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How background checks can serve as the first line of defence to avoid bad hires

Everyone wants to avoid making bad hires, but the harsh reality is that they’re inevitable. But what could you do to ensure you minimise the risk of a bad hire? That’s what a new white paper by Sterling seeks to find out.

Jasper Spanjaart on June 29, 2022 Average reading time: 3 min
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How background checks can serve as the first line of defence to avoid bad hires

As finding the right talent can quite literally feel like searching for a needle in a haystack, whenever you do identify what you deem is the right candidate for a position, it’s hard not to get too far ahead of yourself. Not to place doubt inside your mind or the minds of your recruiters — but there’s always a chance that the person you deem the perfect candidate, ends up being a bad hire.

And when that happens. The consequences are endless. Financially, you have the cost of off-boarding, which can escalate rather quickly if it’s not a smooth departure. Then you have the cost of recruiting, hiring and training of the person who’ll come in as the replacement. Add in the costs you’ve already made to hire that person in the first place, and it quickly becomes a sober affair.

The consequences are endless

The buck doesn’t stop there, though, according to a recent white paper by Sterling. There’s more at risk. In 2018, an astonishing 50% of UK companies experienced fraud, of which 33% were committed by internal perpetrators. Of which half were committed by senior management. “The total cost? At a high-level, it’s estimated that the overall cost of occupational fraud worldwide amounts to €3.7 trillion”, the white paper states.

“50% of managers believe that increased workload for colleagues is the most significant impact of a poor hiring decision.”

Legal troubles could also ensue. Because if your employee took actions or performed their duties contrary to instructions or expectations, organisations may be held vicariously liable in civil court. Add in the negative attention through social media— which can harm a company brand whether it’s true or not. And finally, it can have a serious impact on employee morale and the general culture around a company. “50% of managers believe that increased workload for colleagues is the most significant impact of a poor hiring decision, followed by increased stress on colleagues and lost productivity”, the white paper states.”

Screening as the first line of defence

Most bad hires stem from a common enemy in recruitment practices: time. Or rather, a lack thereof. Future employees, especially in the current climate, are usually pushed through quickly to ensure the company does not lose the chance of acquiring them. That’s where your first line of defence comes in: screening.

“Your policy should outline your objectives, processes, types of background checks for each position and how the results will affect hiring decisions.”

“The first step to making a good hiring decision is to implement a background screening policy”, the white paper says. “Your policy should outline your objectives, processes, types of background checks for each position and how the results will affect hiring decisions. Be sure to consult appropriate legal counsel to ensure your policy is fully compliant with local regulatory guidelines.”

“A background check should only investigate the aspects of a candidate’s past that are relevant to the position.”

Whether through criminal record checks, reference interviews, credit orders, employment verifications, education and credential verifications or motor vehicle checks — there are many ways of finding out whether a person is who he or she says they are. “A background check should only investigate the aspects of a candidate’s past that are relevant to the position”, the report states. “For example, if a candidate will not have any financial responsibility, a credit check may be excessively intrusive.”

‘A flag is not indicative of a bad hire’

Then lies an important step with interpreting the background check. Whether it’s covering up that their time at another employer didn’t work out, or the fact that they’ve been dealing with a personal or medical issue they didn’t want to draw any attention to — white lies are always to be found on CV’s. But a flag is not always indicative of a bad hire, the company adds. “It simply means that additional review is warranted and the situation should be considered as part of the hiring process”, Sterling adds.

Should the candidate have been more forthcoming? Probably. But is it worth passing up a great candidate? That’s for you to decide.”

Finally, by outsourcing screening services to a third-party provider, it adds value to the objectivity of the process. Or, in other terms: it puts the employer at arm’s length from the background investigation. “While some more serious flags will make it difficult to move forward with a candidate, it is always worthwhile to discuss the information with your candidate to fully understand the circumstances before making a decision. Should the candidate have been more forthcoming? Probably. But is it worth passing up a great candidate? That’s for you to decide.”

About Sterling

Sterling is a leading provider of background and identity services. They help over 40,000 clients create people-first cultures built on foundations of trust and safety. Sterling’s tech-enabled services help organisations across all industries establish great environments for their workers, partners, and customers. With operations around the world, Sterling conducts more than 70 million background checks annually.

Download the full white paper

Before you hand over the employment contract, it’s important to consider the consequences of a bad hire. Unfortunately, the aftermath that follows affects far more than terminating the employee and filling the vacancy. In this white paper, Sterling explores the risks associated with poor hiring decisions and the steps you can take to avoid the dreaded bad hire. Download it here.

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Jasper Spanjaart

Jasper Spanjaart

Editor-in-Chief and Writer at ToTalent.eu
Editor-in-Chief and writer for European Total Talent Acquisition platform ToTalent.eu.
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