Andrew McLeod, CEO of CERTN, tells us why investors should know more about Talent Management in the AI era.

On a JoinMe video call, I meet Andrew McLeod, CEO of Certn, a Canadian startup using AI to verify potential employees, tenants or borrowers’ credentials. 

Despite launching startups from the age of 18, Andrew, now 32, is a thousand miles from the stereotypical nerd. In the meantime, he has also found some time for a Master in International Business Law. He’s a Millennial raises on bread and the Internet.

Together, we analyze some American and Canadian statistics, as his company operates in both markets. To a crime as old as theft, in this case, committed by an employee, we owe a third of the 47 billion dollars of “missing” inventory from the large American distribution chains last year and 30 percent of the cases of commercial bankruptcies.

Another 6 percent of turnover is lost due to employee fraud, amounting to 6 billion dollars a year. But there is more: choosing the right people is crucial to protect not only the company assets but also the extended catalogue of personal rights. 

In 2018, there were more than 85,000 labour disputes due to discrimination, with 400 million dollars in compensation to the victims. For the Department of Health and Human Services, 16 percent of Medicare staff in the United States is convicted after being hired.

Murders in the workplace, while on the decline after peaking at a 1000 a year in the early 90s, as of 2016 still number around 400, with an average cost to the employer of around 800 thousand dollars.

“Negligent hiring", when proven, entails the civil responsibility of the company. Here is a disturbing aspect of the American society's privatization “on steroids": people with mental disorders are not the responsibility of health system and companies try to protect themselves with "scientific" employee screening. 

With the same logic, Social Security pays $400 to a penitentiary that within 30 days communicates the imprisonment of an individual with pension benefits. In short, you inform me that John Doe is in prison, I can stop paying his pension and pay you a $400 bonus for the "blowing the whistle”.

Verification of information regarding a job candidate (identity, residency, educational qualifications, professional experience, mental and physical conditions when relevant to the job) is a key element in talent management, and not just at the time of recruitment. 

One European example is the Andrea Lubitz case, the pilot from Germanwings who crashed flight 9525 with 150 passengers on board into the Savoy Alps. The insurance providers for Lufthansa, Germanwings’ parent company, have budgeted provisions for $300 million in compensation. In the meantime, the American law firm Kreindler & Kreindler has sued - on behalf of the victims’ relatives – the Lufthansa training facility in Arizona, where Lubitz trained as a commercial pilot.

A more recent case, closer to Italians, involves Ousseynou Sy, the bus driver who hijacked a coach carrying 51 middle school students. He was hired without the company being aware of his criminal record for drunk driving and child abuse. 

All combined, it looks like a war bulletin, but in managing these risks, Andrew has seen a mission and an economic opportunity.

"Together, with two other partners, we founded Certn with the aim of creating a platform that would make it easier for employers, property owners, condominium administrators, and other economic operators to evaluate people relevant for their business. To do so, we created Softcheck screen, proprietary software that processes information taken from over 200,000 databases worldwide. This set of information allows us to make accurate predictions about the future behaviour of a candidate, a tenant or a mortgage applicant.”

How does the AI get an opinion? Where does the data the system uses come from? And what happens when you are wrong?

The language shows a good deal of prejudice, but Andrew gracefully ignores the interviewer idiosyncrasies. "AI does not make decisions. AI asks questions, of a huge amount of subjects, and at amazing speed. Then it organizes the information for the user to help them make the decisions. For example, it helps to eliminate false positives. Looking for a gentleman by the name of Andrew McLeod, for example, can mean having to find the right one among the 301 homonyms, some of them born on the same day or maybe calling themselves Andy.

The 200 thousand databases from which we extract data, probably the largest archive of sources for risk management in the world, cover social media, mainstream news, criminal records and sex offender lists. They are public lists. Indeed, we often help government institutions organize the data they have, in order to increase its usability on the Internet.”

  What kind of behaviours can you identify?

"Clearly a person who makes racist or sexist comments on Facebook is not suited to work in a position that puts her or him in contact with the public. But even a person who does "job hopping", often changing employment, deserves an additional investigation. In some cases it could be a signal of the inability to be part of a team, in some cases, it is a talented person who wants to be valued and that could be the right person in your organization. Large corporations continuously monitor Linkedin to ascertain these elements. We do this with our algorithm and make this information available to small and medium-sized companies. 

If a person received a criminal conviction ten years ago, this does not mean that he cannot get a job, but the employer has a direct interest in such information. There is also a problem when a candidate claims to have a certain professional experience without this being true. The paradox is that people tend to lie three times more in their CV than on their Facebook page.”

What benefits does your technology offer the real estate world?

"Two things: first of all, the possibility of entering into a rental contract online. And secondly, the ability to integrate the solvency check of a potential tenant with other evaluation elements. A person with an impeccable financial situation could be on the sex offender’s register. AI allows these cross-checks to be carried out quickly and at a cost of between 5 and 40 dollars.”

In Europe, regulations such as the GDPR (General Data Protection Regulation) and the Payment Service Directive have the objective of returning the control of credit information to the consumer. The verification of the solvency of an individual in North America is done through the credit score, a points system that tracks the credit reliability of a person looking at the punctuality with which one paid mortgage payments, bills and loans. Employers can access this information, and not just those working in the financial sector. 

In short, the elephant in the room is individual privacy protection. I point this out, but Andrew doesn't seem too worried.

"The credit score does not always work. A college student or a farmer in India does not have a credit history. This is why, when we do business, it is important to integrate this information with others to get a complete picture of the person in front of us. However, we do not want to remove human rights from the equation. For example, we only analyze what a person writes on Facebook, but not the photos that portray them in their moments of relaxation. Moreover, most people do not seem to realize that companies and real estate owners are already looking at their social profiles and evaluating with their subjective parameters (otherwise known as prejudices), the photos posted by a potential employee or tenant.”

It goes without saying that the quality of the human capital of a company is a key element even for those who invest. By definition, it applies to top management, but also to the rest of the people in the company. In a growing number of cases, companies convicted of gender discrimination or sexual harassment in the workplace, have been asked to respond to shareholders in court.

At the next shareholder meeting, those who invest will have one more reason to explore the slides on the Talent Management in the company and to ask some questions about investments in HR Tech, the set of AI applications that are revolutionizing the way in which Capital relates to Work.