Business Blog Business & Networking The Pros and Cons of Employee Background Checks

The Pros and Cons of Employee Background Checks

By Varun Bodhi

It is a standard procedure within many industries to run a background check on prospective employees before officially offering them a position. Although background checks come with many benefits and preventatives such as protecting the company from bad publicity, safeguarding the company’s assets, and making current employees feel safe in their work environment, this doesn’t come without negatives. When considering the implementation of background checks in your hiring process, there are a few factors that should be recognised before making a final decision. 

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Pro #1: Workplace Safety 

Employment experts generally agree that successful criminal background checks reduce the instances of violence in the workplace. In any workplace, even virtual office environments, it is the employers' responsibility to create a safe and healthy working environment for all employees.  

According to Safe Work Australia, nearly 10 percent of workers have experienced some form of workplace bullying. The Australian Productivity Commission has also reported that the estimated annual cost of workplace bullying to employers and the economy in Australia ranged from $6 billion to $36 billion. Workplace violence is another detrimental issue which can be avoided from a background check, resulting in a safer environment for employees and less financial risks for businesses. 

Finally, sexual harassment in the Australian workforce is one of the most serious threats to workplace safety. In 2018, $2.6 billion were lost in productivity due to workplace sexual harassment – this is where employee background checks can protect workers and businesses. 

Con #1: Time and Expense 

Background checks can be an arduous and expensive process for small businesses and entrepreneurs. A background check can cost anywhere from $20 to more than $100 depending on the desired type of check.  

This cost can quickly exceed the initial expectations. For example, if a business is interviewing ten people for an open position and each background check costs $50, then the business has spent $500 for hiring a single candidate. For some companies this price may be feasible, however for smaller firms it can be an expensive and unwanted cost, especially if they are hiring for multiple positions. 

Background checks are not instant and require time to collate all the necessary data before being presented to you. Submitting a request for a background check also takes time and will only increase the hiring duration. There are also cases where a candidate may be applying for another job with a different company, and by the time you receive the background check, the candidate has accepted the other offer. 

Pro #2: Avoid Bad Hires 

Hiring mistakes are relatively common. 

According to Business Review Australia, a bad hire can cost a business up to 2.5 times the salary of the potential employee. 

On average, it takes companies 10 weeks to realise their new employee isn’t delivering the desired outcome, and then a further six weeks are gone in the search for a replacement. As a result, time is wasted during the hiring and training process, stress levels of managers increase and team productivity/morale decreases.  

Verifying the candidates' claimed qualifications via a background check will save future hardship and safeguard the business from anyone who may be lying about what is written on their resume. A bad hire has been reported to decrease business productivity by 39 percent, therefore making a background check extremely valuable regardless of the initial cost – especially if it is for an integral role for the company. 

Con #2: Unfair Bias 

Unfortunately, the results of a background check can cause an unfair bias in the hiring process. Background checks can disqualify criminal offenders who committed a crime, learned from their mistakes, and have since developed into a responsible, qualified, and experienced candidate for the position. Just because a potential employee received a DUI at the age of 21 doesn't automatically mean they're unfit for the position. If you're going to conduct an employee background check, come up with specific grounds for disqualification before you review the report. 

Types of Background Checks 

There are a broad range of checks the hirer can conduct on a potential employee. The type of check is completely dependent on the job/role, but includes: 

  • Criminal checks 
  • Credit background checks 
  • Drug testing 
  • Professional license checks 
  • E-Verify checks 

Before searching for such information, the employer should fully disclose the nature of the search in the form of a signed legal release. Also, be sure to check the laws in your state before performing a background check as they may vary across the region. 

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