Tuesday, August 21, 2007

Dropping Some Knowledge

NEVER ASK QUESTIONS. Because if you don't ask, you won't get answers--and you can avoid exchanges like the one below, where I was asking my boyfriend why employers check credit scores:

boy: A bad credit score means you have poor character.

me: why?
what has caused that shitf?

Sent at 2:32 PM on Tuesday

boy: Because, they can? And some Smart People sat down and did a Study which showed that people with poor credit scores make worse employees. I mean, it's the same reason they run a criminal background check. It's a indicator of how you'll perform as an employee. If you have poor credit, it means you're lazy and shiftless. In the cases where that's not accurate, oh well...it falls in the noise. If you fire 10 people because they have bad credit, and eight or nine would have been bad employees, avoiding those problems is more than worth (at least in actuarial terms) what you would have gained from the one or two good employees.

me: hmm

boy: It's all about the numbers in a more and more purely capitalistic society. "How can the corporation make the most money for the stockholders?"
It comes down to money.
And science.

me: ahhh

Sent at 2:37 PM on Tuesday

boy: Let's say you have 1000 employees, and you run a credit check on them. And let's say that scientific studies show that employees with a FICO score lower than 600 are 5x more likely to steal, take more sick days, and are generally less productive. Let's say that you can quatitate that to mean that each employee with a FICO score less than 600 costs the company $10000/year more than an employee with a FICO score greater than 600. Then, you find that 50 of your employees have a FICO score under that. A consultant comes in and says, "well, it's going to cost you $25000 to replace these employees."
Of course you do it.

me: Oh, I get it.
So what you're saying is
it's gay

boy: Now, if this theory that a lower FICO score makes you a worse employee becomes conventional wisdom in management circles (as it has), you don't have a choice. Because, especially if you're a publicly traded company, your stockholders will accuse you of not maximizing profit, which is a federal crime.

Sent at 2:42 PM on Tuesday

boy: So, you develop HR policies based on these management consultants, studies and conventional wisdom which say, "we run a criminal background check and credit report on all new hires. Any new hires that have a FICO of less than 600 are to be immediately terminated for cause."
And that gets put down in an HR manual...
And it becomes inviolate.

me: wow.

boy: That's how your credit score becomes an indicator of your employement prospects, especially in a competitive market.

me: Yeah...