The Costs of Inadequate Background Checks

Your workforce is the heart and soul of your company. You need trustworthy, qualified employees to hit your business goals — but building a quality team isn’t easy. 

You’ll need to thoroughly perform background checks and vet hires before making the final call. 

That said, far too often, companies make the mistake of trying to perform background checks themselves or hiring the wrong company to vet them. 

Inadequate background checks can have major negative implications for your business. In this article, we’ll discuss what those consequences are so you know why thorough and accurate background checks are needed. 

The Costs of Inadequate Background Checks

Inadequate background checks can cause significant financial losses, legal liabilities, and reputational damage. Neglecting thorough background screening, such as accurately verifying an applicant’s qualifications and job history, often leads to poor hiring decisions. Avoiding making mistakes in your background check process can save you a lot of headaches down the line.

Poor Hires 

We all know a bad employee when we see one. Workers who aren’t a good fit for their roles may stir up trouble. They often lack the skills or care to do the job to their fullest capabilities. 

As a result, the lack of productivity shows. It ultimately hurts the entire team’s efficiency. 

They may even disrupt the team dynamics and put a damper on the morale of the workplace. Whether they’re a cultural mismatch or are unproductive, bad hires will quickly hurt your bottom line. 

On top of that, your customers will notice the lack of quality in your product or service. 

Lengthy Recruitment Process 

When you hire the wrong background check screening provider, you may get incomplete data. Unclear information about a candidate will only lengthen the recruitment process. 

When discrepancies are found between the information provided by the candidate and the background check results, resolving these discrepancies can take time. This process may involve contacting the candidate for clarification, conducting additional verifications, or addressing disputes.

Reputational Damage 

The people you hire are a reflection of your business. They’re the faces of your company and will show customers what you stand for. 

Your organization is in the public eye, meaning people will judge your brand by your products and how your employees conduct themselves. 

For example, hiring a person with a history of criminal behavior can lead to fraud or misconduct. When information becomes public knowledge, it can damage the company’s reputation. 

Financial Loss 

A bad hire will cost you financially. You must consider recruiting, training, and onboarding expenses whenever you replace an employee. 

If you hire the wrong person, only to find out they’re not qualified for the position, you’ll have to redo the entire process.

Beyond employee turnover costs, some bad hires may even engage in criminal activities like theft and property damage. That could lead to losing valuable assets, inventory, and equipment. 

Legal Liabilities 

Without proper background checks, businesses may face legal action in civil or criminal proceedings. 

For example, if an employee with a criminal record harms another coworker or customer, the organization may be held accountable for negligence in hiring. 

In some industries and jurisdictions, failing to conduct background checks can result in regulatory penalties.

What Can Employers Do to Avoid Inadequate Background Checks?

As you know by now, inadequate background checks can have serious consequences and a ripple effect on your organization. 

To begin with, you’ll want to create a standardized process and policy for background checks. You want documentation that states the following: 

• Which types of background checks are conducted?
• How can background check results affect employment decisions in your organization?
• When will these checks be conducted?

On top of that, you need consent to inform candidates in writing that background checks will be done for employment purposes. That way, you ensure a transparent and fair process to prevent discrimination. 

Make sure that you are in compliance with all relevant laws, including those laid out by the Fair Credit Reporting Act, or FCRA. You also need to comply with the FCRA’s policy to send a pre-adverse action notice with a Summary of Rights and a copy of the background report, should they be rejected due to information from the check. 

Besides creating documentation and abiding by federal regulations, you’ll need to choose a reputable background screening provider that follows all the best practices.

When you choose the right provider, you’ll enjoy the many benefits of background checks and have peace of mind you made a good hiring decision. 

Final Thoughts

As tempting as it might seem to save money and research candidates on your own, don’t make the common mistake of doing it yourself. 

Failing to conduct thorough and accurate background checks can ruin your entire organization. It only takes one bad hire to disrupt your productivity, cause an unsafe work environment, and damage your company’s reputation. Not to mention all of the legal battles and money lost. 

The good news is that you won’t have to worry about that. ScoutLogic has a wide range of background check search types, including everything from employment and education verification to drug testing and more.

We offer best-in-class data and vendors to ensure accurate results. Try ScoutLogic today and find the right candidates for your company.

David Garcia

David Garcia, co-founder and CEO of Scout Logic, is an industry leader in the bulk background check world. With his strategic acumen and expertise in the HR sphere, specifically in hiring, recruiting, legal compliance, background checks, and resume screening, he’s an invaluable asset and consultant.

David's counsel extends across the boards of ScoutLogic, YipitData, and Supplier.io, drawing from his impactful stints on the boards of Infutor and Avetta. With an extensive 25-year journey, he champions unparalleled B2B commercial leadership within data & analytics, significantly shaping the HR landscape.