The Risks (and Costs) of Not Screening Candidates

An interviewer reviews an interviewees credentials while meeting virtually

Some businesses may decide to forgo candidate screening in a tight labor market, but that might not be a good move for every organization. Here's why a background check is critical to hiring the right employees.

Candidate screening is a critical element of the employee hiring process, yet some organizations may decide to forgo background checks to speed up the hiring process and quickly grow their workforce. This is especially true when the labor market is tight, and the hiring landscape is stark.

To underscore the difficulties currently facing organizations in the fight for talent, a recent survey by applicant tracking software and recruiting platform Jobvite found that 70% of recruiters fill jobs in less than 30 days. However, the research also found that 65% of recruiters have caught candidates misrepresenting critical data, such as their authorization to work in the U.S, criminal history, and language proficiency.

Although background screening may seem like an additional expense to which organizations might not need to allocate resources, such checks can help to ensure that the right people are hired. Accordingly, they may be considered a requirement for certain roles.

The case for candidate screening

While conducting a background check requires a minor outlay, the time and money it costs to screen applicants using a professional background screening company can pay off in the long run. Moreover, the resources saved by skipping this step can result in other costs. While estimates vary regarding the cost of a bad hire, selecting the wrong candidate can prove expensive.

"As a hiring manager myself, I absolutely understand the importance of securing strong candidates quickly – especially in the current environment," says Cindy Roush, Vice President of Client Services for ADP's screening and selection services division.

"I strongly urge hiring managers to find alternatives to eliminating the background check completely. For example, instead of eliminating, consider slimming down the number of components to the screen you perform, focusing on those that are critical for the position you are hiring for. Also review your policies to ensure the check you are doing is appropriate for the level employee you are recruiting."

According to the U.S. Department of Labor, wages and salaries cost employers 69% of their total costs, with benefits accounting for the remaining 31%. In a competitive labor market, employers may see their expenses rise even more to account for the increase in pay that's needed to attract qualified candidates.

In addition to those costs, a bad hire can impact employee productivity and morale, damage an organization's reputation or negatively impact customers, leading to revenue loss. In extreme circumstances, hiring blindly, without the aid of a background screen, could result in fraud or unsafe business practices that might impact the safety and security of employees and customers.

With these facts in mind, the average expenses to recruit, hire and train new employees — coupled with the costs an organization might face if it fails to conduct adequate screenings— can easily cost thousands of dollars per employee. Background checks can help to ensure that organizations invest their resources in the right people.

Avoiding a costly hiring mistake

Rigorous pre-employment screening doesn't have to add delay and can lead to a better quality of hire as well as added value to your business. Spending money to vet candidates properly today could result in significant cost savings down the road.

Here's a brief overview of the kinds of searches conducted by professional background screening companies, including those offered through ADP:

  • Candidate data. Research into the validity of the candidate's Social Security Number and possible address history.
  • Criminal history. Can include searches of federal, state, and county records. It can also include examinations of criminal records overseas.
  • Medical and physical screening. Can include drug and alcohol tests.
  • Reference verifications. Can include credential, employment, education, and personal reference verification.
  • Registry searches. Can include searches related to government sanctions, state sex offender registries, and Office of the Inspector General and General Services Administration sanctions and registries. Searches also focus on fraud.
  • And other popular searches. Such as a candidate's state driving records, civil records, credit bureaus as well as worker's compensation.

"Remember, no one is going to congratulate you on saving a few dollars or days-to-fill if a poor hire is responsible for serious wrongdoing or loss," cautions Roush. "Same thing if a candidate has a poor experience and feels they were treated unfairly during the hiring process because of a shortcut."

An integrated screening solution can deliver timely and accurate employment background check results, provide better visibility into applicant data, and make it easier to track and claim government subsidies, such as work opportunity tax credit incentives. Given the potential ramifications of hiring an unqualified individual, candidate screening can be a cost-effective and compelling solution for hiring employees with confidence.

Learn more

Get our guide: Maximizing recruitment results during and after labor market disruption