Employers know that background checking is an important part of the hiring process, yet few have the time to do extensive preemployment screenings. And, in the case of high-turnover positions, the costs of doing numerous background checks can be prohibitive.
Yet the consequences of a bad hire can be even worse. Consider these statistics:
According to the U.S. Chamber of Commerce and the American Management Association, about 30% of all business failures are due to employee theft and related forms of dishonesty.
The Workplace Violence Research Institute says action against an employer for negligent hiring is becoming increasingly common. The average award in security negligence cases is more than $1 million.
Inadvertently hiring an illegal alien can result in fines ranging from $250 to $10,000 from the Immigration and Naturalization Service.
There are several Web-based services, including Avert Inc. and ChoicePoint Inc., that offer similar background checks for fairly reasonable prices. The companies are governed by the Fair Credit Reporting Act and must verify that their clients are registered businesses and plan to use the information for employment purposes only.
The data used by these companies is supplied to them by the credit bureaus, government sources, and privately compiled databases. Usually the report is returned via the Internet within minutes. In addition, Avert and ChoicePoint have couriers who are sent to the courts to check records. The turnaround for the court information may take a couple of days.
" The HR manager or the small business has a lot to do as far as time management goes," Jeff Russell, a spokesman for Avert, tells Recruiting Trends. " With unemployment being so low, employers have to make quick decisions. If they are going to make a quick decision on their own, they are taking a risk."
These low-cost background checks are best for employers who must cope with high-turnover positions, especially those in the fast-food industry, retail, building maintenance, and construction, says Kirby Lewis, president of Formis, a division of ChoicePoint Inc.
" Employers are not going to spend as much money in high-turnover positions as they probably would with someone who will be with the company for a number of years," Lewis says. " It' s confirming a lot of information that would appear on the job application. You get a good feel on whether they told you the truth or not."
An additional indirect result of these services is that dishonest candidates take themselves out of consideration if they know that the information they provide will be double-checked. " It makes them more honest on the front end when they are filling out the application," Lewis says.
Employers also find that using a preemployment screening service standardizes the hiring process, says Russell. For example, two of Avert' s clients, Radio Shack and Walgreens, are able to be consistent in their hiring process in all the states in which they have stores, he adds.
Some Job Seekers Lie on Applications
Avert Inc. processed about 800,000 background checks for about 8,000 employers in 1998. Here are the results of the company' s 1998 Hiring Index:
7%, or 56,000, had a criminal record in the last seven years.
32%, or 256,000, misrepresented employment records.
14%, or 112,000, had credit reports showing judgment, lien, or bankruptcy.
25%, or 200,000, misrepresented education or credential records.
20%, or 116,000, had multiple moving violations, DWIs, or suspended licenses.
11%, or 88,000, had a previous workers' compensation claim.
Comparison of Employment Screening Services
Company: ChoicePoint Inc. Alpharetta, GA 800-342-5339
What' s Included: Social Security number search, issuance state and date, and Social Security death records; address and telephone verification; nationwide fugitive search and employment termination report search
What' s Included: Instant First Check ($4) - - verifies Social Security numbers; Instant Address Link ($10) - - all addresses linked with Soc. Sec. Number Instant Credit Link ($10) Instant Workers' Compensation ($12)
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