Recent changes in the background check industry have been incredibly valuable for those companies' shareholders, but have resulted in many disappointed recruiters and candidates. With private equity firms and venture capitalists acquiring background check companies, there has been a greater focus on just generating profits rather than providing great candidate and recruiter experiences. Because of this industry dynamic, many companies are looking to switch their background check vendor. The challenge is sifting through the literally hundreds of providers out there to find the right one for you. This post shares advice on how to make the best selection for your company.
How To Pick A Background Check Company
To pick the best background check provider for your company, we suggest the following four steps. Gather your requirements upfront, so you adequately assess vendor capabilities and get accurate pricing. Determine the vendors with whom you will explore capabilities and gather pricing proposals. Check the references and online reviews of those companies. Agree to a set of metrics which will help you measure the success of the relationship
Gather Your Requirements
Before reaching out to vendors, we strongly suggest you determine your requirements. If you don't have a good understanding of those requirements, a consultative background check vendor will help you determine what information is needed to build your business. The three areas of requirements we suggest you gather are:
- Packages and components. A background check package consists of individual components (e.g., a county criminal records check). The components in a package can dramatically change the coverage and cost of a check. Feel free to check out our blog post on what is in a background check to learn more. We suggest you review your current packages, determine any improvements, and share them with your potential vendors for feedback. The terminology is critical as some vendors make their pricing confusing, so you aren't sure what you are buying. You want as much transparency as possible, so you are making an apples-to-apples comparison.
- Estimated volume of orders for those packages. You will want to share your volume estimates and the "hit" rates for those packages (percentage of reports that return records). This estimate will help the vendor provide you the best possible pricing based on how much you order and how hard your reports are to compile.
- Unique service requirements. You will want to share any unique service requirements that your business requires. For example, do you do hiring events on weekends and need your background check partner at that time? Do your candidates speak Spanish, and you need multilingual candidate service? There are likely many critical requirements to support your recruiting program; just make sure to share them with your background check partner.
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Determine Vendors To Evaluate
The United States background check market spends over $2B annually is growing in the high single digits (Covid pandemic aside). There are generally three types of background check companies, and we call them "The Giants," "Mom & Pops," and the "Mid Tiers."
- The Giants. These companies typically have thousands of clients and hundreds of employees. They are often majority-owned by outside investment firms that take an extreme financial focus on the company's performance. Unless you are a huge client, the chances are you will have a hard time getting any type of customer service from them.
- Moms & Pops. These companies typically have one or two founders, a handful of clients, and do a solid job at customer service. The challenge they have is they cannot scale up to support more significant clients, and they don't have the sophistication or experience to help you stay ahead of the recruiting curve or any compliance changes in the industry.
- The Mid Tiers. These companies typically have hundreds of clients and dozens of employees. They may have an outside investment, or they may still be founder-owned. These companies will often have the customer service and sophistication to meet your needs.
Unless you are spending millions of dollars a year on background checks, we recommend taking a look at mid-tier firms. These types of firms have the best blend of capability and commitment to customer service. We suggest you talk to two to three firms as part of your evaluation.
ScoutLogic is a mid-tier firm with no outside investment, so we are a little biased :)
Price Is Really Important, But Consider Total Cost
Once you have gathered your requirements and shared them with the selected vendors, you will start to get in proposals. It is critical you make an apples-to-apples comparison on the components in those packages to your current vendor and across all the proposals. This stage is where many companies get burned in terms of picking packages that don't do what they think they do or cost way too much money. Many firms give you a low initial price and then add a multitude of additional charges that were not covered in the proposal.
Your decision needs to be about more than the lowest-cost vendor. Providers that offer low-quality service go to market with low prices because they simply don't staff the business. This approach just pushes the cost back on you and your recruiters. When you check references (see our advice in the next section), you want to get a sense of how much work the background check provider is doing beyond the report itself. Many background check companies try to "outsource" their work back on your recruiters, which simply increases your costs in another area of your business. Finally, if any of the prices look wildly different (high or low), it is likely a scoping error. We strongly recommend you dig into those differences, so you are performing a fair comparison.
Check Reviews And References
We all know that checking a vendor's current customer references is a great way to understand their performance. When speaking with a vendor's current customer references, we recommend you probe on three areas:
- How were the set-up and training experience? This question will give you a sense of how much time a transition may take (hopefully very little). You want to hear things like "they made it easy," "the training was helpful," "we were ordering very quickly."
- How do they handle challenging reports? This question will tell you how much work the background check partner does versus your recruiters. You want to hear things like, "if there is a delay, they will proactively tell me….I don't have to chase them down.", "they follow-up with candidates on drug tests," and "they handle everything about verifications; I don't have to follow-up with candidates to find old W2s.”
- How responsive is their customer service? This question is the most critical. The 80/20 rule applies to background checks, 80% sail through, and often 20% have an issue. You want the background check partner to be there when you need them. You want to hear things like, "I hear back from them the same day, often within an hour," "I know my contacts there, and they feel like a part of our team," "they always make things right."
Two other sources we suggest you review are Google and Glassdoor. When you Google the background check vendor, you will see reviews in the knowledge panel on the right side of the screen. In addition to checking out their rating, click into the comments to see specifics. You will want to weed out feedback from disgruntled candidates versus actual clients.
We also always suggest checking reviews on Glassdoor as it gives an excellent insight into a company. Background check companies are so dependent on people ( versus data which is all the same or the technology which is generally simple), so you want to pick a partner with happy employees. Satisfied employees at your background check partner almost always mean you have a better chance of having a great experience.
Agree On Metrics
Now that you have invested time picking a new background check partner, you want to make sure that you were going to be able to understand their performance. There is no need to over-complicate this. We think there are three areas on which to focus:
- Turn around times (TATs). Ask your vendor to provide a perspective on how long your checks should take. If the vendor offers an answer without understanding your packages or the geographies your candidates live in...then, they can't give you an accurate answer.
- Quality. We suggest you ask for the candidate dispute rates on reports. This % should be well under 1%.
- Customer service. We suggest you measure the responsiveness of your requests. So, if you have an issue, how long does it take for the background check firm to resolve the issue.
Service Is Really The Differentiator
At ScoutLogic, we have a bias that service is the real difference-maker in the background check industry. At the end of the day, the data you get from a courthouse is the same for every provider. The technology is nothing any recruiter wants to spend any more time then is necessary. So the way to make a difference as a background check company is with recruiter and candidate service. As you talk to different partners, try to get a sense of their company's focus. If it's about their operational efficiency or some fancy AI technology which has potential compliance risks for you, that just may not be the best choice. We believe that it's the people who do the research, support recruiters and candidates, and care about what they do every day is what makes the difference.
Picking a background check vendor is a pretty easy thing to do. As long as you gather the right information, don't let industry jargon intimidate you, and get transparency in this process, you will come out ahead. There is no need to struggle with a partner that's hurting your recruiting efforts as there are many great choices in the marketplace.
Are You Frustrated With Your Background Check Partner?
All of this is just a start when it comes to determining how to pick a background check partner. Have a question or need help understanding your current program and opportunities for improvement? Click below to work with one of our Scouts for a free assessment of your current background check program.
ScoutLogic is not a law firm. You should always check with qualified counsel before you make any changes to your background check program. If you need a qualified attorney, we would be happy to make a referral for you.