Background Checks in a Tight Economy
By Admin

March 10, 2010

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So we’ve made it through the first half of 2009, inarguably one of the worst financial periods in our lifetimes. And while we hope that the worst is finally behind us, we’re still fearful of what is to come. One of the most positive trends I am seeing is that many are now focusing on the future. We are building up our individual departments and organizations to be leaner, smarter and stronger so that we can emerge in a position to thrive. We don’t seem to be as paralyzed by the fear described above and instead are using this fear to motivate us to push through. GreenlightJobs president and CEO Lisa Kaye recently wrote an insightful blog post on how we can and should use the fear and uncertainty we feel as motivational fuel.
In this essay we’ll examine how the state of our economy has affected the use and implementation of employment background checks. We will also discuss how it has driven some interesting trends and what it means for the future.

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Let’s start with the obvious. Today, more people are competing for fewer jobs. While hiring managers have the proverbial “pick of the litter,” they are being flooded with resumes. Further, the pressure to hire the right person the first time has never been greater as organizations no longer have the luxury of time or money to allow someone to develop. Those who are hired are expected to produce more work with fewer resources. This confluence of events means that employment screening and background checks are now more important than ever to organizations.

Observation 1: Background Checks Aren’t Being Sacrificed

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While organizations are cutting expenses across the board, we have not seen that they are sacrificing their screening practices. In fact, some are even bolstering their programs because of the aforementioned glut of candidates. We’ve seen a rise in the number of clients expanding the scope of criminal records searches by including more counties or a national criminal record search. Organizations also seem to be increasing their efforts related to employment verifications and references. While these measures increase the cost of a background check, it allows organizations to evaluate more information so they can make an informed hiring decision.

Observation 2: Troubling Statistics Concerning Adverse Information

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Unfortunately, we are also noting some disturbing trends that should concern employers. Criminal hit rates have escalated since the economy hit the skids in the second half of 2007. EmployeeScreenIQ currently finds that roughly 19% of the applicants we screen have some type of criminal conviction on their record. This is up from 15% prior to 2007. It is important to note that not all of these records prevent an individual from being hired; however, hiring managers should look closely at each applicant to determine how relevant the indiscretion is to their potential job. Here’s the breakdown of offenses we’ve identified over the past couple years:

Felony Record – 15%
Misdemeanor Record – 67%
Ordinance Violations – 18%

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At the same time, EmployeeScreenIQ continues to find a 50% discrepancy rate between what job candidates represent on their resumes and job applications and what is revealed by employers and academic institutions. This number has actually held steady for a couple of years, but it is elevated compared to pre-recession levels. The most common inconsistencies continue to be related to employment length, salary and job title. Here’s a breakdown:

Discrepancy in Dates of Employment – 31%
Discrepancy in Salary – 36%
Discrepancy in Job Title – 33%
Misrepresentation of Academic Credentials Approx. – 10%

Last, an obvious trend is that we are finding a rise in the amount of applicants with adverse information on their credit reports. We don’t keep actual statistics on this, but will address this trend in greater detail later.

Observation 3: Hiring Standards Are Tightening

Before the recession, organizations were hiring at a blistering rate. There never seemed to be enough qualified candidates available, causing some organizations to relax their hiring standards to remain properly staffed. Today, it’s the exact opposite. Employers’ hiring standards have tightened considerably—they are no longer letting “anyone with a pulse” through the door. White lies about past employment and qualifications are no longer acceptable, nor are borderline criminal convictions that might have slipped through in the past.

Observation 4: The Need for Speed

Weeding through the flood of resumes for ideal candidates and on-boarding them as quickly as possible is the name of the game. Organizations are increasingly turning to applicant tracking and talent management platforms to help them process applicants and to save money. Further, integrating a screening solution with a recruiting platform helps accomplish the same goals. All of the information needed to conduct a background check on a candidate is already there. Rather than wasting the time and money of having someone re-enter the information, integration allows the data to flow seamlessly and securely to your screening provider.

Observation 5: Shifting Reliance on Credit Reports

Anyone who reviews credit reports on a regular basis knows that even in a good economy, those with impeccable credit are hard to find. Nowadays, finding those with good credit is nearly impossible. As a result, we have seen a number of organizations relax their standards when evaluating credit. Failing to do so would significantly impede their ability to hire anyone.

For organizations who utilize credit reports, it is important to evaluate what information or combination of adverse information constitutes a red flag. It also makes sense to determine which positions require this information and how the candidate’s credit report is related to that role.

Observation 6: Workplace Violence is on the Rise

Incidents of workplace violence had been on the decline over the past decade thanks to education, aggressive prevention programs and background checks. Unfortunately, these rates have begun to creep up again over the last couple of years. Reported cases of workplace violence rose 13% from 2006 to 2007. And while 2008 statistics have yet to be reported, it is widely expected that these numbers will show an increase again. While a direct nexus between workplace violence and bad economic times hasn’t been established, Barry Nixon, Executive Director of the National Institute for Prevention of Workplace Violence, Inc. suggests that “as crime rates continue to rise throughout the country, incidents of workplace violence tend to follow.” This is important because a rise in criminal activity can be directly attributed to a poor economy. Nixon goes on to say, “as people become more concerned about personal finances and the possibility of layoffs, stress levels in the workplace tend to be elevated. Stress and anxiety can certainly contribute to incidents in the workplace.”

What does all of this mean?

More than anything, this information should cause employers to take a closer look at their current screening program and make sure that it’s in line with the new realities of this economy. Refining your processes and procedures does not necessarily equate to increasing your overall background screening budget. In fact, in some cases you might find opportunities for savings. It simply aligns your risk-management and recruiting efforts and allows you to focus on acquiring the best candidate for the job. Doing so now will ensure that as the economy improves, you will emerge in a stronger position than before.

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