Employment Background Check Strategies to Minimise Insider and Post-hire Threats
Employers must conduct due diligence ‘before AND after’ hiring an employee or vendor. While this requires spending money, and the cost of employment background check can be seen as a drag on the bottom line. To paraphrase a well-known 1970’s marketing slogan:
“You can pay (a little) now, or pay (a lot) later.”
It has been estimated that the cost of an average level single bad hire can run from $10,000 to $100,000 given time wasted to recruit, hire, train and to replace the bad hire.
Employers are increasingly concerned about the risks associated with employees, temporary workers, independent contractors, and others who have the ability to wreak havoc on an organisation from the inside. This is often referred to as “insider threat.”
The good news is that employers can take steps to minimise surprises by a well thought out pre-employment screening programme.
The first step is to have in place policies, practices, and procedures to carefully select your employees in the first place through a well thought out pre-employment screening programme commensurate with the risk involved.
There are numerous types of insider and post-hire threats that range from fraud, embezzlement, theft of trade secrets, workplace violence or active shooters, and everything else in between. Potential insider threats are not just employees but anyone with access to a business office including contractors, vendors, and temporary workers.
The potential for insider threats always exists and in fact, every new hire is full of risk.
After getting applicants in the front door, a business must be concerned about employees with substantial authority (C-level and above), access to Information Technology (IT) or business proprietary information, access to cash and accounting or access to sensitive information such customer lists and operations information.
Employee screening after hiring
Employers should also ensure their application forms make it clear that any material falsehood or omission can result in termination ‘NO MATTER WHEN DISCOVERED’ and have language in employee manuals that deals with discovered falsehoods or omissions post-hire.
Background check releases can have an “Evergreen” clause to allow future screening if needed. Employers need to keep in mind that any screening programme for new or existing employees should pay careful attention to the requirements of the local laws!
Employers need to be mindful of their obligations under Equal Employment Opportunity (EEO) laws and other laws such as Ban the Box rules that prohibit asking about a criminal record on an application form, to ensure that the use of criminal records is both relevant and fair and complies with an employer’s legal obligations.
Some experts recommend employers consider “continuous” evaluation that occurs periodically after hiring. The argument in favor of such screening is that employees may commit a crime after being hired. It can also be a deterrence of sorts. Employers may also need to screen newly acquired employees if a merger or acquisition occurs. In addition, certain contracts may also require only screened employees.
Employment Background Check is a critical part of the corporate risk-management system
Generally speaking, people with a past history of honesty are much more likely to be honest in the future. Conversely, there is evidence to suggest that if applicants are dishonest in how they obtained a job, they may be dishonest once they have the job. But it is difficult to identify potential “bad hires” just by interviews with some applicants lie so often they come across naturally as if they believe their own story.
Employers utilise background checks to minimise the risks associated with workplace violence, lost customers, negligent hiring lawsuits, identity theft and fraud, embezzlement, data breaches, and high turnover.
Background screening – Types of inquiry
Background checks broadly cover two types of inquiry:
Firstly, a background check may verify information an applicant provides about their credentials, such as past employment and education.
Secondly, a check may involve searching relevant public or private records, such as driving records, criminal matters, exclusion or sanction databases, or credit reports. A competent screening firm will have a number of tools that can help an employer depending on the nature and risk of the hire and the industry involved.
The walk away point is that pre-employment screening is critical to detect and deter internal corporate fraud and insider threats, and should be supported by other corporate fraud controls & investigation programs.