Hiring the Right People: The Importance of Background Checks

Posted on by Lorrie Hellickson

Don’t judge a book by its cover.

While all people should bear this cliché in mind all the time, it’s the business owners who need to take this saying more seriously, especially when hiring employees. In a world where fraudulent activities are rampant, background checks should be a part of every employer’s recruiting and hiring process. After collecting information and interviewing job applicants, it’s important to check their background and see if they are the right people for the job and company.

You are at Risk

All companies with current hiring processes are at risk of the things fraudulent candidates can cause their business. This includes litigation, property or financial loss, possible violence in the workplace, and even job related accidents. According to a 2010 study by the Association of Certified Fraud Examiners (ACFE), the typical American business will suffer losses of as much as 7% percent of their annual profits as a direct result of employee fraud. In addition, the median amount of fraud perpetrated by employees exceeds $80,000 annually. A comprehensive background check can help employers identify red flags that could suggest the possibility of future fraud.

What You Don’t Know

Research conducted by the Society for Human Resource Management shows that 50 percent of all resumes and applications contain false information. This is why it’s important that you don’t trust a “book by its cover,” and dig deeper into an applicant’s information. The U.S. Department of Commerce, on the other hand, identifies employee theft as the cause of 33 percent of all business failures. A report of The Department of Justice claims workplace violence accounts for 18 percent of all
violent crimes. It also suggests that sixty six percent of negligent hiring trial cases result in jury awards averaging $600,000 in damages.

The Importance of Background Checks

Background investigations can help you avoid unnecessary litigation and financial or property losses due to fraud. It also ensures that your employees can perform their job description well and contribute to your business’ growth and success. The checks you can conduct range from consulting with references to checking criminal records. If your employees have contact with your public or financial transactions, the more you should conduct a thorough background and credit checks to avoid any money-related problems.

Types of Background Checks

There are a many types of employee checks available to help you know if you are hiring the right people for your business. These include criminal history search, national criminal scan, social security or name trace, credit report, motor vehicle records, and reference check. The list further includes military service verification, civil court records, education confirmation, employment verification, credentials and licenses, sex offender registry, and drug and alcohol screening. You can hire a third party entity to conduct a background check on your prospective employees in compliance with standards set forth by the Federal Trade Commission.

About the Author

Lorrie Hellickson is an Operations Manager at an SEO firm in New York. He/She maintains a blog that focuses on trends and breakthroughs in social media.