How to Select an Employment Screening Background Firm

Social IssuesEmployment

  • Author Lester Rosen
  • Published May 27, 2009
  • Word count 1,212

In corporate America, pre-employment background checks of new hires have become a standard risk-management tool. It is no longer a matter of whether a firm should screen applicants, but how to accomplish it. A 2004 study released by the Society for Human Resources Management (SHRM), entitled "Workplace Violence Survey," revealed a significant increase in the number of firms that conduct pre-employment screening.

The first decision that an employer faces is whether to perform the screening in-house or to outsource. There are some tasks an employer could certainly perform in-house, such as local criminal record checks; however, a growing trend among profitable and efficient organizations is outsourcing services that, although vital, do not represent the company's core strength. Many firms are finding it is an inefficient use of their time and energy to attempt to perform background-check services that a third-party specialist can provide efficiently and cost-effectively. Furthermore, the employer would have to learn the many complicated state and federal laws governing what information they can and cannot access, and acquire specialized software and information sources.

The cost of outsourcing is also a consideration. An employer would need to devote staff time and resources to the physical management of the process, including computers and implementing a software solution to manage and track all applicants being screened. On the other hand, a typical report from a screening firm should cost less than the first day's salary paid to the new employee -- called the "Less than One Day's Pay Rule." Considering the cost of a bad hire, this is a very minimal investment. Some firms do more in-depth screening for higher-paying positions; however, even if the position is paid more, the relative cost of the increased screening compared to the higher salary remains the same. Unless an employer is so large that incurring the additional administrative overhead of an internal background checking unit pencils out, most employers outsource this task.

How to Choose a Background Screening Firm

Since there are scores of companies that offer employment pre-screening services, some cautionary advice is in order with respect to making a choice. First, an employer should look for a professional partner and not just an information vendor selling data at the lowest price. Second, an employer should apply the same criteria that it would use in selecting any other provider of critical professional services. For example, if an employer were choosing a law firm for legal representation, it would not simply choose the cheapest law firm. Although cost is always a consideration, the employer would clearly want to know it is selecting a law firm that is competent, experienced and knowledgeable, reputable and reasonably priced. Above all, an employer would want to know that it is dealing with a firm with integrity. The same criteria should be used for selecting any provider of a professional service. A screening service must have the proven ability and knowledge to provide this professional service. A review of the company's Web site and materials as well as contacting the firm's current clients for a professional reference should be helpful in establishing the firm's qualifications.

An employer should verify if a firm has joined the National Association of Professional Background Screeners (NAPBS). Membership in NAPBS demonstrates a commitment to professionalism and an industry-wide code of conduct. In addition, a sample Request for Proposal is available form the author's website listed below. Legal Compliance and Subject Expertise

It is imperative that a screening service understand the laws surrounding pre-employment screening and hiring, and they make a commitment to provide an employer with only the information the employer may legally possess.

The federal Fair Credit Reporting Act (FCRA) governs background screening in the U.S. It defines a background screening company as a Consumer Reporting Agency (CRA). A CRA must have a deep understanding of the FCRA and applicable state laws that control everything from the forms needed and what is legal to report, to how to respond to a consumer inquiry or complaint.

Does the CRA have 50-state legal knowledge, since state laws are as critical as federal law?

Does the CRA keep its clients updated on legal and regulatory changes and developments?

Does the CRA make any effort to review specific reports or data before handing them over to the employer?

Does the firm understand that a so-called "national criminal" database search is only a secondary screening tool and cannot be relied upon generally as a primary source of information?

Does the CRA demonstrate an understanding that the use of criminal records are subject to EEOC concerns and discrimination law?

Customer Service, Consulting and Training

Since pre-employment screening is much more than just providing raw data, an employer should determine how a CRA provides customer service. An internal trouble ticket system, for example, is a best practice to make sure nothing falls through the cracks. Having a specific account manager that knows an employer's need is a better option than calling into a general customer service pool. A service provider should also be able to work directly with the security or Human Resources department to provide whatever training and orientation is necessary.

It is also important to choose a firm that is familiar with any special needs of your industry. For example, the health care industry has special concerns and requirements -- unique licensing standards and disciplinary actions.

Pricing

Although it is important to obtain competitive pricing, it is usually not advisable to choose the lowest cost provider. As the old saying goes, you get what you pay for. Although some firms are can reduce some costs through efficiency and technology, one of the biggest areas where a screening firm can cut costs in order to lower pricing is by hiring fewer and cheaper employees. Since screening is a knowledge-based profession that is heavily regulated, key criteria for selecting a firm should be the knowledge, training and experience of the staff member serving your account.

Performance criteria for information providers:

Does the CRA make it clear how they obtain data, and what processes are used in-house to ensure accuracy and quick turn-around time? There may be times when there are delays that are out of the CRA's control; however, it is critical that an employer have accurate real-time status reports.

Inquire about the CRA's Internal Quality Assurance processes. This should also include how a CRA trains and updates its own staff.

Software and Internet Options

A service provider should also be able to provide technology solutions that fit into employers' hiring practices. Most providers have online systems and many options are available for online consent and seamless B2B integrations with hiring and human resources systems.

Data Security and Privacy; References

The information in a background report is sensitive and confidential. The reports must be restricted to those individuals who are directly involved in the hiring process. A screening firm should have policies and procedures in place to ensure confidentiality. It should be able to provide a privacy and data protection statement.

As with any provider of a professional service, an employer would want to check the provider's references. Just as a screening company should advise an employer to carefully screen each applicant before he or she is hired, an employer should exercise the same due diligence when retaining a screening company.

Lester Rosen runs http://www.esrcheck.com and has authored two books. He is a frequent presenter nationwide at human resources, fraud and security conferences, and was the chair of the steering committee that founded the National Association of Professional Background Screeners (NAPBS) and served as its first co-chair. He has testified as an expert in negligent hiring cases in California, Florida and Arkansas.

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