No more excuses: Poor hires can sink a company so HR should be diligent about conducting thorough background checks

For the last decade or so, there’s been a newspaper article floating around the recruitment industry. For anyone in HR, it is one story worth noting.

It states that more than 95 per cent of college students surveyed said they would make at least one false statement to get a job. And 41 per cent said they’d already done so. It’s hard to know how many kids would falsify an entire resume to get a foot in the door, but one shudders to think.

But it’s not just college kids. Company executives, final job candidates, current employees — anyone who’s looking for work or a promotion — are all willing to claim, and hide, the most incredible things.

Mind you, some of the stories are a little more silly than incredible.

Take the recent case of a job candidate an employer was particularly enamored with. The candidate didn’t actually possess the university degree he claimed, and when the company that did the background checking told the employer, the employer was enraged. The employer had received a copy of the diploma and was certain the report from the background checker was flawed.

But the university was able to confirm the job applicant had actually cut and pasted the diploma together (which is in itself a bit laughable because applicants lying about their education normally do so by purchasing the master’s degrees of their choice online.)

These lies are no laughing matter when it comes to a company’s bottom line. Estimates have put the cost of turnover as high as two or three times an employee’s annual salary.

Without proper background checks, not only is there a risk in hiring unqualified people but criminal or ethical concerns can go undetected.

In the United States, the Department of Commerce estimates that 30 per cent of business failures are due to poor hiring practices. This claim seems reasonable when one looks at the staggering number of workplace violence incidents, the high jury awards for negligent hiring in the U.S. and how much money is lost to employee fraud.

According to the Retail Council of Canada, internal theft accounts for 48 per cent of retail losses — more than $1 billion annually.

More than one-third of applicants lie

These numbers can spell big trouble for Canadian employers. A recent internal study conducted by my firm, Infocheck, indicated that 35 per cent of final job applicants had something that raised a red flag during a background check — and those are applicants who have already made it through multiple rounds of interviews.

Some of the red flags raised:

•7.5 per cent had criminal records;

•25 per cent were classified as poor performers by their references;

•27 per cent fabricated their educational credentials;

•40 per cent had areas of concern with their driver records;

•nine per cent were involved in theft or fraud;

•27 per cent had poor credit histories; and

•19 per cent were fired from their previous employers.

Also, fake letters of reference and personal references for hire are now widely available and easily found on the Internet.

With the importance of conducting background checks firmly established in many hiring practices, some organizations are starting to perform annual criminal checks on current employees.

This is often the result of new, more stringent post Sept. 11 hiring practices, but it can be an important step for any organization with employees who never underwent a background check when they were hired.

Any organization can benefit from a background check, whether it’s an individual the organization has never met before or a senior executive who has been in the company for a decade, conducting background checks can reduce an organization’s legal bills, retraining costs and expenditures related to hiring efforts.

Conducting a background check certainly can put a bite on bad hires and there really aren’t many valid excuses for not conducting one.

Source: CHRR, Report on Recruitment & Staffing, May 23, 2005

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