A bad hire can not only damage a company’s reputation, but could also result in loss of opportunity costs, time and resources.

Matthew Glasner, MD South Asia Pacific for First Advantage, finds ways for companies to build a stronger background screening process.

Background screening has become important for a number of reasons. Studies indicate a company can on average lose about 5% of its revenue to fraud each year.

As a result many countries laws and legislations mandate such checks.

However, even if not required by law, background checks help limit a company’s liability risk and can reduce loss by ensuring the right candidate is appointed for the job.

The impact of employees faking their educational or work experience is significant and particularly challenging in sectors like banking and finance.

The concern is even more in Singapore, where you have a multinational community. Hiring outside of the country poses a lot of challenges in identifying degree mills, and other fake documentation.

Among all discrepancies we found last year, about 30% were in employment and 15% were in education.

The cost of a bad hire

According to Recruiter.com, the cost of an employee whose employment is terminated after two-and-a-half years comes out at a staggering USD$830,000, based on annual earnings of USD$70,000.

The cost of an employee whose employment is terminated after two-and-a-half years comes out at a staggering USD$830,000, based on annual earnings of USD$70,000.

This includes costs associated with recruitment, such as advertising, recruitment agency fees, scrutiny of applications, multiple rounds of interviews, travel and accommodation, training and orientation.

Another survey, this one by Recruit Plus, found 99% of respondents felt their organisation employs a certain percentage of bad hires, from 10-50%.

Of 4,000 respondents, only 64% had the intention to make good their bad hires through training; 11% will live with it.

In Australia, there was a retailer who made a strategic hire last year and announced it all over the press. Within three days, they had to retract everything, as his CV allegedly did not have the true credentials.

The impact on their share price was significant.

The costs that are difficult to quantify are the low confidence of customers with the company, loss of business, and cost of disruption of the business, mistakes and failures of the candidates.

One of the major losses is reduced employee morale. When an employee is terminated, the entire team can be in disarray.

The costs difficult to quantify are the low confidence of customers with the company, loss of business, and cost of disruption of the business, mistakes and failures of the candidates.

Evidently, there are tangible and intangible costs to getting hiring wrong and different ways to measure those. But the question really comes back to the cost of not doing background screening.

Everyone thinks it is fine not to insure their car until they have an accident. Screening is a similar proposition, if you don’t screen your employees effectively, it will come back and bite you.

When screening comes in

Most employers think background screening is important only in organised sectors like IT, BPO, pharmaceutical, banks; and has little significance in unorganised sectors such as local supermarkets, agencies providing nannies or domestic help, or local transport companies.

It is important for employers to understand that background screening is a crucial process in all sectors. Any business that deals with people should not ignore the process.

Having said that, it is not easy to confirm the integrity of an individual at the first meeting.

Hence, it is important to screen all shortlisted candidates as it assists the employers in weeding out inefficient and inappropriate persons before making an offer to a candidate who misrepresented his/her credentials.

On average, background screening takes between 5 to 15 days, depending on where it is taking place.

On average, background screening takes between 5 to 15 days, depending on where it is taking place.

In Australia, criminal checks can be done within 24 hours, while in the UK it takes up to 15 days, and 38 days in Thailand. Singapore takes between 5 to 16 days.

It also depends on where the candidate is from, and how extensive the level of screening desired is.

Three top tips for recruiters

To strengthen organisations’ background screening processes, here are 3 guidelines.

1. Verify at source

Establish strong relationships with entities such as education institutions and employers.

Evaluate your internal resources to follow a strict pre-approved process, conduct the verifications in a consistent manner from person to person, and document the attempts and results.

2. Adhere to compliance and local privacy laws

Checks around collection and transmission of personal information are subject to data protection and privacy laws of many countries. These laws are dynamic and subject to changes.

Develop a mechanism to be abreast of latest laws in your candidates’ source country.

3. Determine the number/type of checks to conduct

Asia Pacific employers conducting six checks and above are 11 times more likely to uncover a discrepancy as compared to those who conduct two checks.

Decide what screening components make the most sense based on the position being filled.

Determine what data restrictions and employment screening guidelines are in effect within the country being searched.

ALSO READ: 23% of candidates have exaggerated the truth to get hired

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