A Crucial Yet Often Neglected Part of the Small Business Hiring Process
Why Background Checks Are Important
Background checks are common procedure for large businesses, but smaller and up-and-coming businesses often have relaxed procedures that have been making the news lately. These news stories highlight the importance of background checks not only for security but also to avoid lawsuits and negative publicity:
- Uber, a low-cost car service used in many cities, has been criticized for lax background check procedures. In August, 2015 the LA Times uncovered a story revealing criminal records for at least four LA Uber drivers, including child exploitation, identity theft, manslaughter and DUI.
- Airbnb, a rental sharing company, specifically states that it does not routinely perform background checks. That decision has given way to a web full of horror stories from both renters and guests.
Although these are serious examples, they point out the risk of legal issues and publicity blunders if you fail to perform proper background checks. Skipping the background check could also mean hiring a criminal who could steal from the company, or hiring a person who does not have the skills to do their job properly.
Background Checks – What Holds Small Businesses Back?
Lack of knowledge and costs are the two main factors that hold small business owners back from doing background checks.
In terms of knowledge, there are a lot of possible checks to run when assessing potential candidates – reference checks, criminal history, drug tests, credit reports, school records, lie detector tests, and the list goes on and on. Small business owners struggle to decide which checks are important and which can be skipped.
Costs are also a factor that stall small business owners from performing background checks. Many checks could be run by the company itself, such as verifying previous employment and calling references, but these things take time. The alternative is to hire out, but background checks are complex and each item you choose to add will run up the cost.
Getting a Background Check System in Place
Background checks are not as daunting if you have a standard procedure in place that makes sense for your business. Important elements of the procedure include:
(1) Have applicants sign a consent form for background checks and criminal record checks.
This puts it out in the open that you are or may run a background check, which will discourage applicants from being dishonest and scare away those with a questionable history.
(2) Ask about criminal convictions.
The consent form they’ve already signed will motivate them to be honest, especially if you explain that it’s better for them to be upfront now versus you finding something in the background check. You can ask about criminal convictions in writing (on the application) but also in the interview where you can assess their reaction.
(3) Check employment history.
Some of the most common lies on resumes are incorrect dates, titles, salaries and duties at previous jobs. Experts say you should verify employment for the last seven years to make sure everything is correct.
(4) Ask for residence addresses for the past seven years.
This is a simple way to make sure residences and employment locations coincide. Knowing past residences also helps you if you want to conduct more thorough criminal background checks.
(5) Do a criminal background check.
There are several websites that allow you to perform the check yourself, or you can go to a professional company. It is advised that you at least do a criminal check for the current county that the applicant resides in. However, if they have recently moved you may want to check previous counties too.
(6) Verify references.
And take it seriously too. Some companies will skip reference checks after a good interview, and others will plan a two minute phone call and leave it at that. Take references seriously and have a list of questions planned out in advance to learn more about the character of your potential hire.
(7) Consider other checks as needed.
The U.S. Small Business Administration has a list of other pre-employment checks that are used in the small business world, including credit reports, medical records, school records, workers’ compensation records and more. Review the list and choose any extras that make sense for your business.
Choosing the Right Background Check Vendor
If you’ll be using a professional background checking service for any of the above procedures, it’s important that you vet them before handing over your money. Chris Dyer of PeopleG2 suggests the following tips for finding a good background checking company:
- Look for venders that have a heavy HR focus because they are more in tune with the industry and changes in compliance/lawsuits.
- Check for any lawsuits or fines that the vendor has accumulated by performing an internet search of the provider’s name with the words “lawsuit,” “fine,” or “penalty.”
- Ask if they are owned by another company so you can also research the parent company.
- Ask the vendor when their databases are updated – if dates are more than a few weeks old, it is a red flag.
- Make sure the company performs county criminal searches, not just database searches.
Background checks are an extra step in the hiring process, and they will require extra time and money. It’s important to see these expenditures not as money you’re throwing away, but as investments that insure that you hire the best people for the position. Follow these tips to create a background check procedure and to hire the right vendor to avoid the negative publicity and lawsuits we’ve been reading about lately.