Conducting A Background Check: 5 Things You Need To Know
If you think it isn't necessary to conduct a background check on an employee, consider what might happen to your business if you hire the wrong person. You could wind up with an employee who steals from you, your other employees or your customers. The wrong employee may turn out to be violent, and, if you didn't do your due diligence, you could be sued for negligent hiring.
Fortunately, conducting the background check isn't hard, especially if you're hiring a third party to do it for you. But even then there are many issues you should be looking for. Here are five things you need to know when conducting a background check on a prospective employee.
1. Look for mistakes, not a mistake.
Employers should look for certain patterns of behavior, says Tina Chen, vice president of operations for Employco USA, an HR outsourcing firm based in Westmont, Ill. "It isn't so much the transgression itself that should raise the red flag, but rather, repetitive behavior. For example, employers can probably overlook an individual with one speeding ticket, but they should be wary if an individual has had five speeding tickets."
Even if that person is going to be sitting behind a desk and a handful of speeding tickets doesn't seem relevant to the job, it could be a problem, according to Chen. It may mean your prospective employee has a tough time following rules or is inherently careless. Or, yes, maybe the employee simply had a bad run of luck over seven years. But while you're right to give someone the benefit of the doubt, you're right to be suspicious as well.
2. Careful with the credit checks.
More employers than ever are using credit checks on employees, thinking that's a pretty good indicator of whether they have a solid employee. But careful how you go about this, especially if you aren't using an employment service that's familiar with all the trip-wires out there. For instance, some states, including Oregon and Washington, only allow an employer to use a credit check on an employee if it's truly applicable to the job, such as an accounting position. But if you want to use a credit check on your new sales team, no dice. And according to the federal Fair Credit Reporting Act, you always have to ask an applicant's permission to run a credit check.
Keep in mind that some lawmakers in states and in Congress are mulling over bills that would limit the usage of credit checks for employers. So if you're going to ask for a credit check, make sure you have a good reason.
If you do end up running one, have a process in place to handle any bad news, suggests Michelle D. Roccia, a senior vice president at Winter, Wyman, a Massachusetts-based staffing firm. "With the current state of the economy, credit issues are more prevalent as more families face unemployment, which could result in late payments, foreclosures and bankruptcies. It's important that hiring managers be prepared to understand the information in the reports, hear the candidate's perspective on what happened, and make an informed decision based on all of the information -- all while treating the candidate fairly and professionally. A negative mark on a credit report does not necessarily mean the candidate isn't right for the job."
For more information, check out the Bureau of Consumer Protection's report on what employers need to know about prospective employees and credit checks.
3. Be consistent.
One of the easier ways to find yourself the target of an employment discrimination lawsuit is when some applications receive one kind of treatment in their background check, and others don't. The more consistent you are with your process for doing background checks, the less likely anyone can get angry and come after you. It's fine to do a credit check on the upper management job opening but not the telemarketer, but everyone applying for the upper management position better get a credit check. If you ignore one young woman because she's the daughter of a vendor, and you know her background, that's understandable but stupid -- you're opening yourself up to potential trouble.
4. Don't forget their college career.
"Good background check companies should provide at least a seven-year history for any individual," Chen says. That said, if your job applicants are way past their college years, consider leapfrogging to those days and verifying that your candidates actually did what they say they did during that time.
While it may not be a big deal for an employee who will be on the low end of the career ladder, you should definitely verify the education background of your C-level executives, those people who are going to be responsible for your company's most valuable assets, recommends Ron Williams, a former U.S. Secret Service agent who now runs Talon, a security consulting firm in Sacramento, Calif.
Sure, you might think that that's overkill. After all, if you have a worthy candidate who's coming from a solid Fortune 500 company, he or she is far past the point of needing to inflate educational credentials. That said, even top-notch professionals lie. In 2006, it was revealed that RadioShack's CEO David Edmondson had lied big time about his past -- his resume said he had two college degrees when he had none. He apologized and swiftly resigned. Bausch & Lomb's former CEO Ronald Zarrella claimed he had a MBA from New York University, but it was later uncovered that while he started the program, he didn't finish it. (He didn't end up losing his job but wound up giving up a $1 million bonus.)
And if the financial stakes are really high, the FBI actually offers services to businesses needing extensive background checks on employees.
5. If something bad surfaces, follow up.
It's the nice thing to do, but it's smart, too. You may be letting go of a great future employee by not having a conversation about whatever is bothering you. If you're still unsatisfied by the explanation when you're done talking, you can move on to someone else and feel good you gave the person a shot. As Roccia says: "We always reach out to the candidate for their explanation and document the conversation. Typically, there is more to the story than what the background check reveals."