The Seven Deadly Sins of Background Screening. Common Mistakes to Avoid at All Costs

Transcription

1 A STERLINGBACKCHECK WHITE PAPER By COMPANY AUTHOR The Seven Deadly Sins of Background Screening Common Mistakes to Avoid at All Costs

2 Introduction PRE-EMPLOYMENT BACKGROUND SCREENING is now a must for most organizations. Roughly 73% of employers surveyed by the Society for Human Resource Management in 2010 reported requiring some form of background check prior to making a hiring decision. That number will only grow as more companies and human resources departments view background checks as a way to keep staff and customers safe, weed out unsavory employees and prevent negligent hiring claims. Background screening processes have evolved to include much more than just the traditional criminal record search. While criminal background checks are the still most common type of screening, many organizations are choosing and with good reason to expand screening to also include past employment, education, credit, driving records, sex offender registries, restricted parties lists and other pre-employment checks. As background screening becomes more prevalent, common and costly employer mistakes in the administration of screening programs become more frequent as well. Drawing on SterlingBackCheck s more than 35 years of experience helping organizations of all sizes screen and hire talent, this paper details seven common mistakes ( the deadly sins ) that organizations make when performing background checks. Some of these issues are common at young, growing companies, while others can be found within well-established screening programs. AT A GLANCE THE SEVEN DEADLY SINS OF BACKGROUND CHECKS 7 Not Using an Accredited Background Check Provider 6 Not Screening Vendors, Contractors or Temps 5 Not Verifying Employment & Education Histories 4 Not Performing International Background Checks 3 Relying on Manual Internal Processes 2 Using Irrelevant or Noncompliant Information 1 Not Creating (or Following) a Consistent Screening Policy

3 The Scary Truth About That Perfect Hire 3 Out of 4 Résumés Are Misleading 21% State Fraudulent Degrees 40% contain inflated salary claims 33% include inaccurate job descriptions WHAT APPLICANTS AREN T TELLING YOU 22% Give Falsified References 3% Have A Misdemeanor Record 7% Have A Felony Record 46% OF BACKGROUND CHECKS REVEAL DISCREPANCIES ON AN APPLICANT S RÉSUMÉ. Source: All statistics from Background Checking: The Use of Criminal Background Checks in Hiring Decisions. SHRM. Society for Human Resource Management, 16 July 2012.

4 MISTAKE #7: Not Using an Accredited Background Check Provider This section could alternatively be titled Choosing A Screening Partner Based Solely On Price. Because that s what typically happens: An organization goes with the cheapest background checks possible. But of course, you get what you pay for. Partnering with a screening provider with dubious information sources or sloppy best practices can result in inadequate screening or, worse, screening results that are noncompliant. Even if it means changing providers, always ensure you work with a company that is accredited by the National Association of Professional Background Screeners (NAPBS). The association s Background Screening Credentialing Council (BSCC) accreditation is awarded only to those companies that demonstrate use of the most stringent best practices and procedures. Only 2% of background check companies are NAPBS-accredited. Background screeners must go through a rigorous audit process to prove they maintain the highest standards of operation in order to earn accreditation. A first step is to check the provider s website for specific language about its accreditation. Look for more than just a mention of the NAPBS. Most background check companies are members of the NAPBS but very few have actually earned its accreditation. ABOUT NAPBS ACCREDITATION Accreditation by the BSCC has become a widely recognized seal of approval for companies that conduct employment background screening. To be awarded accreditation, a screening company must complete a full business audit and demonstrate that it meets the NAPBS standards for: 1 Consumer Protection 2 Legal Compliance 3 Client Education 4 Researcher & Data Standards 5 Verification Service Standards 6 Miscellaneous Business Practices Source for all stats and requirements: NAPBS website

5 MISTAKE #6: Not Screening Vendors, Contractors or Temps Outsourced staff, contractors and temporary workers are common at companies everywhere, and fill non-professional roles such as janitor, security guard and gardener. While not direct employees, these workers can pose the same risks. WHY? + The vendor company that hired these workers may have conducted inadequate background checks or no checks at all. + Contracted workers usually have easy access to sensitive areas of the building. + Supervision of these low-level workers is often minimal. + These workers are more likely to have financial strain, drug or alcohol problems, or criminal backgrounds. Employers can minimize the risk of fraud, theft and an unsafe workplace by putting measures in place to identify any contract or temporary worker who may be a workplace risk. This may be done either through the contractor or in-house, as described below. A sad fact: People with questionable backgrounds gravitate toward industries where screening is light. OPTION 1: Make sure the contractor performs background checks on all workers. Insist that screening be a part of any service contract and require the contractor to conduct checks via a reputable (see Mistake #7) company. OPTION 2: Screen contract employees in-house the same as you would any regular employee. This way, you choose the screening company and the types of background checks performed. QUESTION: Should you perform background checks on interns? ANSWER: Absolutely. Interns no matter their age or experience may still pose a risk to company personnel, property and assets.

6 MISTAKE #5: Not Verifying Employment & Education Histories The Wall Street Journal reports that 34% one out of three of all job applications contain outright lies about the candidate s experience, education and ability to perform essential job functions. Worse, the estimated average cost of a bad hire equals roughly 30% of the employee s annual earnings. And yet, most companies only conduct criminal record checks when screening potential hires. But these are just not enough to provide a complete picture of the candidate s history and character. An MBA from Monticello University? Degree mills have handed out millions of fake credentials. 3 ENSURE YOUR CANDIDATE PROFILES ARE ROBUST BY AT LEAST PERFORMING THESE COMMON CHECKS: + Criminal records checks (including national databases) + Employment history verifications + Education verifications Confirm the type of degree earned, major, dates attended, etc. When contacting past employers, pay close attention to start and end dates, job titles and duties. If the candidate isn t currently employed at the company being contacted, try to verify the reason for leaving. This information can be used to validate references and ensure the candidate hasn t asked others to lie on his or her behalf. 1 Background Checking: The Use of Criminal Background Checks in Hiring Decisions. SHRM. Society for Human Resource Management, 16 July Web. 03 Apr The Cost of a Bad Hire. Madden Industrial Craftsmen, n.d. Web. 21 Apr Stopping the Use of Fraudulent Degrees. ACCJC Occasional Papers (n.d.): n. pag. ACCJC. Web. 3 Apr Reference checks FUDGED RÉSUMÉS IN THE CORNER OFFICE COMPANY OUSTED EXECUTIVE DEGREE CLAIMED CSX Clarence Gooden, CCO B.A. MGM Mirage Terry Lanni, Chairman M.B.A. RadioShack David Edmondson, CEO B.A., theology and psychology Yahoo Scott Thompson, CEO B.S., computer science

7 MISTAKE #4: Not Performing International Background Checks Globalization has led many U.S. organizations to expand operations internationally as well as hire more foreigners and foreign-born residents. With so much at stake such as the potential of hiring a violent felon, or the protection of intellectual property in places like China international background checks are critical. Employers cannot assume that the process for screening internationally is the same as for screening domestic candidates in the U.S. Differences often include: + Criminal records, credential verifications and databases may not be easily accessible or available at all in some countries. + Sourcing reliable information can be a challenge in countries where proper collection and maintenance of records does not exist. + Unique forms, procedures and consent language may be needed to meet differing local privacy laws. + Costs and turnaround times can be much greater than for domestic screenings. There are nearly 250 political entities in the world, and each is different when it comes to background checks. Without question, work with an established global background check provider with local expertise in the countries and regions where you are hiring. Here s some practical advice for organizations building an international screening program: 1 Start in the countries where you will do the most hiring. Ensure that that portion of your screening program runs effectively before phasing in other regions. 2 Understand what type of information is available from each country. Available information varies widely from country to country. 3 Be persistent in researching not only the legal but also the social and cultural differences of each country and region. 4 Set your candidates expectations regarding requirements and turnaround time for each region. 5 Do your best to walk job applicants through the complicated screening process. FCRA RULES ALWAYS APPLY The obligations of the Fair Credit Reporting Act (FCRA) apply for international background checks on U.S. applicants as well as domestic checks. If there is a negative public record, such as a criminal-record hit, then the firm must verify the information is accurate, up-to-date and supplied in a way that does not violate any data- or privacy-protection rules.

8 MISTAKE #3: Relying on Manual Internal Processes What do you think when you walk into a doctor s or dentist s office and you see piles of papers, forms and files everywhere? Are you surprised when they ve misplaced your file or don t have an accurate record? It s the same when performing background checks manually. Errors inevitably creep in while you are compiling, filing, storing or even retrieving a candidate s information. Institutions can avoid human errors that delay hiring by using automated screening solutions. Many can be easily integrated into popular application tracking systems (ATS) or human resource information systems (HRIS) so that employers can request background checks on demand, at the push of a button. Buyer beware: Avoid fully automated systems that tout instant checks. Human oversight and intervention is a must. Unfortunately, the pendulum swings both ways. As more employers rely solely on the automated screening process, the discrepancy rate in employment verifications has gone up. Automated screening works, but it lacks human judgment. Plus, some criminal background checks can only be done manually. Using a screening provider that combines the best of automation and human investigation with manual checks and verifications provides the greatest accuracy, consistency and return on investment. POPULAR ATS & HRIS SYSTEMS *ONLY A SAMPLE PEOPLESOFT MISSING

9 MISTAKE #2: Using Irrelevant or Noncompliant Information Nearly all states have begun to scrutinize the use of criminal history, credit history and other records in employment screening. As a result, myriad laws have emerged throughout the country and regulations are changing all the time. An employer must be dedicated to performing background checks that are compliant with all state and federal regulations. For example, exclusion of job applicants based on conviction records is prohibited unless the employer can show business necessity, such as meeting industry statutory requirements. According to rules set forth by the U.S. Equal Employment Opportunity Commission (EEOC), an employer must be able to show that it has considered all of the following: 1 The nature and gravity of the offense or offenses 2 The time that has passed since the conviction and/or completion of the sentence 3 The nature of the position held or sought Only screen what is relevant and fair to the position. Many states have tight restrictions on the use of credit reports, and these restrictions are not consistent from state to state. When screening with a credit report, it is a best practice to show that the individual s credit history is relevant to the position. This is common for positions where the employee will directly handle financial transactions. The same is true for past workers compensation claims, which fall under the protection of the Americans with Disabilities Act. Workers compensation checks are not available for all states and should be ordered only after an unconditional offer of employment. Focus on compliance. By ensuring your screening provider is equipped to provide you with only the information you are legally allowed to have (e.g., removing convictions that have been expunged), you can ensure your hiring decisions are based on relevant information and avoid bias. Your provider should be able to do this automatically and in compliance with all federal and state laws. PEPSI S EXPENSIVE LESSON In 2012, Pepsi agreed to pay $3.13 million and provide job offers and training to resolve a charge of race discrimination filed by the EEOC. Under Pepsi s former screening policy, job applicants who had been arrested pending prosecution were not hired even if they had never been convicted of any offense. The EEOC s investigation found that African Americans were disproportionately affected by this policy. Pepsi to Pay $3.13 Million and Made Major Policy Changes to Resolve EEOC Finding of Nationwide Hiring Discrimination Against African Americans. U.S. Equal Employment Opportunity Commission, 11 Jan Web. 03 Apr

10 MISTAKE #1: Not Creating (or Following) a Consistent Screening Policy It may seem obvious and common sense for an employer to create a formalized screening policy, yet not doing so is one of the most prevalent and costly sins especially in smaller, fast-growing companies. Even large companies have difficulty implementing a policy and enforcing it once it is created. The reasoning for having a formalized screening policy is simple. Having a standard written policy for every job title ensures that: + There is uniformity in background checks. + Data is used in compliance with regulations. + The appearance of discrimination is avoided (e.g., a conviction record is not an automatic bar to employment). The existence of a formalized policy does not guarantee that staff will perform background checks consistently or appropriately. Oversight and training is essential. Often, it s individual employees ignoring or bending policy that results in litigation, not the policy alone. That s why clear and consistent training of anyone involved in the hiring process is essential. Detailed, step-by-step procedures must accompany an employer s screening policy. You should craft standard screening policies and make them an integral part of the hiring process. But you should also build in a regular, thorough review process to update your policies based on the evolving needs of your organization, the changing nature of your industry and the changing regulatory climate. A POLICY CHEAT SHEET All employers struggle to craft screening policies that are effective and compliant. An experienced, reliable screening provider can assist organizations in the creation or update of a screening policy. The Society for Human Resource Management (SHRM), a well-respected industry group, publishes helpful guides and templates for crafting background check policies and procedures. Check them out at

11 Conclusion Employment background screening is now ubiquitous in the hiring process and a natural extension of an organization s human resources department. By avoiding the Seven Deadly Sins of Background Checks, employers can greatly minimize the risks and the associated costs of a bad hire while improving screening quality and efficiency. About SterlingBackCheck SterlingBackCheck is one of the largest background check companies in the world. Led by founder William Greenblatt since 1976, Sterling is chosen by over 25% of the Fortune 100 and over 20,000 organizations across the globe to help them hire and retain the right people. As a global background check leader, Sterling has 2,300 people in 10 offices in five countries. Sterling s people bring expertise in compliance, client experience and applicant experience. Connected by the world s most advanced background check technology platform, and backed by strong financials, Sterling continuously reinvests in its business to ensure it remains a global leader. WANT MORE? In addition to this report, SterlingBackCheck regularly publishes cutting-edge research and insight on the latest trends in human resources, talent management and hire processing. For more information, visit SterlingBackcheck.com