You may see employee background checks as more of a burden than a benefit. But rushing the process or quickly checking it off your list could be one of the most expensive mistakes you make.
In 2013, 66 percent of U.S. employers reported they made a bad hire in the last year, according to a study from CareerBuilder. Of those, 27 percent said that this mistake cost them more than $50,000.
A loss like this can cripple any business, especially if it’s a repeated mistake. A thorough employment screening process can be your first (and most effective) line of defense against making bad hiring decisions.
Here are three reasons why conducting thorough pre-employment background checks should be at the top of your to-do list.
1. Using out-of-date and incomplete information puts your business at risk
A database of 500 million criminal records? Surely, it will have all the information you need to properly screen candidates, right? Wrong.
National criminal databases house less than a quarter of the nationwide criminal records. And, typically, 80 percent of county records are not included in these databases.
Fact: There isn’t a true centralized nationwide criminal records repository available to the public.
The “extensive” and “comprehensive” databases that some employment screening companies claim to use are created and maintained by private businesses. Therefore, there are no laws or standards that determine the type of records they collect or where they come from. Moreover, these databases aren’t updated as frequently as you might think.
Can you really trust a potentially out-of-date and incomplete database to screen your candidates?
It’s a risk you can’t afford to take. And if you’re a small business, you may be even more vulnerable to fraud and criminal activity than your larger competitors.
Since it’s well known that larger companies have screening programs in place, applicants with something to hide are more likely to target smaller employers.
Companies with fewer than 100 employees lost an average of $147,000 from occupational fraud, as compared to $100,000 for companies with 1,000 to 10,000 employees, according to a study by the Association of Certified Fraud Examiners (ACFE).
Moreover, if your company isn’t thoroughly screening employees and something happens, such as fraud or workplace violence, your business may be held responsible.
So how can you make confident hiring decisions?
When using a multi-state criminal records database search, your employment screening service should verify any findings at the originating court before it’s reported to you. This way you know you’re getting the most accurate, up-to-date information about your candidates.
Ideally, your screening service should go directly to the courts, corrections departments and probation departments to collect background information. Many times this means searching criminal history records all the way down to the county level.
2. Productivity predators do more damage than you think
Thirty-eight percent of employees have lied about their past job experience, while 18 percent have lied about their skills, according to a CareerBuilder survey.
Employees who are ill-equipped for the job won’t be able to carry their own weight. The inaccuracies and shoddy work will trickle into other areas of your company, making everyone else’s job much more difficult. Your high-performing employees will be forced to take time away from their duties to correct poor-performers’ mistakes. Not only is a morale killer, but it can also lead to costly errors and slower production.
A CareerBuilder study found that 36 percent of businesses reported a loss in productivity as a result of their bad hiring decision.
When your employees aren’t productive, the quality and quantity of your company’s products and services will suffer, causing a drastic dip in your revenue.
It’s hard to be sure about a person’s personality and skills in one, or even two, interviews. And a basic background check or criminal records check won’t uncover lies about previous education or work responsibilities. Verifying employment, education and work experience, in addition to running a criminal background check, can help you quickly spot any inconsistencies or exaggerations on candidates’ resumes.
3. Replacing an employee isn’t cheap
While you may save a few bucks on the initial service fees, a haphazard employee background check could cost you much more down the road.
The CareerBuilder study defined a bad hire as someone who either turned out to be a poor fit for the job or didn’t perform it well. Of the respondents, 31 percent reported that the cost to recruit and train another worker to replace this bad hire was the most damaging consequence.
A direct replacement can range from 50-60 percent of an employee’s annual salary, according to a report from SHRM.
Spare your business unnecessary expenses by hiring the right person the first time. A comprehensive employee background check verifies candidates’ education, work experience, skills, expertise, etc. so you can make sure they have the necessary skills to be successful before you put them on your payroll.
One last thought
You spend thousands of dollars to hire, onboard and train new employees. A thorough employment screening process is a simple and relatively inexpensive (compared to the costs of not doing it) way to ensure you’re making the best decision for your business.
Make sure your next hire will help your business, not hinder it. Insperity Employment Screening verifies credentials in-house and goes directly to the source for background information. We offer a wide array of screening options that can be customized to suit your business.