Despite rigorous interview processes and candidate vetting, companies still make bad hires. But how much do these mistakes cost? The impact is substantial, both financially and in terms of team morale, says Bart Lautenbach, senior vice president and general manager of talent solutions for data firm Equifax Workforce Solutions.
The initial cost of hiring a new employee can reach up to $4,000, according to Lautenbach. This figure excludes onboarding expenses, salaries, benefits and other compensation-related costs. However, the repercussions of a bad hire extend beyond financial losses. “Lies on a resume violate trust,” says Lautenbach. If HR teams and employers can’t trust new hires from the start, they are unlikely to trust them to perform job duties effectively.
Lautenbach advises HR staff to be thorough and deliberate in the background check process, while also acting swiftly. “Once you’ve made a hiring decision, it is important to move in a timely manner,” he says. “You want to keep the enthusiasm going.”
However, gathering information from multiple jurisdictions or performing checks manually can take time. To maintain momentum, HR teams can use technology to uncover red flags before making an offer. Solutions on the market today can integrate background checks into ATS and HRIS platforms, launch checks from workflows, handle candidate authorizations digitally and provide real-time updates and tracking.
The scope of a background check varies based on the employer’s requirements. Numerous types of background checks exist, with state and city laws differing regarding these tools. The three key things these checks cover are criminal background, educational claims and employment history. HR leaders and their teams should be familiar with the Fair Credit Reporting Act, warns Lautenbach, which governs what screeners can check.
Employment history
Screening a candidate’s previous employment can indicate their likelihood of staying with the company—Lautenbach says this prediction can be based on their tenure in past roles. This is crucial for employers with high-volume hiring needs, where retention is key. According to Lautenbach, high-volume hiring offers significant opportunities to improve candidate experience and reduce costs.
Industry-specific requirements
Many new hires in such fields as nursing and trucking must meet specific requirements, including accreditations or licenses. Bad hires can also pose security risks, especially for roles involving sensitive information and customer interactions so these roles may require unique background reviews.
Proactive accommodation
Lautenbach says background checks can provide a “validated source of truth” that confirms the potential new hire did indeed get the degree or finish the education program as indicated. “It’s important to understand the educational profile of new hires,” he advises.
Some employees may still be in school, and many workplaces report that they lose staff when a semester changes, according to Lautenbach.
Knowing if an employee is an active student (even if they don’t tell their manager) may help managers and HR teams accommodate these workers proactively, potentially retaining valuable staff.
Technology can’t be used in a vacuum, and there will be many instances when human resource teams will need to apply their expertise. Omissions or gaps, says Lautenbach, can be probed by a skilled recruiter. “There might be a good reason for these,” he says.
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