The importance of background checks on potential hires

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Background checks help businesses verify candidates during the hiring process

Every time a business hires a new employee, it is an investment in time, resources, and money.

In an ideal situation, we want to have all the information we need to assure us that we have made the right decision.

Most companies have their own unique set of requirements for conducting background checks but the primary goal is to have the most accurate overview of a candidate before the contract is signed and submitted.

While the perfect candidate might not exist, a thorough background check will probably get a business as close as possible to one. Hence why it can be a laborious process involving various components and stages.

This, of course, can take up a lot of time which is why some companies skip this step altogether. Especially when they’re in a hurry to get a position filled.

The most basic pre-employment screening includes reference checks, past employment and education verification and criminal history checks. Each of them has its own set of compliance procedures that must be adhered to.

Familiarising yourself with the various governing laws surrounding human rights and privacy protection is a crucial step. All employers must be sure to have a black and white policy that has been vetted and approved by a legal body.

This article aims to provide Airswift readers with an insightful overview of the importance of background checks for employment and how it can benefit a business’ long-term growth plans.

Why companies do background checks

Globalisation has massively impacted today’s workforce. Businesses are expanding internationally faster than ever and forming cross-border allegiances to maximise their growth.

This rapid movement towards borderless trade also means that companies can connect with an almost infinite pool of international talent. In situations such as this, background checks can help organisations evaluate and hire from a rapidly expanding and evolving workforce.

Here are some of the reasons why comprehensive background checks are important before hiring employees:

Verify employment qualifications

At its most basic level, a thorough pre-employment check can help employers determine whether or not the information provided by a candidate is true.

78% of job seekers lie or consider lying during the job application process. Some of the most common ones include:

Being proficient in skills they barely use
Working in a company longer than they actually have
Having or completing a degree from a prestigious educational  institution
Having a higher GPA by more than half a point
Earning a higher salary than they actually did
Holding a higher position in a previous company than they actually did

Candidates often exaggerate these areas because they believe them to be easier to get away with during the interview process.

Most of them don’t require a skills test and according to Yves Lemursi, CEO of reference checking company Checkster, candidates assume that hiring managers are unlikely to verify their statements with previous employers.

This heightens the risk of unknowingly hiring someone who is unqualified for the role.

While in some instances, these events can go unnoticed, hiring a candidate who turns out to be a poor fit can be detrimental to the company as it can impact the business across various levels.

Productivity, team morale, quality of service, customer and employee relationships and company growth are some of the areas that can be jeopardized due to an unsuitable hire.

Employment background checks can help employers avoid these mistakes and save themselves time, money and frustration.

Protect your organisation and workforce

As an employer, you are responsible for protecting everyone involved with your business. This includes your staff, business partners as well as your customers.

Another purpose of background checks is that it acts as a pre-emptive measure to ensure the safety of your company and associates.

Conducting criminal history checks can be a sensitive subject but it’s important to be transparent about these screenings with your candidates.

From collectively dealing with the effects of the Covid-19 pandemic to navigating an uncertain socio-political landscape, we are currently a world in recovery. Humanity is at its most vulnerable and now is the time for businesses to work towards creating a safe and accepting work environment.

Fostering a culture of equity and inclusion is a long-term commitment and employers must work towards implementing this across all avenues of their business.

Stringent screening procedures can help you identify problems before they happen and will also protect your business from discriminatory or threatening behaviour.

Implementing a zero-tolerance policy toward harassment, bullying, racism and sexism is a stepping stone toward creating a happier, healthier workforce and improving employee retention.

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Safeguard customer data and cybersecurity

More than 34% of businesses around the world are affected by internal cybersecurity threats. These threats have increased by 47% over the last two years.

Digitisation and interconnectivity have altered the way we handle and store information. Most companies secure their sensitive data on in-house servers that are accessible to select employees, many of whom have remote access to this information.

This means that they can access highly private information anytime and anywhere so long as they have an active internet connection. Increasing the potential for various security breaches that can have egregious effects on the company and its reputation.

Conducting stringent background checks to avoid internal data security breaches is not only essential for the sake of legal compliance but is also a necessary measure to protect your customers’ privacy.

The process of hiring and vetting a job applicant can be painstaking and sometimes expensive, especially when there are various stages involved but the losses you will have to endure in the event of an internal security threat will be far greater than the initial investment of a thorough employee background screening.

For companies that are responsible for handling sensitive customer data, regular employee screening should also be conducted on existing employees. Especially for anyone who will be transitioning into a role where they will have more interaction and responsibility for any sensitive information.

Maintain legal compliance with governing bodies

Making sure that you are legally compliant with the various governing rules and regulations surrounding labour law can be arduous.

Couple this with the fact that many businesses now have international subsidiaries and must manage compliance issues for several different countries - it’s easy to understand how this can be an extremely complex process.

By screening candidates beforehand, you can ensure that the employees you hire have the legal right to employment and have all the required paperwork and qualifications that will allow them to perform work in a country.

In the UK for example, if you knowingly employ an illegal worker or have reason to believe that the individual does not have the right to work in the country and continue to hire them, you can face a prison sentence of up to five years and unlimited fines.

Failure to perform necessary background checks can bear a penalty of up to £20,000 per illegal worker.

There is also a risk of reputational damage to your company should the Immigration Enforcement publish your company’s details – a practice performed to deter other businesses from hiring illegal immigrants.

Navigating legalities surrounding background checks

Background checks are a valuable resource for employers, recruiters and hiring managers.

It has proven efficacy at identifying qualified applicants during the hiring process but it’s important to observe the various laws that are put in place to protect the privacy of the candidate.

Before conducting a background screening process, take a step back and identify the purpose behind it. Some information is irrelevant to a person’s capacity to perform a job while others (such as medical or credit history) will require written consent from the candidate.

It is on the business to find the balance between gathering essential intel to inform their hiring decision and respecting the individual’s right to discretion.

All countries have different laws set in place to protect the privacy of employees. Businesses that fail to observe these standards can face serious legal repercussions.

In the United States, for example, one of these legislations is the federal Fair Credit Reporting Act (FCRA) which was enacted to protect the rights of individuals by regulating the collection of their credit information and access to their credit reports.

One of the most important aspects of background checks is to be sure that the information being gathered is strictly for job-related purposes.

Some activities of a background check may not be relevant. In any case, pre-employment screening procedures should be transparent and consistent for all potential hires of the same company.

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Types of Checks

Here are some of the most common checks conducted during the pre-employment screening process.

Reference checks

Reference checks allow employers to verify a candidate’s education and employment history by speaking to previous supervisors, professors, and colleagues.

Some argue that reference checks bear little opportunity to reveal any red flags as candidates are only likely to list down references that will provide positive reviews.

However, advocates believe that reference checks can help employers learn more about an applicant’s strengths and weaknesses.

To ensure more accurate and honest answers, ask specific, open-ended questions to get the reference to provide you with clear examples of how the candidate contributed to certain tasks and handled various situations.

Education and/or resume verification

As previously mentioned, many job applicants have admitted to doctoring their resumes in an effort to get ahead in the job market. Education and resume verification let employers confirm that the information provided by the candidate is in fact true and accurate.

Information can be verified by contacting the human resources or administrative department of the candidate’s listed past employment and education facility.

Social media checks

Social media checks have grown in popularity amongst hiring managers and recruiters in recent years. It allows them to humanise the candidate and get unique insight that extends beyond the resume.

Screening candidates' social media profiles can also help shed light on any potentially problematic behaviour that might not be visible during the interview.

An example of this would be Teen Vogue’s recent decision to part ways with Alexi McCammond after backlash surrounding her racist Twitter postings in the past.

Criminal checks

Due to their sensitive nature, criminal checks tend to be the most complex among the various screening methods employed. They are used to determine whether an applicant can potentially create an unsafe environment for staff and customers of a business.

Criminal background checks might include record searches on federal and state criminal records, sex offender registries, terrorism watch lists and national criminal databases.

Bear in mind that criminal checks often follow strict federal, state and local laws surrounding employee screening so be sure to confirm that you are fully compliant with these regulations.

Credit background checks

A credit background check is often used to determine if a candidate is financially responsible. This would be especially important if they’re interviewing for a role that will involve them dealing with a company’s finances and fiscal records.

Credit checks should only be done upon approval of the candidate and if it is relevant to the position they are applying for.

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Avoiding negligent hiring claims

Another benefit of employer background checks is that it helps companies avoid negligent hiring claims. This is particularly important if your prospective employee will be in close contact with customers and business associates.

As a business owner, you have a responsibility to conduct a reasonable investigation of all your employees prior to hiring.

The best thing you can do to protect yourself, your employees and your customers is to ensure that your hiring process does a thorough job of verifying that the applicant is trustworthy.

Negligent hiring occurs when an employer fails to verify that a prospective employee may present a danger to the organization.

Negligent hiring claims can be brought by an individual when an employer fails to screen a worker adequately, and that worker subsequently harms someone else. – Forbes.com

In a nutshell, what this means is that if you are not diligent about finding out a candidate’s background, you could be responsible for their actions. Especially if it is proven that the situation could have been avoided with a proper background check.

Negligent hiring can bring the most damage in industries that involve one-to-one care, having access to confidential information and dealing with finances.

All employers should educate themselves on what constitutes negligent hiring to avoid the risks of being subject to negligent hiring claims.

>In the United States, certain laws make it mandatory for employers to perform criminal history checks on candidates who are interviewing for positions with special security concerns such as ports of entry, working with the disabled, children, the elderly etc and government positions.

While most states ban the checking of arrest records, employers are allowed to inspect conviction records. However, the conviction must bear some relation to the job to justify not hiring the applicant.

Be sure to familiarise yourself with the laws that govern criminal record disclosure to ensure that you don’t violate them during the background check. Ultimately, remember that the checks you conduct must be non-discriminatory and consistent for each candidate.

Safeguard your company with a compliant background screening policy

Maintaining a compliant background screening policy for your company will allow you to evaluate and hire fairly and consistently.

As laws surrounding employee privacy and protection continue to evolve and change, so must your screening policy.

Working with a third-party Employer of Record (EOR) and workforce solutions provider like Airswift will allow businesses to benefit from our expertise when setting up a comprehensive screening program and also speed up their hiring time.