Talent acquisition in the hiring process requires a great deal of investment in both time and effort for the hiring manager and would involve even greater repercussions if the chosen candidate turns out to be a bad hire. Due to the ever-growing competitive nature of job seeking, it is becoming increasingly likely that a prospective employee may embellish their CV, making themselves appear more attractive to the employer. When hiring new employees, the company becomes vulnerable to human capital risk, which is often thought as the most damaging threat to an organisation yet is also the least well-managed. Hence, performing the appropriate background screening before confirming the hire can save the company from unnecessary costs later down the line.
Top 3 risks when hiring new talent
1. False Credentials
It is thought that generally around 40% of all job applications contain some fraudulent information, and such a high percentage hence displays the necessity for thorough background checks in the hiring process. One of the most common lies tend to be extending dates of employment to hide a suspicious employment gap which the candidate wants to cover up. Similarly, claims of fraudulent degrees found are on the rise which is a great indicator that the candidate is in fact not qualified for the role. Other false credentials may include exaggerating daily activities in job roles or improving the job title. Other times you may expect to find fraudulent references, or at least references that are not suitable.
2. Breach of Trust
In addition to the risks that a hire with false credentials may impose on the company in terms of being unqualified for the role, the candidate’s willingness to lie on their résumé can be a strong indicator of an untrustworthy candidate. If they are willing to lie to reach their desired position, then what else may they lie about within the company?
With access to sensitive company information and documents, and company reputation on the line, hiring a person that can be trusted to perform their role is critical. For example, theft within a company is estimated at roughly 5% of revenues each year. Hence, pre-employment background checks can also act as a judgment of character of the prospective employee for the hiring manager.
3. Negligent hiring and employer liability
As well as having a background screening process in place having the power to discourage untrustworthy candidates, pre-employment background screening conveys that the employer has exercised the necessary due diligence as a preventative measure to protect the company from legal harm. Pre-employment background checks can also check for criminal checks, social media checks and right to work checks; all areas in which an employer can become liable if the correct due diligence process hasn’t been conducted. An employer who hires a candidate without the right to work “can now be subject to a maximum civil fine of £20,000 per individual and/or a criminal sanction of an unlimited fine or imprisonment of up to 6 months”, Ben Mason- employment law associate at Aaron & Partners LLP. Hence, background checks can reduce the likelihood of encountering risk later on.
A cost-effective risk-management tool?
According to the US Department of Labor, a bad hire can cost the company at minimum 30% of that employees first-year salary, whilst Fast Company says that one quarter of companies surveyed estimated that a bad hire cost them at least $50,000 in the past year. Hence, pre-employment background screening is a cost-effective risk-management tool to help deter fraudulent candidates, mitigate risk to the company and protect the company from liability in the future. This keeps the company safe and acts as an effective risk management tool in providing integrity and confidence in new talent hired.
CRM and Marketing Executive
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