Employment Screening Needs Assessment

By: Insperity Staff
February 21st, 2011

Company Characteristics
The vast majority of companies today perform some sort of screening or background check on their employees. It makes sense because, regardless of industry, you’re giving your staff access to equipment, facilities, information and perhaps even money.

Of course you’ll want to make sure they don’t have a history of theft, violence or other misconduct.

Still, companies in certain industries are more at-risk for applicant fraud and misrepresentation than others. According to a CareerBuilder.com survey, industries that appear to most often encounter fraudulent resumes are:

• Hospitality (60 percent of hiring managers report finding lies)
• Transportation/utilities (59 percent)
• Information technology (57 percent)

As a result of more companies using employment screening practices, the percentage of criminal record convictions being flagged has gone up, from 8.5 percent in 2005 to 9.5 percent in 2007, according to a report from the Society for Human Resource Management (SHRM). Industries with the highest criminal record hit ratios were:

• Construction (15.4 percent)

• Automotive (13.9 percent)

• Retail (13.7 percent)

The report goes on to say that red flags identifying criminal records in the manufacturing sector grew from 11.6 percent in 2006 to 12.6 percent in 2007; and in the food services sector from 12.1 percent in 2006 to 13.4 percent in 2007.

So while all employers should conduct due diligence on their prospective hires, doing thorough employment screening is even more important for industries where problems are more common.

Common Pain Points
Impractical as it may seem, employers and job applicants have profoundly competing interests. On one hand, employers must rigorously uncover all they can about a candidate before making a hiring decision. On the other hand, most job seekers will want to avoid disclosing any personal or professional information that could potentially harm their chances at snagging an interview or a job.

Rigorous background checks can consume an employer’s valuable time and resources. In order to save time and money, more and more employers are outsourcing their employment screening processes for two basic reasons:

1. To successfully manage the above-referenced competing interests; and

2. To gain the peace of mind that comes with knowing experienced professionals are helping minimize risks associated with today’s constantly changing regulatory environment.

In fact, according to survey results reported in January 2009 by SHRM, the outsourcing of general and criminal background checks is expected to increase 65 percent over the next three years, more than any other HR practice.

That’s because employers want to ensure that they’re not exposing themselves to damaging problems such as high turnover, workplace violence, fraud or negligent hiring lawsuits.

Know the Drawbacks
If you Google the terms “employment screening” or “background checks,” you will find a healthy listing of advertisers and vendors for these outsourced services. As with any other professional consulting business, you will find that some vendors are more reputable and reliable than others.

Ironically, employers might feel as though they need someone to check the background of their potential background checking partner. If employers are not careful, or if they do not know firsthand who they are dealing with, they can end up paying in more ways than one.

For instance, given rising identity-theft concerns, job applicants and employees might be alarmed to learn that some employment screening vendors are transmitting applicants’ personal data to teams in offshore locations such as India or the Philippines. This personal data can include information about employees and applicants such as social security numbers and life histories. If made fully aware, applicants and employees might feel very uneasy and legitimately wonder if U.S. privacy laws can protect them in faraway locations.

“Unfortunately, the practice of outsourcing background checks raises other issues that companies should consider, because many background check companies are also outsourcing some or all of their work,“ says Jeff Jones with Insperity Employment Screening.

Jones says the information needed for a background check is considered personal information and needs to be protected in an age of legitimate concern about identity theft.

Any company that outsources background checks needs to ask these questions:

• Just how protected is a candidate’s personal information once it is sent to a background check company?

• Is that company, in turn, also outsourcing portions of the work? Is it being sent overseas to places where identity theft is more prevalent?

• Do all the companies and people that touch the data have security measures in place to protect the information?

• And, how will all the passing of data affect the turnaround time and ultimately the accuracy of the results?

At companies such as USDatalink, all verification requests are performed in-house, which greatly lowers the risk of identity-theft incidences. Criminal records are processed using local USD-approved researchers, not regional third-party clearinghouses.

“This practice speeds up turnaround time and also protects candidates’ personal information,” Jones says. “Insperity Employment Screening processing facilities are security-badge protected and our servers use state-of-the-art data security technology.”

Budget Expectations
Doing it yourself. There is nothing preventing a company from conducting its own background check on employees without involving a third-party. Once the candidate gives permission for the screening, the employer is free to seek out the information, much of which can be obtained free of charge or for a nominal fee. The real “cost” associated with the do-it-yourself approach to employment screening is time. Checking references, verifying work history, delving into criminal records — all of this is time consuming. And unless you have a significant HR department, you’re looking at taking someone else away from their regular duties for several days to do a thorough screening.

Hiring a service. A quick criminal background check of national online databases can cost as little as $19.95. More thorough checks by respected screening companies can cost $100 or more. Typically these outsource providers will seek to contract with client companies for their services. That means that the vendor will handle all background checks the company needs for a regular monthly or yearly fee. The fee is typically based on the number and type of checks the organization wants to run.

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