Who’s your new hire? How to check
HOW WELL do you know the people you are hiring? In today’s business environment, failure to perform proper due diligence, including pre-employment background checks, can have lasting and potentially costly consequences for companies.
Depending upon the nature of applicants’ falsified information, companies may also find themselves with unwanted liabilities as a result of a poor hiring decision.
Actual findings from background checks we have conducted include the following:
- Applicant hid citizenship status by providing a false Social Security number.
- Applicant provided a false date of birth to hide criminal charges.
- Applicant was a non-compliant registered sex offender who intentionally misspelled his last name to avoid detection.
- Applicant provided a false address to escape an outstanding warrant.
- Applicant provided an education degree that was obtained through a diploma mill.
- Applicant provided a false driver’s license number and misspelled his last name to hide DUI charges.
So, why conduct background checks when the majority of applicants are trustworthy, honest people? Aren’t background checks an additional expense that companies do not need to incur?
Unfortunately, findings like those noted above are more common than one might expect. Conducting thorough background checks can provide companies with necessary information to protect the company and its employees. In the long run, properly conducted background checks have the potential to save companies both time and money, as costly hiring decisions may be prevented.
The following are the top five reasons companies should conduct pre-employment background checks:
1. Verification of resumes. If you receive a resume that is too good to be true, it probably is. Recent surveys show that 30 percent of all job applicants lie on their resumes, while 60 percent include misleading information.
Deception on resumes commonly entails falsifying education (the most common deception), stretching dates to cover employment gaps, enhancing job titles, embellishing job duties and achievements, fabricating credentials or licenses and inventing employers. A pre-employment background check will verify the accuracy of the information provided on applicants’ resumes.
2. Verification of personal information. When applicants falsify their identification, they are usually trying to hide something. Wouldn’t you like to know what that is before a hiring decision is made? Again, a thorough pre-employment background check will expose inconsistencies and inaccuracies in personal information provided by applicants.
3. Reduction in employee theft. The Association of Certified Fraud Examiners estimates that fraud costs U.S. organizations approximately $994 billion annually. This is more than the cumulative cost of the wars in Iraq and Afghanistan combined.
Past offenders have a greater tendency to recommit a crime. Therefore, a proactive pre-employment background check will uncover past criminal offenses and may help protect your organization.
The following fraudulent activities are regularly found in the workplace:
Skimming: Taking cash/check payments before they are entered into the accounting system and reporting lesser sales than actually turned in.
Lapping: Taking a customer’s cash/check payment and covering the theft by applying a different customer’s cash/payment to the account.
Fictitious vendors: Submitting invoices for payment from a non-existent vendor.
Fraudulent check disbursements: Producing checks to non-business related payees or altering checks.
Ghost employee schemes: Setting up an employee that does not exist or has been terminated in the payroll system.
Theft and sale of inventory: Employees taking inventory without authorization and selling for personal gain.
Submission of false/fictitious expense reimbursements: Employees submitting expense reports for items already covered by a company credit card or items not allowable for reimbursement per the policy manual.
Padding of hours: Employees lying on timesheets.
Improper use of company credit card: Employees using company credit cards for non-business expenses.
If a background check indicates a history of any of these fraudulent activities, it does not automatically mean the individual should not be hired. The company will have to determine whether the responsibilities of the position the individual is applying for create opportunity for fraudulent activity to reoccur and include that determination in its hiring decision.
4. Reduction in turnover costs. Verifying the truth and determining what is embellished on an application or resume can help companies choose the best candidate for the job and minimize turnover rates. Hiring the right person at the onset prevents the following:
Restarting the hiring process.
Loss of revenue due to vacant positions.
Low staff morale.
Damage to professional reputation.
Training of new employees.
5. Avoid negligent hiring. Negligent hiring is defined as the failure to properly screen employees, resulting in the hiring of someone with a history of violent or criminal acts. It is important to remember that negligent hiring is a legal doctrine and employers are liable for the destructive actions of employees when due diligence (conducting background checks) would have revealed the employees’ propensity to commit such actions.
By conducting pre-employment background checks, your business can benefit from more informed hiring decisions, which can potentially lead to higher profits for the company.
Kari Yonke,
EideBailly:
701.476.8778
kyonke@eidebailly.com
www.eidebailly.com
