According to IBISWorld, the background check industry is a two billion dollar a year juggernaut, and grows 2.2% annually. The Society for Human Resources Management (SHRM) reports that 85% of “large companies,” as well as a growing subset of smaller businesses and start-ups, perform background checks on their applicants and employees. From these two pieces of data, we can reasonably make a few statements of fact. First, background checks are not a fad: they are here to stay, and have become a commonplace staple of the hiring process. Secondly, an increasing number of companies are implementing background checks each year. The question is,why are background checks growing in the way they are?
Recent studies prove that pre-employment background checks are becoming more common, but why is the industry growing? We take a look at a few potential explanations for this growing trend.
Managing Risks and Avoiding Bad Hires
There could be a number of reasons that more and more companies of all shapes and sizes are implementing background checks. The most compelling of these explanations is that employers have simply become more conscious of the risks associated with not screening their workers. Negligent hiring lawsuits have not only grown more common in recent years, but more visible as well. The Internet and social media has ensured that stories about negligent hiring cases and court battles reach a wider audience than ever before. As a result, more companies are noticing these cautionary tales and taking measures to make sure that similar things don’t happen to them.
Furthermore, the intense visibility that the Internet affords maximizes the reputational blow that businesses or corporations suffer in the case of negligent hiring. When big companies mess up these days, everyone knows about their blunders, which can affect everything from stock valuation and revenues, to overall public image. Said another way, businesses these days have more to lose with negligent hiring cases, simply because the PR fallout from such incidents is so much worse than it once was.
Keeping the Workplace Safe
Another reason that more and more companies are doing background checks could be that they simply help to keep the workplace safe. Negligent hiring cases can be costly and can damage a company’s PR. However, before negligent hiring lawsuits can spring up, something often has to happen at the workplace to prove that the company made a bad hiring decision in the first place. And often, these incidents pose a threat to the safety and well being of other employees, customers, or both
With that in mind, many businesses might be adding background checks to their modus operandi simply because doing so is a smart safety precaution. Criminal background checks can help weed
out violent criminal, sex offenders, and other dangerous individuals who might harm others while on the job.
Attracting the Best Employees
In connection with the above, running criminal background checks and striving for the safest workplace possible can also affect the kind of employees that a company attracts. Put simply, running thorough background checks and emphasizing high standards can function as a show of respect and courtesy for the employees at a business. After all, running criminal background checks is an investment in the safety of the workplace, and employees who feel safe while on the job will also feel more valued by their employer in the long run. This feeling of appreciation can impact productivity, effort, dedication, and overall company culture, which will in turn bring better, brighter people to an organization.
Complying with Laws
Laws requiring background checks for certain types of professionals are also becoming more and more common in the 21st century. It’s not just teachers and doctors who are being legally required to undergo background checks anymore. On the contrary, background checks are also on the books—in different states, of course—for youth sports coaches, daycare workers, bus drivers, school volunteers, nursing home workers, and many other professionals. For the most part, the laws requiring background checks apply mostly to careers that involve direct contact with kids, or with the elderly or disabled. However, there can be no doubt that laws mandating background checks are a trend by themselves. This trend, in turn, contributes to the growing ubiquity of background checks in the professional world.
Protection of Assets
No one wants an embezzler or thief on their staff, especially if that person has access to a company’s accounts or finances. As a result, more businesses are cracking down on background checks as a means of reducing fraud, identity theft, or even petty theft of company supplies.
Hiring the Right Person
Most of the above reasons for the growing background check trend involve varying types of protection that companies are seeking when they run background checks: protection from liability; protection from lawsuits; protection for their workers and customers; etc. Ultimately, though, companies can also use background checks just to make sure that they hire the right people.
With a thorough background check, employers today can get a better sense for who their applicants are than ever before. They can sniff out lies on the resume with verification checks, spot potentially dangerous applicants with criminal checks, and more. All of this can help to thin out the applicant pool and highlight the applicants who are most fit for the job at hand. With background checks, businesses simply have a better chance of making the right hiring decision the first time around. And since interview processes can be costly, both in terms of resources and time, it’s not difficult to see why a company might implement a background check policy as hiring insurance.
There are many reasons that the background check industry might be growing, from increasingly common negligent hiring lawsuits, to a desire to attract the best employees. The bottom line, though, is that there is definitely a trend here. More and more companies are doing background checks, and while not all businesses are screening every single one of their employees that definitely seems to be where things are going. At this rate, background checks could be as universal as the job interview in as little as 10 years.
Michael Klazema has been developing products for pre-employment screening and improving online customer experiences in the background screening industry since 2009. He is the lead author and editor for Backgroundchecks.com. He lives in Dallas, TX with his family and enjoys the rich culinary histories of various old and new world countries.