How expensive is a bad hire at your business? CareerBuilder says hiring the wrong person can cost you an average of $17,000. A Northwestern University study put the figure at $15,000. And the cost increases for higher-level positions.
When you factor in onboarding, training, lost productivity, turnover, and the impact on other employees or customers, a bad hire can have a profound impact on your business. Yet, 75% of employers admit to having hired the wrong person. Employee background checks can help you screen potential hires to avoid making mistakes, saving you a considerable amount of money in the long run.
Employee Background Checks Save Money and Protect Your Business
There is an upfront cost to conducting an online employee background check, so you want to ensure you get a solid ROI. Here are some of the ways companies say they have saved money by conducting employee background checks before making a final hiring decision.
Reduced Turnover Rates
A noteworthy way background checks save money is by reducing employee turnover. By ensuring you're hiring qualified, honest individuals from the start, the likelihood of early terminations or resignations decreases.
According to the Bureau of Labor Statistics, the average turnover rate over the past ten years is 3.32%. Some industries see significantly higher rates, approaching 50% or more. Reducing turnover saves money on recruiting, hiring, and training.
Improved Performance and Productivity
With background checks, you can increase your odds of hiring more productive employees. Employees who are truly qualified for their positions tend to perform better.
This increased efficiency can lead to significant cost savings over time—especially when the employee is in a role where they interact regularly with customers. A Harvard Business Review study showed that experienced and high-performing employees can increase revenue by up to 50% for top companies.
Disengaged employees or those that are a poor fit can have a big negative impact as well. McKinsey research estimates the cost of employee disengagement and attrition at $228 billion per year (or more) industry-wide.
Decreased Likelihood of Workplace Incidents or Legal Issues
Thorough background checks can help prevent costly workplace incidents and legal issues. By identifying potential red flags in a candidate's history, you can avoid hiring individuals who may pose a risk to workplace safety or engage in fraudulent activities.
In retail, for example, shrinkage is a $100 billion-a-year problem. Employee theft, damage, and errors contribute heavily to inventory loss. Employee background checks can screen for criminal records or financial problems.
In case of an incident caused by one of your employees, you may have significant legal exposure—especially if you should have known about an employee’s past behavior. For example, someone with a history of arrests for DUI may increase your liability if they drive for company business. Conversely, proactive online employee background checks may produce reductions in insurance and liability costs.
Enhanced Company Reputation and Customer Trust
While harder to quantify, a bad hire can damage reputations—both your company’s and yours as a hiring manager. This can have a cascading impact on your employees, customers, and community.
In a nationwide survey, 88% of business owners and leaders said managing their reputation was a top concern, outpacing concerns about profits, inflation, or the economy.
Get Online Employee Background Checks
Command Credit can help you improve your hiring process with online employee background checks that can improve your hiring confidence and save you money. Background checks can include:
- Criminal record searches
- Identity verification and reference checks
- Prior employment verification
- Educational verification
- Driver records and monitoring
- Safety requirements checks, such as those required by the Federal Motor Carrier Safety Administration (FMCSA) or Federal Aviation Administration (FAA)
While you will want to check with your labor attorney to make sure you follow the regulations and guidelines for employee background checks, Command Credit is a one-stop shop to handle all of your background investigations quickly and confidentially. We’ve made it easy to get started and request background checks online to save you time. Fast results can help you make better hiring decisions, protect your business, and save money in the long run.
Get employee background checks online and take the uncertainty out of hiring. Contact Command Credit today to get started.