From an article by Anna Mathieu:
When hiring someone into your company, you vet them for their experience and ability to present themselves professionally. You verify their expertise and skills first by absorbing their resume and then getting acquainted in one or more interviews. Most hiring managers have a good sense of people and can feel pretty confident about the personal qualities, skill set and cultural fit to the company.
Nonetheless, taking someone at face value can be risky. A background check should be a policy routine; and all offers made by the company should be contingent on passing a background check.
Cost of Hiring
A background check is crucial for many reasons. The cost of recruiting and hiring a new person is expensive; estimates range at 1.5 to 5 times the annual salary.
Think of the staff time involved, the recruiting fees or internal HR department costs, advertising, travel and relocation expenses, training costs and time. These are pretty standard costs, but they are often not calculated out.
If you hire the wrong person, you will have to start again and you will potentially face additional costs such as legal fees, severance pay, and loss of intellectual property.
Having to separate yourself from a bad hire may cause the company to miss deadlines, cause unnecessary distractions, lower productivity, lost sales opportunities, and generally disrupt business. A bad hire risks damaging the morale of current staff, clients and other stakeholders.
In a worst case scenario, you may face a lawsuit for "negligent hiring".
Neglecting to verify person's history to rule out theft or embezzlement; drug or alcohol use; falsification of licenses; employment history; and educational certifications can be perilous. If a third-party is injured in some way by your employee and brings a case against you for violating the "duty of care" in hiring, you face escalating legal and human costs, not to mention legal liability.
What's in a background check?
Not all background checks are the same; there are various types of background checks. What you need will depend on the company and the position. Background checks may include: a credit check, a criminal background check, a reference check, and independent verification of employment or education.
Credit and criminal background checks should be done by a third-party vendor. Reference checks and independent verification can be done internally or by a third-party.
Credit and Criminal Background Checks
You should have a credit check only where relevant to the job or company.
A financial services company may employ them widely due to the nature of the business. Certain roles require the handling of money, client's financial information, or the company's finances, so a credit check is relevant.
Performing a criminal check will also depend on the job description and the company.
Certainly you would check the driving record of an employee who will be driving for the company. Investigating the criminal background of a property manager or care giver who enters client's homes is relevant.
Checking for theft or violent crimes to ensure the safety of the workplace and clients is considered a "duty of care" in hiring. If you are sued by a third-party because of the action of an employee, and there is something in the employee's past that was easily discoverable through a simple background check, you risk losing a suit of "negligent hiring". This has also been applied to the hiring of independent contractors.
All information contained in a credit or criminal background check may not be material, for example you should seek to obtain only the last 7 years of data, and you should exclude history of bankruptcy or a single incident of wage garnishment.
Determine and specify what data is actually provided to you by your vendor in advance.
Reference Checks and Independent Verification
Checking references should always be done.
It is a good idea to obtain contact information independently, i.e. look up the number in the phone book, do a search on the internet, call the company and ask for the reference. When confirming a reference, there is a duty of honesty.
This does not mean that a reference giver is obliged to disclose negative information, but they are not allowed to misrepresent an employee's work history either.
Independent verification of jobs or education can be quite simple. An internet search may show the list of graduating degree holders in a given year, or a call to the school can confirm that a specific degree was awarded.
Applications should include questions.
If there is negative data in the background check and the applicant lied on the application, then the adverse decision is based on the misleading answer or dishonesty of the applicant and not the actual negative data.
Learn about Barringtons Background Check Services here.
Blayne Webb, Director, Barringtons