Why You Should Run Background Checks on Potential New Hires

Finally, after sifting through a pile of résumés and conducting interviews, you’ve found a match, someone who seems to be the perfect hire. The candidate comes across as friendly,  hard-working, and smart. But, as with any person you’ve only just met, first impressions can be deceiving.

For that reason, you should thoroughly vet the applicant before offering them a job. You don’t want to hire a liar or, worse, a criminal. And you can explain that the process is simply standard procedure: More than two-thirds of organizations conduct criminal background checks on job candidates, according to the Society for Human Resource Management.

Still not convinced? Here are six more reasons why you should run background checks on potential employees.

1. Your livelihood is at risk. Workplace fraud strikes small businesses the hardest, according to the Association of Certified Fraud Examiners. The median loss caused by employees in a review of more than 1,300 fraud incidents was $60,000.

2. You could find warning signs. A review of a job candidate’s history may not turn up juicy details (in fact, 87 percent of employees who commit fraud at work previously had clean records, according to ACFE), but it may raise red flags about the person’s integrity and temperament. Seek hints from creditors and former employers about financial difficulties and unethical behavior. Wrongdoers often are not inherently bad people, but they do bad things out of “necessity.”

3. You lack the resources to prevent problems later. Small businesses don’t have the internal controls that big companies often do. For example, you probably don’t have an employee tip line or a separation of duties that will limit the temptations of, say, an employee who has access to the company’s finances.

4. You could limit your liability. If you hire someone with a clean record and they do something wrong while under your employment, you can show your insurers, investors, and customers that you had done due diligence to prevent it.

5. You can spend a little time now to avoid a big mess later. The internet and third-party researchers make it easier than ever to review people’s backgrounds, including credit reports, school history, and criminal records.  If you take the time now to do a quick investigation — or pay someone to do it for you — you could save yourself a lot of time, money, and grief in the long run.

6. You could suss out a liar. Companies typically ask job candidates for references. Few actually check them. Remember Scott Thompson at Yahoo? He stepped down as CEO in disgrace because he had falsely claimed to have earned a computer science degree — a fact that apparently no one questioned when he was hired. Take the time to verify all of the information on a candidate’s résumé — and call those references.

About Sarah Johnson

Sarah Johnson is a business writer and editorial consultant. Her work has appeared in CFO and CIO magazines.
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1 comments
Ryan
Ryan

It is an essential factor in the hiring process. That is why industry leaders perform background checks and I think more small businesses should follow suit. I am in construction and there is a huge lack of background checks for employees.

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