Could the people that you are hiring put you in hot water and expose your firm to reputational risks? Unfortunately, the answer is yes.
As a business, you want to make sure that you are not just hiring the right people for the job, but also mitigating reputational risk. One way to do so is with background investigations.
We recently found this article that spotlights different ways that companies can proactively screen to reduce reputational risks. One of the most effective ways is pre-employment screening. Pre-employment screenings can help you to uncover different information about the applicant that they might not have revealed on their application. Some people legitimately do not realize that they need to disclose certain information, while others deliberately obscure their past to try to make it through the screening process. Through screening, you will be able to minimize your reputational risk by gaining a better understanding of who you are hiring.
A whopping 43% of victimized organizations did not run background checks on the perpetrators before they were hired. Another study involving companies in 133 different countries found that 21% of background checks reveal something about the applicant that was previously unknown and considered a red flag. Occupational fraud can lead to a 5% decrease in your revenue over the course of a single year. This study by ACFE found that those losses add up to a whopping 4.7 trillion in losses every year.
Why should you conduct background checks? Pre-employment screening helps to minimize your risk of hiring someone who will engage in occupational fraud or misconduct. On one hand, background checks make sure that there are no surprises in the past of the employees that you hire. However, they also help to prevent serious consequences in litigation. A single employee with a history of criminal activity can lead to catastrophic reputational risk.
When you are considering what types of pre-employment screenings you can perform, make sure that you check local laws. The screening that you perform should depend on what position the person is applying for and include things like confirming identity, confirming residence history, confirming employment eligibility, verifying past employment, and a criminal background check.
The consequences of not performing pre-employment screening can be very serious. For example, consider a company that does not complete a background check on someone who has a history of theft. A year down the road, that employee steals on the job. There is a good chance that you would not have hired this person if you had known about their past criminal activity, and now you are suffering from increased reputational risk and potential liability. Never skip the pre-employment screening process.
James P. Randisi, President of Randisi & Associates, Inc., has been helping employers protect their clients, workforce and reputation through implementation of employment screening and drug testing programs since 1999. This post does not constitute legal advice. Randisi & Associates, Inc. is not a law firm. Always contact competent employment legal counsel. To learn more about the rights of employees who test positive for marijuana, Mr. Randisi can be contacted by phone at 410.336.0287 or Email: info@randisiandassociates.com or the website at randisiandassociates.com
