Few businesses boast perfect records on hiring decisions.  Mistakes, unfortunately, are commonplace and they typically result in workplace disruption, lost revenues and low employee morale.  In some cases, however, they have far more serious effects, including significant financial losses, litigation and damaged reputations.  In extreme (but not unheard of) cases, they can put a firm out of business.

With these risks in mind, it is astounding that many businesses do not conduct background checks on applicants, especially now that technological advances have made these checks less expensive and less time consuming.   In today’s employment market they are a necessity, not a luxury.  Firms that recognize this are the ones with a long-term perspective on the bottom line.

Why are background checks so critical?  Consider the statistics:

  • According to a 2012 Career Builder survey, more than a third of employees have embellished their job responsibilities at some point, and nearly a fifth have lied about their skills. 
  • The typical organization loses five percent of its revenues to fraud each year, according to the 2012 Report to the Nations from the Association of Certified Fraud Examiners.  Such losses are, in nearly half of the cases, never recovered.
  • More than one third of organizations have reported incidents of workplace violence, according to the Society for Human Resource Management (SHRM).
  • According to the Privacy Rights Clearinghouse, negligent hiring lawsuits are increasing.

These statistics hardly inspire feelings of security among employers.  Recognition that many job applications contain falsifications – and that such falsifications may hide histories of violence or fraud – should spur employers to make background checks a matter of course.  Although comprehensive checks require financial investment, they save money in the long run by ruling out applicants who are not forthcoming on their application and applicants with criminal records – the benefits outweigh the costs. 

What exactly do background checks involve?

Background checks range from basic verifications to in-depth inquiries.  A list of common search areas provided by the Privacy Rights Clearinghouse includes:

  • Driving records
  • Vehicle registration
  • Credit records
  • Criminal records
  • Social Security no.
  • Education records
  • Court records
  • Workers’ compensation claims
  • Bankruptcy
  • Character references
  • Neighbor interviews
  • Medical records
  • Property ownership
  • Military records
  • State licensing records
  • Drug test records
  • Past employers
  • Personal references
  • Incarceration records

The level of detail required varies according to the business of the firm and the nature of the position to be filled.  Not surprisingly, jobs that involve handling classified data or large funds should require more extensive background checks.  But even the most basic background inquiries offer the benefit of self-selection – cases in which candidates voluntarily remove themselves from consideration when they discover that background checks are required.  This helps to eliminate applicants early in the process and saves time.

Few firms would consider working with a vendor without conducting a minimum of due diligence.  There is no logical reason why businesses should not approach hiring in the same fashion.  It only takes one negligent hiring lawsuit to destroy a firm.  By the same token, it takes only one background check to help prevent the negligent hiring lawsuit in the first place.


About the Guest Blogger:

Insperity, a trusted advisor to America’s best businesses for more than 27 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity® Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace.  Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization™ solution.  Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services.  Insperity business performance solutions support more than 100,000 businesses with over 2 million employees.  With 2012 revenues of $2.2 billion, Insperity operates in 57 offices throughout the United States.  For more information, call 800-465-3800 or visit http://www.insperity.com.