Hiring managers confront a down economy, a more volatile workforce, and a global challenge.
By Rob Pickell
With emerging regulatory requirements and shifting business demands, employment screening processes and requirements are evolving. It’s important for human resources professionals to understand what companies are actually doing when it comes to screening their workforces, so that they can identify new demands and trends and evaluate and improve their employment screening programs to be most effective for meeting today’s challenges. HireRight’s recent Background Screening Benchmarking Report addresses these issues. Based on a survey of more than 1,800 human resources, security, and compliance professionals from organizations of all sizes over a wide range of industries, the report reveals several key trends and industry practices that can help talent management professionals improve their program effectiveness.
Evolving Workforce Composition
The report indicates that the composition of the workforce is evolving as the mix of non-employee and employee workers within organizations has changed. Contingent and contract employees represent a growing percentage of the workforce. Two-thirds of respondents reported using contingent labor in their workforce, and about one in four organizations has a substantial non-employee population. Contractors are filling a wide range of roles, from finance and IT to support and administration. The use of contract labor is growing because of the volatile business environment in recent years. Also, an increasingly stringent regulatory environment raises the cost of hiring permanent employees, so companies are naturally turning to contingent and contract employees for help.
According to the survey, nearly all organizations screen permanent hires, but only one-third screen contract and contingent workers. This can often represent a large security gap in the screening program if only full-time employees are subject to a background check. Organizations should consider the risk of everyone who has physical or logical access to facilities, staff, data, and assets—then ensure that they are covered within the screening program effectively.
In addition to contract and consultant workers hired directly by the organization, companies must also consider vendors and partners whose employees have access. Building screening policy requirements into contracts with suppliers and partners is one way to communicate screening policy and drive consistency across the screening program. Since the screening activity can be outside of the immediate control or visibility of the client organization, conducting audits to ensure compliance with the screening policy is a sound choice. When vendors are found to be in violation of the contractual arrangement, be prepared to terminate relationships. Extended workforce screening solutions are available today that allow companies to have visibility to the adjudicated screening results for employees that vendors will be sending on-site. The company doesn’t review the individual screen itself, but gets confirmation that the background check was completed and that the individual met company standards.
Although there are signs of optimism, the top two business challenges that respondents named in the survey were related to the economy—managing the recession and cost-cutting. Where previously managing in a downturn would have been a distinct challenge, today’s business environment and economic situation represent a long-term shift. The third-ranked focus was on finding and retaining high-quality talent. So now companies are working to manage within a down economy, while continuing to evolve their talent acquisition and development efforts in order to address new challenges, such as sifting through an over-abundance of job candidates and hanging on to top talent when budget constraints put stress on training and benefits programs.
The top three talent management-specific challenges ranked in the survey were attracting and retaining experienced workers, transferring knowledge among employees, and managing changes in workforce size. Part of the new normal is dealing with a more volatile, dynamic workforce, which with increased employee turnover grows the challenge of retaining corporate knowledge. A corporation’s increased reliance on contingent labor, as more contractors and consultants are brought in, only exacerbates the issue.
Another significant and growing trend is the need for screening outside of the domestic market. According to the report, the rate of organizations conducting global screening has more than doubled since 2009. Last year, 11 percent of respondents either conducted global screening or had plans to start, while this year, that rate jumped to 25 percent. Approximately half of the respondents who reported doing global screening today conduct global screening on workers based in international offices, and half reported screening the international backgrounds of domestically based employees. The substantial increase can be attributed to a growing awareness of the risks of not screening beyond the domestic boundary and to the phenomenon of new technologies making global screening easier than ever before.
Variations and Commonalities
Seventy percent of respondents indicated that their firms apply screening policies consistently on all employees at every level, but 30 percent vary the policy and screening requirements depending on role, title, job function, or other factors. The shift is being driven by regulations and legislation and business demands. For example, credit history is information that previously could have been used more broadly, but new legislation in certain states now regulates exactly how credit may be used in the hiring decision. Organizations must evaluate their policies and tailor screening requirements to what would make sense for the positions they hire for, the industries they operate within, and the geographies where hiring is taking place.
Almost all respondents screen in some way. The most common employment background check components are criminal history checks and education and previous employment verification, followed by drug and alcohol testing. Twenty-eight percent of respondents are using E-Verify for verifying employment eligibility, an increase from last year. This is due both to government regulations and requirements and to the growing viability of companies being able to access the program. Using E-Verify enables a company to verify that its employees are legally able to work in the U.S., and in an increasingly stringent regulatory environment with a growing number of companies being targeted for government audits, penalties and fines, it helps businesses to maintain compliance. It’s effective to integrate the screening program with I-9 form management and E-Verify employment eligibility verification.
Screening existing employees is another important trend. Last year’s survey showed an increase from about 10 percent of respondents doing recurring screening to about 16 percent, and that rate held steady in 2010. Many employers recognize that risks might emerge in the workforce after someone is hired or originally brought in, and they are taking steps to reduce that risk. This is especially prevalent in industries with a public safety risk or where intellectual property protection and data security is critical.
Most respondents report that approximately 10 percent of their background checks result in information that adversely affects the candidate. Almost 30 percent report higher adverse rates for background screening. For employment eligibility verifications, respondents reported average adverse rates of 7 percent. One interesting question that’s often raised is whether the economic downturn would cause adverse rates to increase with a constrained job market and tighter competition for jobs, but the report shows little change from the rates reported in 2009.
However, candidate misinformation remains a risk. On average, 10 percent of applicants provide untruthful information, typically about education and previous employment. Roughly 70 percent of respondents have caught an applicant lying on a resume.
Eighty percent of respondents report some degree of integration between their screening solution and other related systems. This is driven by core demands for efficiency and to improve the user experience, both for the HR professionals managing the screening process and for applicants. This rate will continue to grow as more human capital management applications and the processes that support them become further integrated. Organizations are also considering the applicant experience and are beginning to implement solutions that provide transparency to the screening process by allowing the applicant to review the results as each step of the screening is completed.
For the applicant, this visibility can eliminate much of the mystery and stress around a background check or drug test. Additionally, these solutions enable applicants to submit any necessary information electronically, reducing workload for the recruiting and hiring staff. This full lifecycle integration significantly improves efficiency, improves the candidate experience, and reduces man-hours required at every level, which bodes well for organizations striving to do more with less staff and lower budgets.
The report provides guidance for best practices for employment screening programs by revealing the screening practices of more than a thousand employers around the globe. Implications of the results for employers can include:
Conducting policy reviews. Evolving regulatory requirements and business challenges demand that organizations review their screening policies at least annually using industry benchmark data and outside counsel.
Closing coverage gaps. Businesses must reduce risk across the entire workforce, including contingent hires and existing employees, as well as employees outside of the U.S.
Ensuring recruiting success. Companies may review their existing end-to-end applicant experience to improve recruitment practices. When screening is transparent and as stress-free as possible—giving the applicant visibility to the results and the ability to address any questions—it improves the overall applicant experience.
Driving program efficiency. Organizations should evaluate opportunities to streamline and integrate the screening program with adjacent solutions to improve efficiency and eliminate duplicative processes.
As organizational hiring requirements have become more complex and sophisticated, the needs for background screening have also increased, and organizations must construct their screening programs to meet these changing demands. Screening programs today are becoming more advanced, efficient, collaborative, and productive. An effective program based on industry standard benchmark data provides decision support to help produce the best hiring decisions.
Rob Pickell is senior vice president of customer solutions for HireRight, a provider of on-demand employment screening solutions. The HireRight 2010 Background Screening Benchmarking Report can be found and downloaded at www.hireright.com/benchmarking.