The Many Benefits of Background Checking

The Many Benefits of Background Checking

Performing a background check before hiring someone is essential for several reasons. First, it reduces the risk of fraud and theft. Second, it lowers costs. And third, it can protect your company from the threats that come with hiring a candidate who is not who they claim to be.

Reduces fraud

According to the American Institute of Certified Fraud Examiners, employers lose about five percent of their gross sales to fraud, and the median loss is approximately $150,000. The report notes that about 75 percent of employees steal from their employers at some point during their employment, and fifty percent commit fraud regularly. Furthermore, a third of bankruptcies occur as a result of employee theft. Fortunately, there are ways to minimize the risk of fraud. Background checks done by experts like help companies detect potential fraud when they hire a new employee. The process can be as simple as checking the applicant’s educational credentials and comparing them to public databases. It can also help verify whether an applicant has professional licenses or certifications. It’s also a good idea to check the applicant’s resume and ask for references if possible.

Reduces theft

Background checking is one of the most critical security measures that employers can take to prevent employee theft. It can discourage employees from stealing by providing details about their past criminal activities. It can also help employers make informed decisions about an applicant’s suitability, enabling them to avoid hiring a potentially troublesome employee. Moreover, it allows them to set a zero-tolerance policy for theft and promote a culture of honesty and integrity among their employees. Using a multiple-choice personality test or an integrity screening tool on applicants can help employers avoid hiring employees who are likely to commit robbery. A recent study found that pre-employment screening and integrity tests reduced workplace theft by 35 percent and reduced turnover by 13 percent. Although these results are still not 100 percent, they show that this method effectively reduces employee theft. It is important to note, however, that applicants can cheat on the system by taking the test as often as necessary until they pass it.

Reduces turnover

Background checks are an essential part of a well-run employment process. Turnover is expensive for any business, and bad employees can risk the business, other employees, and the public. To avoid this, intelligent companies devote a significant amount of time and resources to ensuring job candidates have a clean criminal record and are qualified to work in their organization. Doing this will reduce turnover costs and ensure you get the best possible employees. Studies have shown that turnover costs anywhere from 30% to 150% of an employee’s annual pay. Hiring the wrong people is one of the leading causes of employee turnover. Another major cost factor is occupational fraud. According to the Association of Certified Fraud Examiners, small businesses incur the highest losses, and the cost of turnover is most increased among small businesses.

Reduces costs

Background checks are an essential part of the hiring process. However, too much focus on background checks can reduce the value of the hiring process. Employers should focus on hiring the right talent for the right job and not on unnecessary background checks. Using an applicant tracking system, they can identify potentially problematic candidates early in the process. These systems also offer reports that show how well applicants are doing on their background checks, which can help them optimize the hiring process. Another benefit of background checks is reduced employee attrition costs. Hiring the right person can reduce turnover by as much as 30%. Background checks can also help you avoid hiring the wrong person, which can cost you more in the long run.

Reduces lawsuits

The background-checking industry has a long and successful history of reducing lawsuits. These lawsuits can range from individual cases to class-action lawsuits. Some cases involve the Consumer Financial Protection Bureau, which can bring suit against background check companies. 

Ensures compliance

Background checking is essential to hiring the right person for a job. It protects the company’s reputation and the rights of employees and clients alike. It is not only an ethical decision but also protects you from liability for hiring the wrong person. Several laws govern this process, and businesses are encouraged to follow them. Failure to do so can result in steep fines or even legal action. And since these laws are constantly changing, it can be challenging to stay up-to-date. Background checks can provide employers with various information, including criminal records, credit reports, educational backgrounds, and social media use. While employers can use this information for various reasons, the process should comply with federal and state regulations.