A Personnel Nightmare (Part I)

The investigation had started because there had been shortages on the teller's window in different amounts for over three months. They now totaled $13,000.

There had also been numerous claims of empty envelope deposits at the ATM machine serviced by the branch personnel. Those claims now exceeded $5,000.

Audit had not had the time nor the personnel to properly investigate, so an outside investigating consultant was hired.

A review of the records of the branch personnel showed that one teller had more seniority than anyone else in the branch. And that teller had been there only six months! All of the remaining six people in the office had been hired by the bank during the past few months.

During the initial interviews, one of the tellers, when asked if anything struck them as unusual in the workings of the branch, said, "Yeah. I don't like having to put through the manager's checks as cash all the time. We were told not to do that in teller training."

The manager had a fairly new account, as she had only been with the bank for three months. A review of her account showed that she was kiting between the account she had opened not long before at the bank and the account she kept at the institution where she used to work!

They immediately discharged the manager, and managed to get out of the kite with no loss.

The procedure on the ATM was reviewed, and found to be incorporating a strange type of dual control regarding deposits. The envelopes were counted under dual control, but were opened and processed by one teller after they were counted! There was no way of tracking who was doing the processing on the days the empty envelope deposits were recorded.

The teller who was short $13,000 was discharged, charged with the theft, and is awaiting trial.

But the story isn't over yet?

The bank personnel officer received an inquiry. It seems a small financial institution had hired the discharged teller, and the first day on the job the teller at the station next to the new hire was short $2400. They instituted an immediate investigation, and the new hire "discovered" the $2400 in the wrong drawer. They were so glad to get the money back that it did not occur to anyone to ask how the new hire happened to know where the money was until two days later. Then they decided to start asking questions and checking on facts on his employment application.

The application showed that this person had worked for two banks. Careful investigation showed that there were charges pending against the teller as the result of alleged thefts from both former employers.

The small institution was shocked, and thought they were covered by the question on the application that asked, "Have you ever been convicted of a crime?" The applicant answered, truthfully, "No." He had never been convicted-only charged, but not yet brought to trial. How was the small institution to protect itself?

This is an area that has given many personnel managers headaches for years. The new Criminal Referral Form may eventually be an answer for us, by accumulating information in a central location which will be available to all financial institutions.

And individual states are starting to take action-Arizona and Louisiana already have statutes on the books enabling financial institutions to record and check names of persons discharged for 'wrongful doing.'

Polygraphs are no longer permitted as a preemployment screening device. Honesty tests are being utilized by some institutions, with mixed success rates.

It is possible to protect ourselves from those with experience and capability to harm us. You may deny employment due to a conviction of a crime only if the nature of that conviction would be a serious risk for a person in the employment capacity.

For instance, if you were hiring a bank teller, you would not be able to deny employment solely on the basis of a drunk driving conviction, as it would have no bearing on job performance. By the same token, if a person has been convicted of embezzlement, you would not be able to deny employment as an auto mechanic solely because of that conviction.

Personnel officers should also be aware that other financial institutions can verify information, even if they choose not to exchange information.

Every employment application should bear a statement giving the employer permission (by the employee) to reveal certain pieces of information-Name, Job Title, Salary, Dates of Employment, Reasons for Leaving.

The application should also state that providing false or misleading information on the application is grounds for denial of employment or for termination of employment.

If the small institution's "new hire" had put on his application as a reason for leaving "discharged for poor job performance," they would not have hired him. Any other reason he would have given on his application would not check out with the former employer's records. The former employer does not have to give the correct reason-they would just respond with, "That piece of information does not agree with our records." There are also other methods the small institution could have used, which we will discuss in a later article.

Because of the increased vulnerability and exposure in this area, we will be headlining personnel procedures and preemployment screening techniques in future issues of BANKERS' HOTLINE. These articles will be written by guest columnists who are experts in the financial institution personnel field.

Copyright © 1990 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 1, No. 4, 4/90