ACHIEVING DUE DILIGENCE IN YOUR RECRUITING PROCESS-A STRATEGY FOR PREEMPLOYMENT BACKGROUND INVESTIGATION

David Bartley

David Bartley is executive vice president of General Information Services, Inc. (GiS), a 32-year-old nation wide full-service preemployment background investigation and technology company. He and his firm offer preemployment background investigation consultation and services within the private and government sectors, maintaining offices in Texas, Ohio, and South Carolina. They can be contacted by E-mail at: dbartley @geninfo. corn.

n today’s litigious business environment, there is no argument that performing due diligence is a necessary part of your I recruiting process. The challenge has been to inaugurate the

most supportive due diligence philosophy to your company while not taking on an additional wildly fluctuating or exorbitant expense. Legal opinions on how each company should approach this issue vary significantly. However, the one consensus that seems to be unchanging is that you need to do something and do it consis tent1 y .

OUTSOURCING MAY BE THE KEY You may already be performing background investigations

(BIs) in your company, but does your current approach serve your bottom-line goals? Even if you recently began performing BIs on prospective employees, are you comfortable with the related ex- pense that you have forecasted for this process? The purpose of this article is to offer an affordable approach that will support your company in making a sensible effort at due diligence.

Because recruiting trends do fluctuate, it is suggested that you consider outsourcing this process. This enables your company to spend BI dollars only when you require the addition of an em- ployee versus maintaining a steady ongoing expense for an inter- nal staff to conduct this procedure.

COSTS HAVE NEVER BEEN LOWER FOR BI SERVICES With the large number of BI service companies available in the

United States today, it should come as no surprise that the cost of acquiring or outsourcing this function has never been more afford- able. Just a few short years ago, the cost of an average BI could run more than $100 per employee. Today, that same report is available for less than $50, thanks in part to competition, the Internet, and

Employment Relations Today Summer 1999 25 CCC 0745-7790/99/2602025-05 0 1999 John Wiley & Sons, Inc.

David Bartley .~

In the end, this is the office that will have to defend your company’s position should a negligent hiring suit find its way to your door.

improved automation utilized by providers of this type of service. Implementing a new BI procedure or restructuring your current BI philosophy should always begin with a visit to your company’s legal counsel. In the end, this is the office that will have to defend your company’s position should a negligent hiring suit find its way to your door.

Firms offering BI services sometimes suggest a graduated scale of components based on the level of position responsibility. For example, an entry-level employee might be checked for possible criminal history only. A senior-level management posi- tion could call for checking criminal history, employment, edu- cation, professional licensing, and credit / financial history, and interviewing personal or professional references. Add in the nuances of a given industry, such as the credit-card business, and you will most likely also include an F.B.I. fingerprint check on all employees. Another approach utilizes the same BI compo- nents for all prospective applicants regardless of position. There is value in both.

A POSSIBLE STRATEGY Two companies, one of the largest providers of credit cards in

North America and one of the largest insurance firms in the United States currently utilize a comprehensive, yet economical, ap- proach to conducting BI.

Previously, both of these firms purchased BI services that were consistent across the board for all prospective employee positions. Although the strategy was excellent from a due diligence perspec- tive, they paid a hefty price for ordering criminal record checks, employment and education verifications, along with credit / fi- nancial histories on every prospective hire.

Following consultations with their BI service providers, both companies decided to initiate a two-level screening process. All Level 1 screening would include criminal record checks onZy on all prospective applicants for hire. The reasoning was that because approximately 6 percent to 8 percent of all applicants for employ- ment across multiple industries will most likely have criminal record histories that (in most cases) would preclude them from being hired, why not remove them from employment consider- ation at a lower per screening cost than had been previously expensed? Applicants passing Level 1 screening would receive employment offers contingent on Level 2 screening results. Level 2 screening criteria used by the companies noted earlier included the balance of investigative research (education, employment, credit / financial, and reference research), which was formerly associated with all potential candidates for hire. The BI service

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If your vendor has not offered on a regular basis (at least annually) to review your situation and make intelligent recommendations on the screening process, call the vendor to discuss the matter.

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~ Achieving Due Diligence in Your Recruiting Process-A Strategy for Preemployment Background Investigation

provider automatically began the Level 2 screening on those applicants passing Level 1 in support of timeliness.

The BI expense associated with applicants who were ulti- mately hired remained the same. However, by utilizing the two- level screening strategy described, the cost of ”deselecting” the 6 percent to 8 percent of candidates who have criminal record histories most likely making them ineligible for hire was reduced by more than40 percent. This reduction in BI expense is significant whether you are a Fortune 100 firm or a small business with only moderate recruiting numbers. Both companies saved valuable time and money with their new approach.

VENDOR CONSULTATION IS CRITICAL So, where do you begin in determining what strategy best

supports your company’s hiring goals and bottom line? If you are currently engaged in a relationship with a provider of background investigation services, and you are satisfied with the relationship up to this point, invite the vendor in for a discussion on this subject. Many vendors offering these types of services don’t often engage in the consultation of various types of strategies with their clients. This is due to either a lack of experience on their part or a desire to keep their revenue streams constant. In any case, you and your firm may not be enjoying a mutually supportive relation- ship. This should be the goal in any relationship between your company and a provider of products or services. If your vendor has not offered on a regular basis (at least annually) to review your situation and make intelligent recommendations on the screening process, call the vendor to discuss the matter. Depending on the outcome of that meeting, you may wish to explore other profes- sional screening services organizations that are available.

HOW TO FIND AND SELECT A VENDOR/PARTNER If you have not previously contracted for background

investigation services and wish to experience professional consultation in this area, start by contacting the Society for Human Resource Management (SHRM). This is a fantastic resource for learning about available preemployment screen- ing products or services. Several national “member” firms offer a full range of preemployment background investigation services and technology.

Direct a communication to at least five of these firms inviting them in for an ”informal” discussion on the subject of what strategies might best serve the needs of your company. The idea here is to observe which firms accept the offer to journey to your location and which firms present option strategies rather than

David Bartley

/t is challenging at best to find good, productive employees in today’s competitive environment. It is also very expensive to recruit, train, and keep employees.

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just showcasing their products and services. Those firms that direct more time to an open discussion on your business, indus- try, recruiting goals, and challenges should be invited to partici- pate in a ”formal” bid process and follow-up presentation. You will know which of these companies separate themselves as very professional consulting entities with the experience and technol- ogy to support you from those that are just interested in selling what they have to offer. It will not be difficult to tell them apart.

Following the bid process, select two vendors / partners to support your screening process. This may make sense depending on your recruiting volume and whether both firms appear to be very equal in experience and technological ability. However, if one firm stands above the rest, you will be able to build a strong partnership with that firm to support your company’s goals.

LEARN FROM THE DATA COLLECTED BY YOUR VENDOR Ideally, you should plan quarterly meetings with your vendor

to discuss challenges that may have occurred and allow your vendor to assess changes that may be necessary to better support you. Ask for periodic management reports that include acquired historical data about your applicant background investigation process results. This can show how many applicants were dese- lected as a result of a multilevel screening procedure. If, for example, your Level 1 method included a criminal record check or checks on every applicant for hire, how many had criminal records? What type of criminal records were located? What was the aver- age cost per Level 1 screening? Level 2 screening? What was the average cost per criminal record search conducted? From what geographical area(s) were these applicants recruited? If a Level 1 method included reviewing personal finance information (credit reports) on every applicant, how many were deselected as a result of your established criteria for this level? This is the type of information your vendor not only can provide, but should pro- vide. This data supports your company in evaluating recruiting channels such as job fairs, Internet resume databases and your recruiting sources in general.

IT’S ALL ABOUT CHOICES It is challenging at best to find good, productive employees in

today’s competitive environment. It is also very expensive to recruit, train, and keep employees. However, it is even more costly to defend your company’s hiring practices in any negli- gent hiring litigation.

If you don’t currently have a preemployment screening strat- egy, establishone now. If you do have one (internal or outsourced),

Achieving Due Diligence in Your Recruiting Process-A Strategy for Preemployment Background Investigation

review it now. You can implement a supportive due diligence process at a cost that is bottom-line friendIy. +

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