strengths. Weaknesses. Whether they’d rehire the person.

And we mean it. We don’t hire without a satisfactory response.

But here’s the thing.

This only protects us on one side. The incoming side.

And the outgoing side? Completely out of our hands.

When our employees leave - sometimes mid-project, sometimes with vendor relationships half-built, sometimes with distributor issues unresolved - the new company just... hires them. No call to us. No BGV form sent. Nothing.

They don’t do anything. Because calling up another business, a competitor in the same industry, is a sign of weakness?

Many employees know this. They know nobody will ask for a recommendation. So there’s no consequence for leaving badly. No consequence for burning bridges. No consequence for walking out with open disputes and half-finished work.

System. Broken.

And it’s not just sales. I’ve seen HR professionals in the industry - who hit on 19-year-old junior employees, who drunk-called vendors and colleagues at midnight. People whose behaviour should have been a massive red flag for any future employer.

How did none of this come up?

Because nobody asked. The new company saw a resume, conducted an interview, and made an offer. Three steps. Zero verification.

And here’s what kills me. A proper background verification costs ₹2,000-5,000 per candidate, if outsourced. That’s it. Less than a team lunch. For a process that could save you from hiring someone who’ll cost you lakhs, if not crores.

But we don’t do it. Most Indian businesses - especially MSMEs, the sector that employs over 11 crore people - just don’t.

We companies are responsible for our own losses.

That’s not a dramatic statement. That’s accounting.

Think about what a recommendation culture would actually do.

If every company called the previous employer before hiring, bad employees would know there are consequences. The sales guy who dumped fake commitments on distributors would know his next employer will hear about it. The person who made other employees uncomfortable would know it’s on record.

Right now, the incentive structure is backwards. A bad employee can burn one company and restart fresh at another in a week. Zero friction. Zero accountability. The information exists - the previous employer KNOWS what happened - but nobody bothers to access it.

It’s a classic open loop. Information flows in one direction (employee to new company) but never loops back (new company to old company). The system has no feedback mechanism.

For a guy who named his blog after closed-loop systems, this one hurts personally.

I’m not saying recommendations alone will fix Indian hiring. Most small businesses don’t always have formal HR departments to respond to verification requests. And people lie in BGV responses too. Some managers give good references because they don’t care about the future employer or they tell themselves “Iska career kyun kharaab karun. Ho gayi galati. Aage se nahi karega. Baccha hai…”.

But the starting point is simple. Ask.

Pick up the phone. Send an email. Use a template. Just ask.

Because right now, the bar is literally on the floor. And we’re still tripping over it.

Until next time.