Why Do Small Businesses Do Background Checks on Employees?

In today’s world, in which large corporations rule the market and swallow the largest portion of profits, running a small business has become more challenging than ever. Owing to the economy of scale and size, larger companies are able to offer products and services at a price hard to achieve by small businesses.

To survive as well as stay profitable, small businesses have to cut costs wherever they can. Large corporations claim the largest portion in the overall economic system, however, small businesses also claim a significant chunk in the systems and employ a large portion of the population.

Hiring and retaining employees is one of the challenges that small businesses have to face. They do not only face a talent crunch but also find it hard to keep up with the salary standards maintained by large businesses. Small businesses have to cut costs wherever they can and when it comes to employee background checks, they find themselves in dilemma.

This article focuses on employee background checks for small businesses, whether they need it or can skip it to save some money?

As we discussed above, small businesses have to face bigger challenges in terms of funding, operations, profitability, and hiring suitable employees. They have to operate with limited resources yet have to outperform the competition.

Large-scale organizations and enterprise-level businesses are generally found to have a well-defined and structured division of work. There is a minimal chance that an employee hired to do a particular job will be given responsibility irrelevant to his/her profile unless his/her project or department is changed entirely. In large-size organizations, employees do not even have access to the areas irrelevant to their profile.

However, that is not the case with small businesses. Employees working for a small business are generally expected to be more efficient, flexible, and versatile when it comes to taking responsibilities. They do have a work profile, however, they may be expected to take responsibilities beyond their key responsibility areas.

In that case, employees at small businesses may have access to resources and information that can be sensitive in nature. This information or resources can potentially be misused if handled by an employee with a questionable background.

If you hire employees without conducting a criminal background check, chances are that you may have to face workplace security as well as behavioral issues with these employees. Depending on the severity of the crime committed by such employees, they can even pose a serious threat to your organization, people, and resources. Following a simple employee background check process before or after hiring an employee can save small businesses from a lot of troubles that may arise in the future.

Comprehensive background checks include drug screening as well. Choosing to skip drug screening while hiring employees for your small business may look like instant saving and money saved is money earned, right? But if your newly hired employee is taking illegal or prescription drugs, there will be a high possibility that you will have to face issues like hampered productivity, absenteeism, etc.

The issues with an employee addicted to drugs do not end here, if your small business is into manufacturing or operating a factory with tools and machines that require careful handling, these employees can pose the threat of workplace injury to themselves and others. The employee affected by workplace injuries can become a liability to the organization and lead to heavy compensation.

In comprehensive packages that background check agencies offer, they offer employee drug screening as a component. It may be tempting for small businesses to save money by skipping employee drug screening, however, the price they may have to pay in the future can be much more than the background screening.

Background check for small businesses is no different than what is prescribed for large businesses. If your small business falls under-regulated industry, employee background checks are generally backed by and law and mandatory to conduct. In that case, big or small, your business cannot afford to skip on employee background checks. Operating under regulatory guidelines and not performing necessary background checks can attract regulatory actions that include warnings, hefty penalties, and cessation of operations, legal complications, and more.

Though employee background checks may look like an additional expense to small businesses, the truth is that they can save you a lot of money and unforeseen troubles. Consider this: If you hire an employee without conducting proper background checks, you will be paying the salary to an employee who may have lied about his education, work experience, or skill set. It may take considerable time to acknowledge that the employee is not fit for the work.

Finding a new employee and repeating the same mistake of not conducting employee background checks may further cost you considerable time, effort, and money. It is always good to conduct necessary background checks on the employee you hire for your small businesses to avoid these issues.

Employee background checks are now a common and standard process before making a hiring decision. Most businesses, be it small or large, performs at least some kind of employee background checks. Large corporations may even perform more invasive employee background checks to ensure that the candidates they are hiring contribute to the growth and his/her background do not pose a problem or threat to the organization.

This is the most common type of candidate screening performed by employers. What a candidate has mentioned in his/her resume and made claims about his/her education during the interview, are screened for their validity. Inflating resumes with false educational claims can be practiced by some applicants who may choose to do this to beat the competition with illegitimate educational claims.

During the verification of educational qualification, the claims made by the candidates in his/her resume and during the interview process are checked for their legitimacy. This is done by contacting the schools, colleges, and other educational institutes he/she has mentioned in his curriculum vitae.

Other than the education, a candidate might try to exaggerate or add fake work experience to his resume. This is again done to improve the chances of securing a job with a higher salary. The candidate may even present fake documents such as forged offer letters, appointment letters, salary slips, etc. to back his fake claims.

Some employment types require candidates to go through criminal screening with live scan background checks. In criminal background checks, your identity information is scanned through criminal records maintained by local, state, and/or national criminal databases.

Some job types require employees to hold a valid professional license before they can join an organization or start to provide the services independently. Professions such as teachers, healthcare service providers, real estate brokers, financial advisors, etc. require a valid professional license before working as a professional in these fields.

The validity and legitimacy of these professional licenses need to be checked before you can employ these professionals. Failing to perform professional license checks can even make you liable to regulatory actions.

The best way to check the validity of a professional license is to get it verified with the issuing agency. Some issuing agencies even facilitate online services to verify the details and current status of a professional license. There are also many third-party employee background check agencies that can perform professional license checks for you.

Skipping on background checks may look like savings to small businesses, especially to the ones with a high attrition rate where employees keep joining and leaving quite frequently. Though you can save some money by skipping background checks, it is not worth the risk.

Just like your own business, in which you try to beat the competition by giving the best prices in the market, there are employee background check agencies that provide highly competitive prices for their clients. Try to look for special offers or new user offers, a little research can save you some money on each candidate.

There is no need to go for market leaders, which are obvious to cost more. It would be wise to go for a background check agency with an optimum reputation and competitive prices. More options and flexible packages are a definite plus. It would be great if the agency lets you choose only the checks you want to perform.

Though a large part of background checks for small businesses can be common for all employees such as educational or work experience checks, yet you can play smart and only pick the checks that are relevant beyond necessary checks.

Background check service providers provide their screening service in different packages. Basic background screening packages cost less, however, they include lesser numbers of checks. There is no need to go for comprehensive employee background check packages that include tests that are irrelevant to your case. For example, checking credit history background would be entirely irrelevant for a customer service executive. Similarly, there is no need to conduct driving record checks for an employee who does not have it in his/her work profile.

Organizations that provide background check services, use background check software to manage their workflow. Background check software for small businesses can improve efficiency and reduce the time required to process background checks.

Most background check software for small businesses also allows candidates to self-register for specific checks such as drug screening. They can choose which screening facility is the most convenient for them.

Background check agencies may also allow clients to integrate their human resource management (HRM) system with the background check software so that they can place requests and receive reports right at their system. Many background check service providers have also started offering mobile compatibility that allows candidates to click straight from their email to a mobile-friendly site that guides them through easy-to-follow consent forms.

Background check software for small businesses comes with options to place a new background check request, real-time status updates, and download the report of the completed background check requests. Most background check software allows employers to choose the type of background screening and include or skip additional checks (such as drug screening, driving record verification, credit history checks, etc.).

A background check software can automate workflows and manage several candidates under the process of background checks at different stages. Background check software for small businesses not only helps manage the service provider’s workflow but also allows its clients to place and manage employee background check requests. Cloud computing has enabled background check service providers to allow the software access via a web browser with a subscription-based model.

If a small business deals in products or services that are not under the regulatory scanner and does not pose any major liability threat, they may feel that skipping the employee background check can save some money for them. However, it is always good to run a background check whenever you make a hiring decision regardless of the size of your business or the type of industry it operates under. Your hiring decision backed with a solid background check report will not only make your business safer but also ensure the security of other people and resources.