Skipping Background Checks Can Cost You Big Money

October 3, 2014 | Staffing Blog

More employers are running background checks on job candidates, according to a report at Workforce.com. It’s something we’ve been doing for years so we’re glad to see other businesses are recognizing the value.

According to data compiled for a Workforce.com article, about 70 million Americans have a criminal record (1 in 4 adults), 27% of job candidates misrepresent their educational background, and $18.4 billion was lost to employee theft.

Those numbers alone should encourage businesses to conduct background checks. While individual businesses might be doing more checks, only about 40% of staffing agencies run background checks. At Allegiance, we do a check on each and every candidate. We verify employment with former employers and we speak with past supervisors to gauge an applicant’s work ethic, skills and reliability.

We take our hiring process very seriously. Our success as a company depends on providing our customers with high-quality temporary workers – and that means we need to know their history.

This Fast Company article noted that 27% of U.S. employers surveyed by CareerBuilder reported that one bad hire had cost their company more than $50,000. We’re not aware of any company that wants to see $50,000 or more go down the drain.

Aside from the outright loss of dollars, you also have to factor in lost productivity, lost time while recruiting and training another worker, and negative impact on other employees and clients.

Another blog post from recruiter Jörgen Sundberg lays out the bottom-line costs: hiring, compensation, cost of maintaining employee, disruption costs, severance, and mistakes/missed business opportunities. Roll those together for a second-level manager who earns $62,000 a year and was fired after 2.5 years on the job. The total: $840,000. You can apply that same formula to an employee at any level, and you get the picture: bad hires are expensive.

According to that CareerBuilder survey, 11% of companies make poor hires because they didn’t perform good enough reference checks and another 21% didn’t test the employees’ skills.

This is why we stress our 3-Day Hiring Process and background checks – they are the very best way to determine if an employee is reliable, skilled and serious about the job we have to offer. Taking the extra time to call references, conduct a background check and run the employee through more than one interview may take three days, but in the long run it saves thousands of dollars and allows us to provide our customers with quality workers rather than expensive mistakes.