April 21st, 2021
Background Checks Help Your Business Save Money
3 min read
Background checks are a necessity in the modern business world as they keep your business safe from liability. Businesses that use background checks have proven that they are able to ensure new hires are not a risk to the organization and, more importantly, to their culture and employees. Not only do background checks provide businesses with peace of mind about a potential employee, but they can also be a valuable investment by saving your organization from the costs that can come with making a bad hire. In fact, hiring the wrong candidate costs an average of $17,000 per employee. If you’re debating on whether or not to incorporate background checks into your business strategy because of the upfront expense associated with it, use the points below to aid you in your decision-making process.
Eliminate the Risk of Fraud
Businesses are constantly seeking out strategies to keep their organizations safe and secure from any outside threats that could result in revenue loss. One strategy that can’t be overlooked is background checks because they can help your business eliminate the risk of potential fraud. On average, businesses see a loss of revenue of nearly $3.6 billion across 125 countries, an average of $8,300 per month due to fraud. One of Certn’s many background check solutions such as Criminal Record Checks, Credit Checks, or Reference Checks can help reduce the risk of your business losing a significant amount of money on a hire that looked promising.
According to the Association of Certified Fraud Examiners (ACFE), there are three types of fraud that businesses typically see which result in revenue loss. They are:
- Asset misappropriation – 86% of fraud happens from employees stealing or taking advantage of business resources
- Financial fraud schemes – 10% of fraud is seen when an employee intentionally mishandles any financial statements
- Corruption – 43% of fraud happens when bribery or conflicts of interest occur and can result in a loss of $200,000
Conducting background checks on candidates during the hiring process provides them with insight into the type of culture that your organization values and is dedicated to maintaining. In addition, screening these candidates provides you with peace of mind, as it puts your business in a position to see any potential ‘red flags’ before revenue is lost.
Save Money on Training an Unfit Hire
As the economy continues to recover from the global pandemic, businesses need to make decisions to stay afloat. In Canada alone, nearly 251,000 jobs in essential industries such as retail, accommodation, and food services have been terminated. That’s double the candidate pool looking for positions across the country that can cost your business hundreds of thousands of dollars if not properly background-checked. CareerBuilder found in 2012 that 43% of companies made a bad hire because they felt that they needed to hire someone on a tight deadline. With the economy recovering quickly and restrictions slowly being lifted, there will be an increase in hiring within essential industries. Conducting one of Certn’s quick, seamless and user-friendly background checks can help identify these common stretched truths seen on resumes:
- 25% of people stretch the truth about job experience on their resume
- 21% of people stretch the truth about job duties and responsibilities on their resume
- 16% of people stretch the truth about specific employment dates on their resume
As the hiring pool of candidates continues to grow with the uncertainty of the economy, it’s important to know that the market is more competitive than it ever has been. Meaning, people will continue to stretch the truth on their resumes to stand out from other candidates. If your company hires an unfit candidate without conducting a background check, it can cost you more money than the background screening fee itself. Here are some of the fees that are associated and calculated when conducting the cost of a bad hire:
- Recruitment advertising fees and staff time.
- Relocation and training fees for replacement hires.
- Lost customers.
- Outplacement services.
- Weakened employer brand.
- Litigation fees.
Reduce the Risk of an Internal Lawsuit
When businesses do not actively conduct background checks during the hiring process, and an incident occurs that could have been prevented, that is known as negligent hiring. A company in Arkansas was sued based on negligent hiring when one of their truck drivers caused an accident killing another driver. That could have been prevented if a background check was completed. The company awarded the family $7 million dollars because the business failed to conduct a simple background check. If a background check was conducted, it would have revealed that the driver from the company had a record of unsafe driving including having his license revoked twice. Incorporating a quick and simple background check into the hiring process of your business can help reduce internal lawsuits and can also protect the reputation of your organization.
Background Checks are Critical to Any Business
Background checks are a solution that can help a business reduce the risk of losing revenue due to hiring an unfit candidate. They also provide valuable information to an employer as it helps them evaluate how a potential employee is likely to behave, given their past behaviours and actions. All it takes is one bad employee to cost you money, time, and resources that could have been spent on more relevant solutions. There are a lot of different businesses in different industries that utilize background checks to help them stay profitable. Let’s make your business one of them!
Ready to get started? We have a variety of background solutions that your business can invest in, that seamlessly fits into your hiring process and can save your business money in the long run.
You can book a demo with one of our industry experts to make sure your business stays one step ahead.