In the world of businesses, large and small, just about everything you do is about the bottom line. From buying paper to purchasing ad spots, if the money you spend doesn’t ultimately become the money you earn, it’s time to develop a new strategy.
Many human resources and risk management departments are forced to answer the following question: Is pre-employment screening worth it? Most businesses agree that background checks and candidate screenings are important for eliminating undesirable applicants from a pool of candidates. But the thing is, it also costs a lot of money.
That means business administrators and HR personnel are forced to determine the return-on-investment (ROI) of employment screening and find ways to maximize the benefits of a screening campaign while minimizing the expenses.
The Benefits of Employment Screening
Background screening can provide a substantial ROI for businesses. Screening candidates helps protect the company from the high costs of employee turnover, occupational fraud, and catastrophic events that can mar the public image of any business. Screening is also an effective way to maintain the safety of your employees.
What is turnover? Turnover is a simple ratio of the number of employees you have to replace in comparison to the average number of people you employ in any established period of time. For example, if you hire 10 employees in March and have an average number of 60 employees that month, your turnover rate for that period is approximately 17%.
The higher the rate of turnover in your business, the more money you lose. The Employment Policy Foundation of Washington, D.C. has estimated that the average cost of turnover nationally, across all positions, is more than $13,000 per employee. That’s a lot of money going down the drain.
To put it simply, occupational fraud occurs when an employee within your organization steals money. Fraud occurs at all levels of employment from the lowliest hourly worker to the company’s top executive.
The Association of Certified Fraud Examiners estimates that 6% of the nation’s combined revenues are lost to fraud every year in the United States. In addition, it has been reported that 30% of all businesses that fail, close as a result of theft or embezzlement from their own employees.
Things like sexual harassment, workplace violence, and accidents that are the result of drug or alcohol abuse can all be categorized as catastrophic events, and they all contribute to major expenses that can severely and negatively impact a company’s bottom line.
The Workplace Violence Research Institute (WVRI) has estimated the annual cost to U.S. businesses “for instances of workplace violence alone,¬” to be around $36 billion.
The major benefit of employment screening is that it provides you background information on prospective employees, helping you determine the level of risk the company assumes when hiring a new worker. Knowing the risks in advance helps you prevent losses generated as a result of turnover, fraud, and catastrophic events and that saves you money, protecting your bottom line.