Hiring is one of the riskiest decisions a hiring manager or business owner makes. Most large companies run pre-employment background checks. They simply include it in their standard recruiting process as a safety net.
Most small businesses, on the other hand, don’t run background checks. Yet small businesses would benefit from pre-employment screening just as much as larger companies.
Here are just a few of the reasons why we believe background checks are so important.
When you hire people without checking backgrounds, you’re trusting blindly. Without checking, there’s no way to know whether the experience and credentials they claim are accurate.
Hiring someone with false credentials might directly affect your existing employees. In fact, 95% of employers surveyed by Robert Half feel that a poor hiring decision affects the morale of the whole team. The survey also showed that managing a bad hire can take 17% of a supervisor’s time (almost a whole day per week).
2. Workplace Theft
Many business owners are worried about employees stealing cash and inventory, and that’s a valid concern.
Businesses estimate that they lose 5% of revenues to employee fraud each year, according to a 2014 study by the Association of Certified Fraud Examiners (AFCE). The study also found that the median fraud loss at businesses with less than 100 employees is 28% higher than at larger companies ($154,000 at smaller companies vs. $120,000 at larger ones).
But money and inventory aren’t the only concerns. Many small employers neglect to consider other forms of potential theft, such as cybercrime. With fewer resources to put strict security protocols in place, small businesses are particularly vulnerable to the actions of rogue employees.
Unfortunately, employees with access to sensitive data have stolen (and in some cases, sold) client and fellow employee information from company computers.
3. Negligent Hiring
“Negligent hiring” is a legal term that describes an employer’s liability for an incident caused by an employee when the employer knew (or should have known) that the employee posed a risk.
For example, let’s say a company hires a delivery driver who gets into an accident that causes an injury, and that leads to a lawsuit. One of the first questions a plaintiff’s attorney is likely to ask is, “Did the employer run a background check before hiring the driver?”
The company would be in a much better position having run a background and motor vehicle records check that came back clean.
On the other hand, if the company didn’t check, and there were previous license suspensions, the company could be found liable for the injury. That’s because it could have found out about the employee’s previous driving record, but failed to check.
The average cost of a negligent hiring lawsuit is estimated to be $1 million. And, when such cases are brought to court, employers lose about 70% of the time.
4. Creating a Safe Workplace for Customers and Employees
Employers have an obligation to create a safe workplace for employees. Yet 36% of employers reported workplace violence incidents, according to a SHRM study. These incidents result in physical or emotional harm to employees and customers as well as damage to company operations and resources.
Background screening before hiring is one of the most important steps you can take to reduce the risk of workplace violence. Convictions for violent crimes are an obvious red flag.
Drug screening can play a role when it comes to reducing on-the-job injuries, too. Implementing drug screening reduced worker’s compensation claims by about 50%, according to a survey conducted by SHRM.
Taking every reasonable step to keep employees, customers, and clients safe makes business sense — and it’s the right thing to do. Without a background check, though, you’re hiring in the dark.
Think of a background check as an inexpensive insurance policy. A basic check can start as low as $30.
Get started running legally compliant background checks using GoodHire!
GoodHire is an FCRA-compliant employment screening service that automates and simplifies the background check process. Available through both an easy-to-use web interface and full-featured, RESTful API, GoodHire’s affordable, comprehensive services empower companies of all sizes to make the best hiring decisions. It also has world-class customer service with its experienced and knowledgeable US-based support team.