Why businesses should background check all employees

Integrity means everything in the business world. Just ask American investment billionaire and philanthropist Warren Buffett, who has said he looks for three things when hiring people: intelligence, initiative, and integrity. However, he warns, if they do not have integrity, the first two will kill you.

Throughout the Asia Pacific, organisations get it. They want to hire fundamentally “good” people who will support the integrity of their business, not threaten it. Knowing this, most will thoroughly background check their executive leaders to ensure they possess the experience, expertise and, yes, the integrity required to lead the business. But what about other employees? What about workers at all levels of the business who are at the front lines, facing customers and partners every day?

The short answer is, yes: all employees should be screened, not just executives, and here is why.

Executive screening—leading by example. Business leaders are the face of an organisation. They have the power to lead a company through tough times, or they can destroy it with bad decisions, flawed judgement, and irresponsible behaviour. To mitigate these risks, most organisations thoroughly vet executives with intensive background checks to help:

• Ensure the “right” person is making key strategic decisions.
• Give shareholders peace of mind.
• Mitigate the risk of financial impropriety.
• Foster respect and minimise the potential for negative publicity.

Yet, when you consider the possible risk associated with a handful of executives compared to that of an entire workforce that is NOT being screened, the odds are not in your favour. And, with the potential for increased employee risk, comes the potential for decreased organisational integrity.

Employee screening—setting a standard. Unlike most executives, employees are not usually bound by corporate policies to conduct themselves in the best interest of the business. Instead, they are often hired without a basic background check. This means they bring their past indiscretions with them to the workplace, along with a potential for future disruption, and an acute lack of awareness of how their actions can impact their employer.

“Background checks help stop this destructive cycle before an employee is hired by revealing high-risk information such as prior criminal records, falsified employment history, and suspended professional credentials.” – Guna Govin, VP Sales Management, HK and ASEAN, First Advantage.

Background checks help stop this destructive cycle before an employee is hired by revealing high-risk information such as prior criminal records, falsified employment history, and suspended professional credentials. This positions HR to proactively recognise risky candidates who might cause harm to the organisation, be it a legal, financial, physical, or reputational threat.

In turn, it also sets a higher standard of integrity by establishing a clear correlation between an employee’s actions and their employment. It deters those with a history of inappropriate behaviour from applying to work at the business, while making existing workers aware that their actions inside and outside the workplace matter.

Do the math—background checks pay for themselves. Most businesses weigh the price of a background check against mitigating their risk. For example, a 2020 report from the Association of Certified Fraud Examiners shows that employee-driven fraud cases within the Asia-Pacific region drive a median loss of USD $195,000.

In this case, you might say, “Sure, if a USD$200 background check can save me a USD $200,000 fraud loss, it’s worth it.” However, that math is flawed; the loss is much more than that.

Consider the ripple effects of negative publicity resulting from an employee incident, which often includes increased costs and resource investments related to:

• Hiring and replacing the employee.
• Overhauling internal processes to prevent a similar incident from happening.
• Pivoting the brand message to overcome negative publicity.
• Adapting marketing communications to the repositioned brand message.
• Declining stock prices and shareholder values.
• Ability to compete for top talent and attract quality executive leadership.

When you factor these very real costs into the equation, the price of background checking all employees for the greater good of the organisation makes perfect sense. Remember this: business integrity is a meaningful differentiator in today’s global marketplace, but it only takes one negative employee incident to destroy the reputation you have worked so hard to build.

By Guna Govin, VP Sales Management, HK and ASEAN, First Advantage