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Why run a background check? Why background checks are important?

Why run background checks

Background checks have become a norm in the industry today. As hiring the right candidate is becoming more critical for an organization's success and reputation, companies increasingly prefer conducting background checks before onboarding candidates.

Why is it better to wait for the results of a background check before you sign an agreement with a new employee? 

The last thing you want is to find out that your company has been sued for negligent hiring because of the losses incurred by an employee or that the CEO you hired six months ago did not go to college as stated in his resume. 

Always remember, wrong hiring can prove costly to an organization, not only in monetary terms but also for its reputation and standing in the industry.

With increasing competition for each job opening, you might come across candidates who may exaggerate certain details, or more importantly, hide information that may be critical. As a result, it is better to perform detailed background checks every time.

A background check is typically done after you finalize a candidate and before the agreement between an employer and employee is signed. What will be included in a background check depends on the nature of the job, exposure to sensitive information, and the level of check required.

Let us understand the various facets of background checks.

What is a Background Check?

As the name suggests, a background check is an activity through which certain public and private records of an individual are inspected. A background check involves verifying the details submitted by a prospective hire before the final decision is made.

According to a report from HR.com and the National Association of Background Screeners (NABS), 95% of employers use one or more types of background screening techniques. The report further highlighted that employers not only conduct these checks before making the decision to hire a candidate but also during the employment lifecycle.

The Importance of Background Checks

A background check of a prospective employee is essential for any organization. Here are some key reasons why a background check is important:

  • Improve workforce quality: Background checks help improve workforce quality over time. As a background check comprehensively covers the history of prospective candidates, your chances of getting a good candidate on board improve significantly.
  • Protecting an organization’s reputation: Background checks are a great tool to avoid potentially uncomfortable situations and crises that would otherwise have occurred in an organization.
  • Prevent/reduce criminal activity: Background screening is an effective tool in preventing and reducing criminal activity in an organization. This is critical for large organizations with more than 1000 employees.
  • Law/regulation requirements: You should check if background screening is one of the laws that your company must follow. In some US states, background screening is an integral part of the laws that a company must follow.

What is Included in a Background Check?

A background check can include a variety of topics and areas, depending on the requirements of a job. A background check may include the following areas, depending on job requirements:

Education records: These are imperative. These records include the education credentials that a candidate claims to hold during the interview process. This includes the college of graduation, the year of graduation, and the degree the candidate holds. This is typically done for all candidates a company hires, but it is critical for C-Suite positions.

Work experience history: This is crucial for all businesses. Checking the work experience includes the year of experience of the candidate, salary drawn, performance during the job, etc. This can be done by contacting the respective HR departments of previous organizations or via tax records.

Criminal records: This is also important for all positions for which a company hires. A reputable company would not want a candidate with a criminal record as an employee. As a result, background screening is critical to check if a candidate has a criminal record before they are hired. A criminal record check usually includes felony convictions, misdemeanor convictions, pending criminal cases, civil judgments, prison records, domestic terror watch list, and arrests that led to a conviction. Some employers also conduct criminal checks for arrests that did not lead to convictions and expunged or sealed convictions.

Professional and personal references check: As the name suggests, this indicates checking an employee’s credentials with professional and personal references. An employee’s previous managers are contacted to verify the candidate’s job performance in light of the information submitted by the candidate. In the case of personal references, a connection is established with the contacts provided by a candidate to check the candidate's address and other basic personal information seen on the resume.

Residential background check: This is to check the residential and permanent address of a candidate. If a candidate has the same personal and residential address, only one address is verified. However, if the residential and permanent addresses of a candidate are different, the two addresses will be independently verified.

Credit checks: This is important for people in accounting jobs or positions that involve handling significant amounts of money. A candidate usually has to sign a form so that the employer can access the credit records. It is critical to check these records to unearth scams (if any) or a low credit score that may signal irrational credit behavior. 

Motor vehicle records: This background screening step is very important for positions that include dealing with official vehicles in the organization. Checking motor vehicle records includes checking the license validity/status, class, and expiry, in addition to traffic violations, arrests, convictions, etc.

Benefits of Background Checks on Hiring

There are several benefits of running background checks before hiring. Some key benefits of background checks are listed below:

Informed decision: A background check before candidate hiring is finalized helps hiring executives make informed decisions. Without background checks, there is a high probability of encountering certain unknown variables. However, with a thorough background check, you can be much more confident and make the right choice.

Work environment: A background check is essential to build a safe work environment. As organizations have gender diversity, you expect the work environment to be safe, healthy and motivating for employees. Just because a background check was missed and an unsuitable employee entered the ecosystem and made the work environment unsafe may jeopardize the whole business. Also, background checks help protect company assets.

Organization protection: There have been cases where companies have been sued for negligent hiring because they did not conduct a background check. These organizations had to pay sizable fines because of this mistake. A background check helps protect the organization against potential liability claims.

Compatibility with laws: A background check helps a business comply with various laws, which may exist at the federal, state, or local level in the US. Background checks are also part of some industry regulations, such as the Financial Services sector. Depending on the industry you belong to and its requirements, background checks help comply with the laws of the land.

Lies on a Résumé

Lying on a resume, cover letter, or job application is much more common than you think. As these are not legal documents, potential employees often tend to lie on these documents. 

However, if a candidate goes a step further and presents fake education or experience documents to back up the lie, it is certainly illegal and should be picked up during a background check. 

What can you do to avoid this long battle? Opt for a background check even before the hiring of a candidate is finalized.

How to Pick a Company for Background Checks 

As a human resources manager or a business owner, picking the right company for background checks is critical, as it contributes to business success eventually. 

As a background check company verifies critical information that helps you choose the best candidate, it is important to select the right company to ensure you are in the right hands.

Here are some key things that you should consider before zeroing down on a background check company for your organization:

  1. Accreditations and compliance: The background check company that you select must be FCRA-compliant. For a background check company to be in business, holding an FCRA accreditation is mandatory. In addition, background check companies should be a member of any of the national background check associations that define strict guidelines to which they must adhere.
  2. Customer support: Check the quality of customer support of the companies you have shortlisted before making a final decision. Typically, background screening companies provide customer support through phone, email, and/or live chat. Check that the company you select provides customer support in the mode you prefer and have a team of helpful customer support agents to help you when you need it the most.
  3. Technological capabilities: This is the era of technology. Having a partner on board with the required technological capabilities, such as ATS integrations and electronic consent forms, can provide a real push to your business. You can check out Veremark's background screening software that ensures easy integration for seamless background checking.
  4. Customization: As each industry and business has unique requirements, it is important to have a background screening service that can customize the solution according to your requirements. You should check if your business requires tailor-made background checks and select a company that matches your needs.
  5. Accuracy of data: What is the use of a background check if the agency selected does not provide accurate information? Always look for a background screening company that provides comprehensive, clear, and accurate reports.
  6. Industries covered: It is better to select a background check company with some level of exposure to your industry. With a background screening company that understands your industry, you can expect candidates to be evaluated thoroughly.
  7. Online experience: Gone are the days of trails of paper and faxes. Today, most background check companies offer online portals that can provide data at the click of a few buttons. An online dashboard is important for you as an HR manager or a business owner—both for placing new orders and checking the results of the evaluations conducted.
  8. Turnaround time: The results in this industry are relevant only if they are provided on time. Make sure to check the turnaround time of the background screening company you select. Most hiring decisions are to be communicated to candidates in a few days. Partnering with a company that has a long turnaround time may not be ideal for your business.
  9. Pricing: This is an obvious one. Compare the prices of the shortlisted companies and ask for bundled deals and commitment discounts. Also, factor in any additional fee that you may be charged before making a decision.
  10. Checks and screening options covered: It is important to note the kind of checks and screening options the shortlisted agencies cover. Match them with your requirements and select an agency that meets your needs.

Picking the right company for background checks will not only help you streamline your HR process but can also protect your company's reputation in the long run. However, do not start checking the backgrounds of every candidate applying for a job at your organization, as this activity entails significant expenditure. Conducting a background check of shortlisted candidate(s) before an agreement between an employer and employee is signed is the sweet spot for background checks. 

You can partner with Veremark and undertake background screening for candidates with GDPR- and PDPA-compliant processes. The process followed for background checks at Veremark is simple, straightforward, and user-friendly. At the same time, it ensures data security and is scalable.

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