By Daniel Callaghan
Bringing new employees into your small business is a balancing act. The fewer employees you have, the bigger contribution each makes to the overall company culture, and the more responsibility they have for driving the firm’s success.
cost of a bad hire is also far greater for small firms, both in a financial sense (amounting to at least 30% of an individual’s first-year expected earnings, according to the U.S. Department of Labor) and a reputational one. Small firms have to work much harder for brand recognition than larger ones, and any shadow cast on their good name could prove fatal.
For this reason, without the large and well-resourced HR teams enjoyed by bigger corporations, the risk to smaller companies of unwittingly hiring someone unsuitable could be greater, too.
Risk of hiring without background checks
Sadly, job candidate fraud is more common than you might think. Over half of Americans have lied on their resumes, according to research by
MoneyPenny. Nearly one in five said they had exaggerated their previous experience, while one in 10 admitted to lying about their employment history or level of education.
The potential danger this poses is clear: employers could end up
hiring someone woefully underqualified or under-skilled for the role. And even if this isn’t the case, if someone is untrustworthy enough to lie to get a job, what other misdeeds might they be capable of?
There now exist entire industries which help prop up resume fraud, from so-called
“diploma mills” which churn out degrees from fake universities to companies which produce false credentials and experience letters for candidates (Accenture India recently fired “a large number” of employees who had secured their roles with fake credentials and experience letters.).
That’s not to say false claims can’t be detected. In fact, a robust and comprehensive screening process will be able to root out even the most well-presented mistruth. However, with myriad checks available, each with their own legal considerations, and various ways to handle the process, pre-employment screening might seem like something of a minefield to small businesses. Here are the main things to consider.
Pre-employment screening: what you need to know
1. Analog or automated?
Traditionally, screening has been handled by HR teams (or by managers in smaller businesses) who verify each claim on a resume or job application manually—and many companies still work this way.
While it may be suitable for very small companies which rarely make new hires, this approach is labor-intensive, inconsistent, and slow. Applicants may be left waiting weeks for their details to be verified, which, should they have been offered multiple job offers, could see them opt to join another company instead.
The alternative is automated pre-employment screening, which is much faster: some checks can be completed in mere hours. Automated checks are also more accurate and will be applied consistently and fairly across all candidates, without the risk of human bias inadvertently intervening.
2. What are your legal obligations?
Depending on what kind of business you run, or the role you’re hiring for, there may be certain checks you are legally required to conduct. For example, if the position involves working with vulnerable people or children, or finances. Alternatively, you may have to verify that someone is legally permitted to work in the United States.
Criminal records checks are one of the most common checks carried out. These involve searching various databases—such as county criminal court records, statewide criminal records, and the sex offender registry—in order to identify any active warrants, arrests, or a history of incarceration.
Some roles might require you to check an applicant’s credit record and whether they’ve ever filed for bankruptcy, or to run a search through government sanctions and watch lists.
Such checks are likely unavoidable, but they constitute only the bare minimum when it comes to the screening you should be conducting.
3. Most common risks
Globally, most candidates who failed a background check according to the
State of Hiring and Background Checks Discrepancies for 2022 did so because they had unexplained gaps on their resumes (14.5%) or employment histories (10.1%). Additionally, 6.3% of candidates had academic achievement discrepancies.
A candidate’s employment history and qualifications are therefore two areas it makes a lot of sense for firms, no matter their industry, to verify—particularly considering the risks of hiring someone without the requisite knowledge or experience to perform the job.
4. Reputational risk mitigation
One of the most important roles any employee plays is being a visible face for the company and, unsurprisingly, most companies will expect their staff to uphold the brand’s values. It may seem an impossible quality to screen for, but there are certain checks that will provide a useful impression, such as social media screening.
While it’s totally legal to look at a candidates’ social media profile, care must be taken not to judge someone on protected characteristics to avoid discrimination. It’s also a useful way to flag any candidates who may lack professionalism. It doesn’t necessarily have to result in a revoked job offer, it could be that you have a discussion with the applicant and ask them to remove, or make private, any unprofessional content before they are hired.
5. Keep the candidate informed
There’s nothing more agonizing than waiting to hear back about a job offer or being kept in the dark about how your application is progressing. That’s why employers should keep candidates as informed as possible throughout the pre-employment screening process, letting them know when each check has been completed and whether they need to provide any further information.
It may not sound like the most important consideration, but keeping the candidate engaged and up-to-date will send a positive message about your business and the way you treat your staff before they come on board. In a competitive job market where you’re likely fighting for top talent, it could make all the difference.
6. Screening doesn’t end with a hire
So you’ve screened your prospective hire, checked out all of their credentials, and are satisfied that they’re the right fit for the team. Job done! Or is it? While screening at the pre-hire stage is crucial, we all know that things change. What if, for example, an employee sets up their own business as a side hustle a year into their employment. Could there now be a conflict of interest?
In order to keep on top of any changes, it’s important that rescreening is carried out periodically among staff. This should happen at regular intervals—say every two or three years—or when someone is promoted into a more senior role (particularly if this means taking on new responsibilities, such as handling money or accessing sensitive data).
Make sure there is a clear company policy in place which outlines exactly what will happen if any findings arise, to ensure everyone is treated fairly and consistently.
Great employees are key to building strong companies
Putting comprehensive pre-employment screening in place may seem like just another unnecessary burden for a small business trying to focus on growth. But, as argued, it’s vital for building a strong and trustworthy team, without whom your company could not flourish.
As business management researcher and author Jim Collins wisely said: “Great vision without great people is irrelevant.”