November 04, 2015

3 Ways Inadequate Pre-Employment Checks Could Damage Your Business

Pre-employment vetting checks can be costly, time-consuming and an administrative burden for both the employer and the candidate. 

As we have seen frequently in the press of late, failure to carry out these checks or relying on poor processes to complete them can have a huge negative impact on your organisation.

This can damage your business in three fundamental ways.

1. Financially

Robust and comprehensive background checks are a vital part of the recruitment process. They should not be used merely to rubber-stamp an appointment but also need to form a part of the selection process. A candidate’s CV - and even their performance in an interview – often only reveals what the applicant wants to reveal. But with the right set of background checks, an employer can get a much fuller sense of the person behind the listed experience and academic qualifications. For example:

  • A reference may point to a past disciplinary issue or discrepancies in job seniority and length of experience
  • Criminal history can highlight a particular offence 
  • For senior appointments, FCA checks can reveal past warnings, fines or bans 
  • Financial probity checks may uncover personal mismanagement, large debts or bankruptcy

Establishing a pattern of dishonesty in someone’s past can sometimes predict future conduct. 

Financial mismanagement, for example, is of particular importance within the financial services industry. If an employee is facing huge financial problems and has access to client monies, behaviour can be dramatically altered and temptation too much to bear. 

Fraud can be a possible if by no means inevitable outcome.

2. Operationally

Professional or academic qualifications are the two areas we find most dishonesty when carrying out pre-employment checks. 

Whether it’s the falsification of regulatory membership (e.g. FCA approval) or a failure to complete the relevant professional qualifications (e.g. qualified accountant) the impact can be huge. 

Hiring someone who is not fit to carry out competently the requirements of a particular role can have a damaging effect on the operational success of your company. 

It can destabilise not only a team or department but sometimes the entire organisation. And an employer shouldn’t forget that it may suffer legal ramifications. 

The more senior the appointment the greater the potential risk – and often the longer it can take to discover the individual is unfit to carry out his or her duties. 

To make matters worse, there is evidence to suggest that the more senior the appointment the less checks are carried out - particular in the case of executive appointments.

3. Reputation

If serious enough, fraudulent activities or operational incompetence can have a catastrophic impact on the reputation of your company. This can extend not merely to the media but also to clients, investors, regulators, suppliers and employees. 

As the billionaire investor Warren Buffet once said: “If you lose money for the firm I will be understanding. If you lose reputation I will be ruthless.”

We only have to look at the recent experience of a well-known car manufacturer to see how the alleged actions of one or two individuals can have a devastating impact on a huge organisation.

And here is the real advantage of high quality vetting procedures: it is not a purely quantitative process. 

Done well, background checks will uncover the character of the candidate. Is he or she honest and trustworthy? Does a small ‘white lie’ point towards more fundamental issues? 

This is where wholly automated and computerised processes fall down. Vetting services need to involve human intervention, expertise and discretion.Experienced vetting professionals will quickly weed out dishonesty. They will know that someone with one discrepancy will often have several. 

And while one check is better than no checks at all, the real power of vetting comes through its cumulative effect. 

Just in the same way you need several perspectives to form an accurate view of a mountain, a combination of different background checks will establish a truer picture of a candidate. 

For example, a criminal check may reveal an offence and a date; a social media scan will provide fuller details on the particular incident; a reference will uncover that it was serious enough for the applicant to be dismissed from his or her previous employer. 

The real cost of a bad hire?

At Core-Asset Verify, to accompany the detailed report of the checks we carry out, we provide clients with traffic light recommendation:

  • red (do not proceed)
  • amber (proceed but items need attention)
  • green (recommended to proceed)

Around 10 per cent of our checks result in red and 40 per cent in amber. Only half of applicants receive a resounding green light. This is significant and highlights the complexity involved in ensuring you, the employer, are hiring the candidate you think you are. 

Skilled and comprehensive pre-employment checks may be an additional cost to what can already be an expensive and lengthy recruitment process. 

But can you afford not to do them?

Jenny Smith, Divisional Manager, Core-Asset Verify 




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