Most companies discuss the cost of doing a background check when it comes to budgeting for the year and predicting overall costs. But what are the costs of not doing a background check? The cost of a bad hire will far outweigh the cost of a pre-employment screening.
By having your employees prescreened you can greatly reduce the rate and cost of turnovers within your company. It is estimated that the total cost of turnovers in the U.S., per year, is $713 billion (HR Management). For a professional position, replacing an employee could cost you anywhere from $12,000 to $60,000.
Occupational fraud is another important reason for screening. Occupational fraud could be in the form of asset misappropriations, fraudulent statements, and embezzlement. The United States Department of Commerce reported that 30% of business failures are a direct result of theft or embezzlement.
Severe problems that result from a failure to do adequate screening are catastrophic events, including violence in the workplace, sexual harassment and accidents that occur due to falsified qualifications or drug/alcohol use. According to The Workplace Violence Research Institute, the annual cost of violence in the workplace is $36 billion. Alcohol and drug abuse total $81 billion according to the Substance Abuse and Mental Health Services Administration. There are no accurate statistics on the cost of sexual harassment per year.
Reasons to perform background screens on employees include: turnover reduction, increased morale, increased productivity, mandate compliance and fulfilling legal responsibilities. By performing background screens to all applicants of equal qualifications, not only provides employers with protection against legal issues, but ensures that the best candidates are getting hired.
Sources: HR Management; United States Department of Commerce, The Workplace Violence Research Institute, The Substance Abuse and Mental Health Services Administration