June 12th, 2017 | Sterling

The Critical Step of Hiring: Background Screening

Woman peaking over cube wall

Despite all the hiring committees, phone screening, in-person interviews, tests and other vetting methods, employers and recruiters can make bad hiring decisions. Finding the perfect new employee can be described as searching for a needle in a haystack. For many employers, it’s tempting to hire people without performing due diligence or background checks on the applicant. Yet, what happens if the job candidates turn out to be different from what you originally thought during the interview and hiring process? It is essential that you identify a bad hire before she or he becomes your new hire.

The Price of a Bad Hire

According to Hr.com, 53% of job applications contain inaccurate information with 34% of all application forms containing outright lies about experience, education and the ability to perform the basic functions of the job. Resume lies include exaggerated job titles and responsibilities, falsification of education credentials, inflated salaries, misrepresentation of dates and employment and falsifications stating they are eligible to work in a particular country. According to Bradford Smart in Topgrading 201: How to Avoid Costly Mis-Hires, the average cost of a mis-hire is four times the annual salary for supervisors and up to 15 times the annual salary for executives. The numbers could go even higher if the employee commits fraud on the job.

There are many risks associated with poor hiring decisions. Our white paper, Screen Now, Save Later, explores the risks and what can be done to prevent them from happening by having a proper background screening policy.

Don’t Hire the Wrong People

The impact of one bad hire can spread throughout the entire company and leave behind harmful consequences to the company’s reputation, employee morale and even financial assets. Two red flags to look for in candidates who “look” good, but in reality might not be:

  1. Resume Fraud – According to SHRM, 78% of job applicants have misleading resumes. Of these, 21% state fraudulent degrees and 40% include inflated salary claims. Best practice is to institute a consistent program of employment verifications and reference checks on all candidates no matter how big or small the job role.
  2. Criminal Records and Behavioural Problems – Past bad behaviour of job candidates are another serious concern. Workplace violence is also a very real concern. There are about 350,000 cases of workplace violence each year in Canada. Nearly 20% of these incidents including physical assault, sexual assault or robbery, occurred in the victim’s workplace. Recruiters and employers must take extra steps to obtain all pertinent information from candidates including work experience. Recruiting a bad employee can not only inflict damage on a business but can also put it on the wrong side of the law. Laws imposing obligations on organizations to conduct the right checks on candidates and employees are becoming more common in Canada.

Why In-House Pre-Employment Screening is a Challenge

While background screening is becoming more common, screening practices and policies vary across organizations. Each company can create their background screening policies and programs based on their needs. Some may require just simple employment verifications or reference checks while others might include a criminal record check, education verifications, credit history and social media checks.

Performing thorough pre-employment background screening in-house is costly in both time and resources. This is a challenge for all organizations, but particularly for small and medium-sized businesses. Pre-employment screening requires specialized expertise that most recruiters and hiring managers lack. Background screening entails more than just the actual checks. Employers must also obtain formally documented consent from candidates, as well as manage the process and the documents.

Benefits of Using a Third-Party Background Screening Company

Having a third-party source frees up the time of HR professionals to do the important part of their jobs: hiring and training new talent. Benefits of hiring a third-party background screening company, such as Sterling Talent Solutions, include:

  • Speeding up the hiring process
  • Allows for more knowledgeable screening
  • Frees up staff to focus on revenue-generating activities
  • Promotes compliance with all applicable federal and provincial laws

Hiring an employee requires a lot of time and money, so it is important to perform due diligence with background screening. Taking the time to verify resume information will give you peace of mind that you are hiring the best candidate with “real” qualifications. Selecting the wrong applicant based on falsified experience or credentials can be a costly mistake and result in poor performance, low employee morale, reduced productivity, negligence lawsuits and bad PR for the company. Learn more about the importance of preventing a bad hire and why background screening is the most critical step of the hiring process in our latest white paper, Screen Now, Save Later.

This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.

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