Pre-employment Background Investigations

Protus3Background Investigation


Why did the chicken cross the road? You know the rhetorical question and the answer: to get to the other side. But would the chicken cross a six-lane highway during rush hour traffic with his eyes closed? I think not; chickens are smarter than that. I use that old joke to illustrate the dangers and risks some companies assume if they have no policy for conducting thorough pre-employment background investigations before allowing new employees access to their assets. Why would a company knowingly put their physical, intellectual, and human assets at risk? There seem to be three different perceptions. First, owners or managers assume they will be able to make the best hiring decision for their company even though their decision may be based on limited, incomplete, and possibly fraudulent information. Second, they think that thorough pre-employment background investigations are simply too expensive and fail to see the ROI. Finally, many just haven’t thought it through.

It is human nature to make decisions we feel are in our own best interests. The problem for you as a manager or owner is that potential employees frequently make decisions in their own self interest that are contrary to yours and those of the business. Any decent writer can create a falsified résumé. A Google search of “fake résumés” produces 4,560,000 hits. The first site on the list was www.fakeresume.com, which stated that more than 53% of job seekers and 70% of college graduates lie on their résumé. The website offers guidance in “filling gaps,” “finding foolproof methods to add experience,” attaining “fake references,” and getting “transcripts from any university with any GPA you want.” It even suggests that if a candidate doesn’t lie, hiring managers will assume they have. For many, rhetoric like this is reason enough to invent. The chances of encountering a falsified résumé are substantial, and without proper security measures, you could become a victim.

The costs associated with hiring the wrong employee are frightening.
Mindboggling statistics have been published by security, HR, accounting, auditing, risk management, business and economic organizations. Here are some recurring figures:

  • 35% to 60% of job applicants have inaccuracies and/or misrepresentations of some sort on their résumés/applications
  • Internal theft and fraud cause nearly 30% of business failures
  • 70% of these internal theft or fraud crimes are committed by repeat offenders
  • The cost of employee theft to employers is between $60 to $120 billion a year
  • One bad hiring decision can cost more than $100,000, not including the costs associated with theft, violence, harassment, or wrongful termination

What is the bottom line?
It is simply smart business to gather the necessary information to make a good hiring decision. Obvious reasons aside, good hires provide a competitive advantage to a company by increasing morale, sending a positive message to other employees and making people more productive. A poor hire can do just the opposite. Either way, managers and owners are expected to know whom they are hiring and whether this person is the right fit for the organization. In addition, studies show companies who have pre-employment background investigation policies:

  • Attract higher quality applicants,
  • Discourage applicants with something to hide,
  • Have better and more complete information on which to base hiring decisions,
  • Reduce company liability by showing due diligence,
  • Encourage applicants to reveal “true self”,
  • Comply better with applicable federal and state mandates, and
  • Provide a safer work environment.

So you want to know more about proper hiring strategies?
Résumés are a tool employers use to identify individuals who meet the requirements of the position they are trying to fill. Applications are the tool employers use to fill in the gaps résumés leave, and should require candidates to attest to the truthfulness of the information they have provided on their résumé. Applications should also include an “authorization and disclosure statement,” requiring a signature that permits background investigation for the purpose of employment and stating their rights under the Fair Credit Reporting Act. Standard applications that meet state and federal guidelines are available from various sources. HR directors and legal representatives can typically provide you with pertinent additional information.

The goals of a pre-employment background investigation are twofold: to verify that the information given is accurate and complete and to look for information that has been omitted for reasons that are unfavorable to the applicant. To be effective, companies should require that the application be completed in full to include all applicable addresses and contact information, dates of attendance, employment, residences, and other information. It is important that qualified personnel review the application for completeness and follow-up on any missing data or gaps.

Most employers look back seven to ten years on applicants, but there are some instances where longer historical investigation is appropriate. At a minimum, the background investigation should include Social Security number verification, birth date verification, current and former address history, employment history, reference and developed reference verification, and criminal records checks. These measures provide any employer with the verification and validation needed to support the information gathered from the résumé and interviews. Additional important information includes the verification of education, civil records (including bankruptcy), state licensing, credit reports, military records, regulatory sanctions, sexual offender indices, terrorist lists and driving records.

It is perfectly reasonable for a company to complete all or portions of pre-employment background investigations themselves if they have the resources in house. In some cases Risk Management Associates works alongside companies who check references and former employers. Other companies depend on us for all of their records checking. Using an outside service is a good fit for companies who do not have the experience and/or resources to perform a thorough investigation in-house. It also puts an additional layer of liability protection between the company and the applicant and can often be a cost savings. Either way, the most important thing to remember is that thorough pre-employment background investigations are imperative to providing the necessary information for making the best hiring decision for your company. Like the chicken, it helps to see if danger is coming.

“Review your hiring procedure to ensure that a thorough background screen and criminal history check is conducted on all potential employees, especially those who will have access either to trade secrets, or to the private information of employees or consumers. After all, the best defense to the would-be rogue employee is not to hire him in the first place. Part of this screen should include asking for and thoroughly checking references, which we find is all to frequently omitted by companies, but which provides an excellent source of information (or perhaps equally telling, a lack of information) about the applicant. Companies may consider more thorough screenings for employees handling sensitive information. In addition, with the proliferation of social networking pages, it can be useful to conduct an Internet search to see if the applicant has elected to provide additional information about him or herself online.” Privacy & Security Law Report, ISSN 1538-3423


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Protus3 specializes in security system design, security consulting, corporate investigations and other investigative services. Partner with Protus3 and we will examine each situation to identify threats and develop solutions for your best outcome.

919-834-8584 or 800-775-8584