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Employment Screening ‘Critical’ to Success of Small Businesses

Employee Background ChecksA new study shows 64% of small companies in the United States have discovered inaccuracies during employment background checks, while experts warn firms who fail to identify them risk prolonged financial pain.

Employee screening mistakes, failure to budget for background checks and not having a suitable due diligence process in place at the hiring stage is becoming ever more costly to small businesses. More than two thirds of job applicants to SMEs in the US are shown to have lied on their CVs, while more than half of firms surveyed said they uncovered issues thanks to screening checks that otherwise would have gone unnoticed.

HireRight’s survey looked at small business background check processes in a poll of 593 small company owners, managers and executives.  The most popular searches being performed were criminal searches (97%), identity checks (81%) and previous employment or reference checks (58%).  The consequences of small firms hiring the wrong person can weigh more heavily on their finances than they would on their corporate rivals, stunting the SME’s growth and impacting on its customers.

Best practice can prevent this unnecessary pain, leveraging screening and key trends in background checks enabling small business owners to improve hiring quality, they found.  The benefits of using background screenings to hire were identified as, firstly: improved quality of hires at 53%. The importance attached to this benefit is that effective screening can ensure only correctly-qualified applicants end up in that firm’s key roles.  A safer and more secure workplace (49%) came second, followed by better regulatory compliance (36%); found to be critical in an ever-shifting regulatory environment where industry and federal goalposts are constantly moving. Other significant benefits included better company reputation and greater employee retention.

Significant risks from screening mistakes by small businesses, flagged by the survey results, were topped by firms who didn’t verify candidates’ education and previous employment adequately, at 58%.

This was highlighted as being of particular concern because in not checking credit reports, work experience and academic credentials properly, small firms may not be hiring the best qualified staff in their most-needed areas.  The Department of Labor in the US calculates a bad hire can exceed 30% of an employee’s annual wage, so someone hired by a small firm at $50,000 annually could end up costing them more than $15,000.

Small businesses are recommended to use business intelligence and background checking offerings that integrate screening information into their services. Outsourcing in this area frees up resources that would otherwise have been used trying to conduct screening by the company itself, while providing superior information they otherwise would not have had access to.

When such services are provided on-demand, as a scalable solution, they can enable small firms to access the same extended databases their larger competitors enjoy.

Addressing this issue is timely, according to small business hiring forecasts for the coming year. Two-thirds of small business respondents in this survey (67%) expected an increase of 1% or more staff, while twenty-two percent expected an increase of 6% or greater.  New employee hires were expected by small businesses to comprise 60% or more of their workforce increase.

worldboxThis story is provided by Worldbox Business Intelligence.

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