BRB's Public Records Blog

The Return on Investment (ROI) of a Screening Program

Employers justify the costs associated with employment screening with the clear Return on Investment, or ROI, that these programs bring to the workplace.

Two costs are associated with a screening program. First, is the cost of the in-house time and effort needed to pursue a Safe Hiring Program; second, the cost of any outsourced services such as background checks. These costs are covered in greater detail in The Safe Hiring Manual 3rd Edition. In the meantime, let us assume as a general rule, the cost of a background screening is likely less than the cost of an employee’s salary on just his or her first day on the job. Of course, the depth of screening, and therefore the costs, will vary depending upon the job position. Screening for a janitorial position, for example, will likely cost less than that for an executive. Since executives are more highly paid, however, the cost of a screening as a percentage of salary is still less than their first-day salary.

Two Approaches to Calculating ROI

Because the purpose of background screening is to prevent harm, it is often difficult to quantify the ROI of events that did not happen. A firm hit with even a single incident of workplace violence or related legal action immediately recognizes the advantages of a Safe Hiring Program.

Method One: Making a Judgment as to the Value of Avoiding the Parade of Horribles

Assume an average background check performed by a third party firm is $50, and a firm submits 100 names to a screening firm during a twelve month period. Keep in mind that most employers only screen finalists, not all who apply. The third-party costs of this service would be $5000.

If a firm can avoid just one problem employee as a result of a background check, the $5000 cost of the screening program was more than worth it. Just one bad hire can exceed the cost of an applicant’s yearly salary. Given industry statistics that suggest up to 40% of all applicants contain potential issues, it is likely that a background check would save an employer a great deal of time, money, and grief in terms of a bad hire. Given the negative impact that even one bad hire can cause, it would appear to be a very small price to pay.

Method Two: Calculation of Benefit from Lack of Turnover

The benefits of a Safe Hiring Program can also be measured by estimating the average costs associated with a single employee turnover. An easy way to consider these costs is by building a turnover calculator that breaks down all the costs associated with having and filling a vacancy on an item-by-item basis. When the expenses involved are broken down to basics, it is easy to see how such costs can add up to a sizeable figure.

This information was taken from The Safe Hiring Manual 3rd Edition by Lester S. Rosen. For more information on this publication, please visit the BRB Bookstore or contact [email protected].

Spotting Six of the Biggest Job Applicant Lies

Although statistics vary widely, there is widespread agreement that a substantial number of resumes and applications belong in the fiction section of the bookstore. The rate of fraud can be as high as 40% and higher according to different sources. Applicants certainly have the right to put their best foot forward, and puffing their qualifications is an American tradition. But when puffing crosses the line into fabrication, an employer needs to be concerned. When you hire an applicant who uses lies and fabrication to get hired, the issue is that the same type of dishonesty will continue once they have the job. Below are six of the most common fabrications claimed by job applicants.

1. Claiming a Degree not Earned

Yes, believe it or not, applicants will make up a degree. Sometimes, they actually went to the school but never graduated. Some applicants may have had just a few credits to go and decided to award themselves the degree anyway. On some occasions, an applicant will claim a degree from a school they did not even attend. The best practice for an employer is to state clearly on the application form that the applicant should list any school they want the employer to consider. In that way, if an applicant lies, the employer can act on the lack of truthfulness regardless of whether the educational requirement is part of the job requirements.

2. Claiming a Diploma Mill or Fake Degree

A related issue to claiming an unearned degree is declaring a fake degree that can be purchased online from a Diploma Mill. Today one may obtain a degree simply by going online and using a credit card. There are even websites that will print out very convincing, fake degrees from nearly any school in America. In fact, the author obtained a degree for his dog in Business Administration from the University of Arizona—and the dog had been dead for ten years. A transcript was even obtained and the dog got a “B” in English! Some sites will even provide a phone number so an employer can call and verify the fake degree. Some of the degree mills even have fake accreditation agencies with names similar to real accreditation bodies, in order to give a fake accreditation for a fake school.

3. Previous Job Title

Applicants can easily give their career an artificial boost by “promoting” themselves to a supervisor position, even if they never managed anyone.

4. Claiming Knowledge, Skills, Abilities, or Experience They Do Not Possess

Employers normally hire based on a job description that will describe the knowledge, skills, and abilities (KSA) needed for a job as well as the experience required. These are exactly the areas, however, where employers often find a candidate has fibbed.

5. Dates of Employment

Another concern for employers is applicants who cover up dates of employment in order to hide employment gaps. For some applicants, it may be a seemingly innocent attempt to hide the fact that it has taken awhile to get a new job. In other cases, the date fabrication can be more sinister, such as a person that spent time in custody for a crime who may be trying to hide that fact.

One caveat—there can be times when the applicant is honestly mistaken about employment dates due to having started a position as a temporary worker on a staffing firm’s payroll. An applicant may have worked at a past employer for five years, but the first year was officially an employee of a staffing vendor. In the applicant’s mind, they were there for five years. However, the official records for the company may only show employment for four years.

6. Previous Compensation

A related issue is past salary. Applicants have been known to exaggerate compensation in order to have a better starting point when negotiating the salary for the new job. However, for many employers past salary is a sensitive area and some HR professionals will ask for a written release first.

This information was taken from The Safe Hiring Manual 3rd Edition by Lester S. Rosen. For more information on this publication, please visit the BRB Bookstore.

Four Benefits of a Safe Hiring Program

The best way for employers to make one of the most critical decisions in their business is to institute a Safe Hiring Program (SHP). The definition of a Safe Hiring Program is: A series of policies, practices, and procedures designed to minimize the probability of hiring dangerous, questionable, or unqualified candidates, while at the same time helping to identify those candidates who are capable, trustworthy, and best suited to the job requirements.

A Safe Hiring Program will help employers substantially minimize risk to their businesses. The Program requires taking appropriate steps toward the development of policies and countermeasures before the hiring process begins. Properly implemented, a Safe Hiring Program helps employers in four key ways.

1. Provides Deterrence

   Making it clear that screening is part of the hiring process can deter potentially problematic applicants and discourage applicants with something to hide. An applicant with a serious criminal history that is inconsistent with the needs of the job or falsified information on his or her resume is less likely to apply at a firm that announces pre-employment background checks are part of the hiring process. Do not become the employer of choice for people with problems when simply having a screening program can deter those problem applicants. However, as discussed in Chapter 10 (The Safe Hiring Manual 3rd Edition), an employer should be mindful of the proper and non-discriminatory use of criminal records.

2. Encourages Honesty

   The goal of a safe hiring program is not to find “perfect” candidates. Many job-seekers with blemished records may still be well-suited for employment. Few employers enjoy the luxury of choosing only from a pool of perfect candidates. However, employers need to be fully informed when making hiring decisions. Having a Safe Hiring Program encourages applicants to be especially forthcoming in their interviews. Making it clear that background checks are part of the hiring process is strong motivation for applicants to be open, honest, and truthful.

3. Yields More Factual Information

   Although intuition can play an important role in hiring, basing a decision on solid information is more reliable and safer. Effective screening obtains factual information about candidates to supplement interview impressions. It is also a valuable tool for judging the accuracy of a candidate’s resume. Facts limit uncertainty in the hiring process. As the old saying goes, an employer can “trust, but verify.”

4. Promotes Due Diligence

   Implementing a Safe Hiring Program helps employers practice due diligence in their hiring. Having an SHP is a powerful defense in the event of a negligent hiring lawsuit, and understanding how due diligence is associated with liability for negligent hiring is critical for any employer. If a bad hire results in a legal action, then an employer must show that it utilized appropriate measures of due diligence.

   Firms that do not perform due diligence are sitting ducks for litigation, including attorneys’ fees and big damage awards. Employers who implement and follow a Safe Hiring Program show due diligence measures that are a powerful legal protection. Fortunately for these employers, the cost of exercising due diligence through a SHP is very modest. Even if there is a cost involved, employers need to measure the risk of hiring blind with the considerable and near certain risk of litigation and attorney fees stemming from a single bad hiring decision. As another old saying goes, it is a matter of “paying now or paying later.”

   In addition, a SHP protects employers when bad hires slip through. Despite an employer’s best efforts, there is always the possibility someone will be hired which may result in a lawsuit. Employers who can demonstrate to a jury that due diligence was maintained as part of a SHP will have a powerful defense against a lawsuit.

This information was taken from The Safe Hiring Manual 3rd Edition by Lester S. Rosen. For more information on this publication, please visit the BRB Bookstore.