The Importance of Conducting Background Checks: Never Trust a Book by Its Cover

A great deal of powerful information is available to employers; employers have the right and responsibility of selecting the absolute best candidates to work in their organizations. Background investigations can help employers avoid unnecessary litigation, help to avoid losses due to fraud, and to ensure that their employees are providing the best customer service and maintaining a positive public image. Employers cannot be too careful; the information, which can assist them in making the right hiring decisions, is right at their finger tips.

In an increasingly litigious society, lawsuits are filed for a litany of issues. Often, employers are held responsible for the actions, or inaction, of their employees, and suits are lost, because of liability associated with some element of an employee’s past. These suits result in millions of dollars of lost revenue each year. A comprehensive, pre-employment background check can help mitigate these loses. If an employee has a potential blemish in their past, which could result in liability, the decision not to hire that candidate, can be made.

According to a 2010 study conducted by the Association of Certified Fraud Examiners (ACFE), the typical American business will suffer losses of as much as 7% percent of their annual profits as direct result of employee fraud. The median amount of fraud perpetrated by employees exceeds $80,000 annually; these losses can be devastating for any employer. A comprehensive background check can help employer’s identify red flags that could suggest the possibility of future fraud.

Losses associated employee fraud, are just part of the story. Employers, who conduct comprehensive background checks, can strive to maintain a positive company image through the avoidance of negative publicity. A pre-employment background check can help an employer determine what kind of employee a candidate will be. When an employee engages in illegal, immoral, or unethical behavior, it reflects poorly on that business, resulting in lost clients and revenue, particularly in cases where the employer did not demonstrate due diligence during the pre-employment process. When an employee violates the public’s trust through activity that could have been revealed through a background check, the employer is often considered responsible, in the court of public opinion.

A background check is a relatively inexpensive measure that any employer can use to manage risk associated with employee fraud. An employer can reduce liability related to previous offenses, guard against employee theft and fraud, and help to preserve a positive company image through avoidance of negative publicity associated with the illegal, immoral, or unethical employee behavior. A comprehensive, pre-employment background check cannot guarantee employees will not engage in undesirable behavior; however, these checks do serve to mitigate and potentially shield employers from some of these risks.