Even as unemployment reached an eleven-year high figure that runs into millions, the economic downturn is leading to a financial crisis. Companies resort to budget cuts on many aspects including background verification, security, and labor to save on expenditure. These short cuts, however, do not lead to success as wrong hires and lack of security can backfire in many ways. Negligent hiring leads to exacerbation of the existing financial downturn due to the high costs of replacing the wrong hire, damage to reputation, irreversible errors and customer complaints. HR professionals are pressurized to hire on a large scale in a short span of time and this is particularly true in large industrial sectors and for those looking at expansion.
The pressures of hiring can laead to making wrong hiring decisions with many companies not adopting a robust background verification process.
A recent incident is a case in point where an IT company’s HR head interviewed a candidate who had presented a strong resume. It was noticed that the claims made in the resume were not matched by the candidate during the interview. When the company investigated further, they found the candidate had copied a senior leader’s resume.
Negligence in hiring & background verification can lead to major financial losses
Maintaining a good reputation and brand in the marketplace is of utmost importance to companies. Lying on the resume is a very common occurrence and a recent survey found that 41% of background verifications conducted found discrepancies.
Wrong hires can damage carefully built image and reputation of companies while they can also lead to negative branding. The loss in reputation goes hand in hand with financial losses that can run into billions. According to a survey by CareerBuilder, one bad hire can cost Indian businesses up to 20 lakhs. India also figures among the Top 4 countries that are most likely to make wrong hiring decisions according to the survey. The same study found that 84% of companies in India were impacted by wrong hiring decisions. The impact of wrong hire without background verification can be much more than financial losses with employee relations, client satisfaction and morale within the company also taking a huge hit.
Precaution is better than cure
As with everything else, prevention is better than cure when it comes to hiring right. The following factors can help avoid negligent hiring.
– Conduct background verification
Taking the help of a third party professional background verification services provider can help companies streamline their time and costs while obtaining accurate results. Expert agencies use cutting edge technology and provide access to countrywide database for conducting comprehensive criminal records check, background verification such as identity, eKYC, addresses, credit check, employment history and qualification. Not only are these results obtained in quick time but are completely reliable and accurate.
– Do the required homework with Reference Checks
It is advisable to not take short cuts when checking the references the candidate has provided. Although reference checking consumes time and energy, it can save up huge amounts of time and money that would have to be spent in replacing the wrong hire. Verify with the references if the dates, salary and skills that the candidate has mentioned in his or her resume are accurate. Also ask the references if they would be willing to rehire the candidate given the opportunity. A negative answer is a red flag although not conclusive. Further action in terms of employee screening and professional background verification can confirm if the candidate is reliable or not.
– Have a policy in place
If the company does not have a recruitment policy that details the background verification and screening processes, it is time to formulate one. Consult senior management and HR department to draw up a recruitment, interview, background verification and onboarding policy that is structured and objective.
Bad hires can cost your organisation a fortune. Do not run into employee related risks. Get vigilant and proactive and adopt background verification policies and structured programs today!