A background verification or background check is a process that confirms the identity and reported credentials of an individual or organisation by verifying their social, commercial, criminal and financial history in order to compile a verification report. Statistics show that over a quarter of employees fluff their educational records and nearly a third exaggerate details of their previous employment.
A bad hire can cost five times his annual salary to a firm. No business owner wants to hire the wrong individual for a job. Not only because they will need to find a replacement candidate sooner than they’d like but also because making a bad hire drains energy and time and can cost a business in a number of ways.
When you hire the wrong person, you will likely find yourself looking for ways to reassign the employee or working tirelessly to fit him or her into the organization in some other way. Rather than simply letting the employee go, you will try to spend time and money on training and ongoing performance reviews. Eventually, he or she may become a useful employee for your business, but there’s also a chance that he or she won’t work out.
Problems related to employees can have a great impact on your company’s finances: after all, it is no secret that a high turnover rate leads to greater expenses, and a scam or fraud can make things much worse. A background check goes a great way in determining whether or not a potential or current employee is suitable for his or her post and can stop you from making a bad deal or hire and thereby from incurring losses.
Ways that a background check can help minimise your losses are:-
Employee turnover
These include termination costs, wasted wages and benefits, and amount to a significant portion of company expenses. If you hire an employee with falsified credentials, you waste a lot of time and money. A background check conducted before employment can help you avoid this.
Loans and financial assistance
If a potential employee has a history of defaulting on payments, background verification can let you know about it and save you from the chance of losing valuable capital by investing in them.
Lost customers
Customers are essential to the reputation and success of business, and hiring an employee with a poor work ethic can not only cost you precious money, but also end up with your business losing customers in the future and revenue.
Repairing physical damage
Workplace violence is on the rise in many companies and background verification can go a long way in informing you if an employee has a criminal record. If you hire someone with a history of violent tendencies or vandalism it could lead to physical damage of your premises/ potential harm to other employees. This would eventually result in paying for repairing the damages caused.
Productivity costs
While you and your managers are spending time trying to train and retrain the new hire or manage personality conflicts between the new hire and existing staff, your business will suffer. All that time spent on the new hire will drain productivity. Thirty-nine percent of managers surveyed by Robert Half International said that bad hires had cost them productivity, and 11 percent said a bad hire resulted in fewer sales. They also said that supervisors spend 17 percent of their time which is about one day per week managing poorly performing employees.
Financial costs
You may not only pay a salary to someone who may not be performing to your expectations, but you might also be paying for additional training. Also if you end up having to release the employee, you may be responsible for severance pay, not to mention the costs you will incur to conduct another employee search and hire another replacement.
Employee morale costs
While you may be spending your time and money trying to correct your blunder of hiring the wrong individual, the rest of your team may become dissatisfied or disengaged.It’s difficult to stay upbeat when one team member requires so much attention or manages to bring the whole team down. Ninety-five percent of executives surveyed by Robert Half International said that a bad hire definitely affects the morale of the team and 35 percent said a poor hire greatly influences employee morale. In many cases, bad hires do not get along with other employees, which can cause additional problems for the cohesiveness of the team.
In today’s world of transparency, job seekers are connected to information 24/7 and can easily gauge out what is and isn’t working at your company, based on reviews from employees themselves. The next time you need to recruit, take your time and ensure you’re getting the right person.
Therefore, a comprehensive background check can go a long way in making sure that you aren’t falling into a trap, and help with minimizing your expenses. It is up to you to decide whether spending a little extra before committing to something is better than shouldering expenses that are sure to leave you with a whole lot of red in your ledger.
