Why Companies Need Background Check and Employment Screening Services

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There are several reasons companies, individuals, and non-profit organizations should use background check and employment screening services. The reasons include:

limiting personal and corporate liability,
dramatically improving the quality of your new hires, and
reducing hiring and future litigation costs.

Organizations have many choices in the selection of a pre-employment screening process. Effective programs that are implemented professionally that use a consistent approach will provide the best opportunity of hiring effective and loyal employees. On the opposite end of the spectrum, inappropriate hiring decisions can expose a company to a myriad of potential problems, both legal and operational.

Listed below are several statistics regarding resume accuracy, criminal records, organizational risks, litigation results, and drug abuse among job applicants.

Applicant Statistics
The Organizational Costs for a Bad Hire
How to Avoid Becoming One of Those Statistics
False Information
On-the-Job Violence
Drugs
Employee Theft
Bad Hires

Applicant Statistics

40% of resumes have errors or omissions
Nationally, 25% of all applicants have criminal records, but only 12% admit it

The Organizational Costs for a "Bad" Hire

Lawsuits for negligent hiring average $50,000 to $250,000 to litigate — Employers lose 72% of cases
It is estimated that 48% of retailer shrinkage is due to employee theft
US companies lose an estimated $600 billion annual through internal fraud and theft
Executive-level scandals are plaguing companies of all kinds

How to Avoid Becoming One of Those Statistics

Notify all recruits that you perform background checks
Establish clear policies and procedures for evaluating candidates

Apply Policies Uniformly

Develop written screening procedures for each level of employment

Include procedures for executive-level recruits and prospective board members

Ensure hiring managers understand the procedures and the reasons behind them

Establish checks to be sure in-house staff and contracted screening companies follow the procedures

Use Standardized Documents

Each candidate should complete and sign:

Application for employment - Condense for top executives, if necessary

Consumer report authorization - Minimizes your company’s risk and simplifies the screening process

Follow Applicable Regulations

Include questions about criminal background

State that a conviction is not an automatic bar to employment

Adjust to Regulated Changes

Federal, state and local regulations change frequently

Know where to get your updates

Perform Background Checks

Increases confidence in the company’s due diligence

Increases confidence in hiring decisions

Helps reduce turnover and the associated expense

Fail-Safe Your Procedures

Check everyone, even executives

Summarize the results on a standardized form

Paints a complete, easy-to-read picture

Makes it easier to compare candidates

Compare report to application and interview notes

Can bring inconsistencies to light

Perform new background checks when employees are promoted

False Information

9% of job applicants falsely claimed they had a college degree, listed false employers, or identified jobs that didn't exist.
Source: Resume Inflation: Two Wrongs May Mean No Rights, by Barbara Kat Repa, Nolo.com, 8/801
34% of all application forms contain outright lies about experienced, education, and ability to perform essential functions on the job.
Source: Wall Street Journal
11% of Job applicants misrepresented why they left a former employer.
Source: Resume Inflation: Two Wrongs May Mean No Rights, by Barbara Kat Repa, Nolo.com, 8/801
Nearly one-third of job applicants listed dates of employment that were inaccurate by more than three months.
Source: Resume Inflation: Two Wrongs May Mean No Rights, by Barbara Kat Repa, Nolo.com 8/801
As many as 30% of Job seekers exaggerate their accomplishments and about 10% “seriously misrepresent” their background.
Source: The Complete Reference Checking Book, by Edward C. Adler

On-the-Job Violence

On-the-job violence costs employers $36 billion each year.
Source: Workplace Violence Research Institute
The average award in a workplace violence lawsuit exceeds $1 million per case.
Source Workplace Violence Research Institute
Workplace violence is the foremost concern of corporate security directors at Fortune 1000 companies. Other top concerns include employee selection and screening concerns, fraud and white-collar crime, theft, drugs and alcohol in the workplace, and unethical business practices.
Source: Pinkerton, Top Security Threats, Year 2000 Survey
In May of 1999, an estimate 16,400 threats were made, 723 workers were attacked and 43,800 were harassed every work day.
Source: The Workplace violence Research Institute
57% of respondents reported that a violent incident occurred in their workplace between 1/95 and 7/99.
Source: Society of Human Resource Management, Workplace Violence Study, 1999

Drugs

One in six workers has a drug problem.
Source: Don’t Hire a Crook, Dennis DeMay and James R. Flowers Jr., 1999 Facts on Demand Press, pg. 90
87% of major US firms now test employees, job applicants, or both, for drug use.
Source: Don’t Hire a Crook, Dennis DeMay and James R. Flowers Jr., 1999 Facts on Demand Press, pg. 90

Employee Theft

30% of all business failures are caused by employee theft.
Source: American Management Association and US Chamber of Commerce
14.7% of all applicants admit to theft of merchandise from an employer.
Source: Reid Psychological Systems (Don’t Hire a Crook, Dennis DeMay and James R. Flowers Jr., 1999 Facts on Demand Press, pg. 88)
4.4% of all applicants admit to theft of cash from an employer.
Source: Reid Psychological Systems (Don’t Hire a Crook, Dennis DeMay and James R. Flowers Jr., 1999 Facts on Demand Press, pg. 88)
33% of all applicants admit to being tempted to steal from an employer.
Source: Security Magazine, 3/97

Bad Hires

It costs $7,000 to replace a salaried employee, $10,000 to replace a mid-level employee, and $40,000 to replace a senior executive.
Source: Recruiting Times
In 1999, employers lost 60% of negligent hiring/supervision jury trials.
Source: The Reish & Luftman Practical Guide to Employment Law