New research shows that organizations lack a systematic approach to background checks.
Organizations have a strong need for top-tier background screening providers, and that need is increasing monthly. The pre-employment screening industry alone represents a $2 billion domestic market (according to research by IBISWorld), and that amount is expected to grow as more jobs are added that will need background checking. The U.S. Bureau of Labor Statistics’ 2017 forecast is 2.2 million jobs.
Coupled with the needs to accommodate volume of hiring, HR in the U.S. faces hundreds of work-related homicides, billions of dollars in employee theft, and numerous applications with embellishments or outright lies annually. In fact, bad hires cost a company nearly $17,000 on average, which doesn’t include damage to employee morale, additional supervision time to train or turn around a bad hire, productivity loss for the organization, revenue that’s not being generated, and client relationships that could turn sour as a result of bad impressions.
To better determine the factors that HR practitioners use in assessing background screening services and the array of services that are most important to them, CSS Inc. (Comprehensive Screening Solutions) commissioned HRO Today to conduct a study among those directly involved with selecting background providers for their organizations across the U.S. The findings were clear: When it comes to the need for background screening, the stakes are higher now for companies than ever before. In a tight labor market, there’s enormous pressure to hire more employees quickly; in particular, data and physical security are paramount.
There is a lack of quantification about the impact of background screening providers. More than 77 percent of study respondents didn’t have or weren’t aware of any formal metrics for measuring the success of their background screening provider service (see Figure 1). Although 86 percent of respondents are satisfied with their background screening providers, there was no hard evidence on which to base the opinion.
Often, HR departments don’t take background screening and the selection of screening providers seriously enough. It’s ironic that the primary way background screening providers are verified by HR practitioners is through references offered by the provider. That’s the equivalent of relying only on what a candidate tells a potential employer about their background.
The top-tier criteria for determining which background screening service is the right fit for an organization are accuracy, compliance, and responsiveness (see Figure 2). All other factors are secondary.
If organizational needs are not met in any of these areas, the engagement will not sustain. When evaluating the quality of the service they receive, nothing correlates more closely than value for the money. While the components of quality cannot be ignored, organizations need to feel like they are getting a solid return on the investment, even if they can’t really quantify it themselves. That quantification may be something background screening providers can offer.
Despite the far-ranging impact of the performance of background screening providers, eight out of 10 of the largest companies in the U.S. have no formal mechanism to evaluate them.
There is also confusion about the accreditation of background screening providers. Nearly 50 percent of respondents couldn’t differentiate between the NAPBS logo for accreditation and the one for membership. Background screening industry associations are the primary source of information about background checking providers, which means many HR decision-makers are relying on incomplete or erroneous information about accreditation.
Industry consolidation is coming, and HR practitioners are comfortable with that: there is much support for combining background screening services. Nearly two-thirds of respondents considered consolidation important. HR leaders are perceptive to background screening companies who combine multiple services that are readily available under one umbrella.
The background checking part of hiring is often an overlooked process. It is too often viewed as a checkbox to tick after a hiring decision is made. But bad hires represent a significant risk to the organization, and far too many organizations don’t have a disciplined, systematic approach to background screening. A quality background service provider can provide a comprehensive methodology to mitigate some of the unknown variables that a hiring company faces with a new employee.
