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How Your Small Business Benefits From Background Checks

Sara Korolevich
January 31, 2023
6 min read

Many employers consider background screenings to be a standard step before onboarding a candidate. But for small businesses, funds allocated to screening job candidates may be more limited.This is often why many small businesses opt to conduct their own background checks when hiring new employees instead of using a background check provider, or forgo them altogether.

Small business owners already have a lot to think about when it comes to hiring. You have to find a qualified candidate with the right skills under a limited time and budget. But when it comes to pre-employment screening, small businesses stand to benefit the most by investing in thorough background checks. Research from CareerBuilder shows, “[N]early 3 in 4 small business employers have hired the wrong person for a position,” with over 30% of these employers reporting that one bad hire cost them between $2,500 and $10,000. So why are so many small businesses skipping one of the most effective preventive measures?

You’ve built your business with grit and dedication, and if you’re like many small businesses, your employees are the lifeblood of your business. Building a team that you, your staff, and your customers can trust is a top priority.

Keep reading to learn five benefits of conducting background checks.

1. Build a trusted, qualified team

Background checks help to ensure that you make informed hiring decisions, providing peace of mind that the best possible team serves your customers. Informed hiring decisions also help to establish and maintain your business’s credibility within your industry and among your customer base.

The type of screening you wish to conduct may depend on your industry and the position being filled. Some of the different background checks your small business might consider include the following:

  • Employment verification confirms past employers, job titles and dates of employment to establish whether the candidate has the necessary experience for the role.
  • Education verification confirms enrollment history and dates of attendance, degrees obtained, and graduation date to ensure the candidate meets the academic requirements of the role.
  • Professional license verification confirms a candidate’s license is active and in good-standing. This screening is often used in regulated industries or professions, such as accounting, healthcare, and teaching.
  • Criminal background checks may reveal a candidate’s criminal history, including felony or misdemeanor convictions.
  • Credit background checks may reveal a candidate’s financial history and responsibility, such as credit-to-debt ratio, accounts in collection, and bankruptcies. Employers hiring for roles with financial obligations may use this screening to gain insight.
  • Driving record (MVR) checks may show a person’s driving history, including license status and class, and driving incidents and moving violations to help promote safety for delivery or other driving-related positions.

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2. Support workplace safety

An underlying benefit of background checks is that they help you manage risk. Background checks help you employ candidates who are properly trained and qualified to perform the responsibilities of the job, which helps you safeguard assets and create a safe work environment for all stakeholders from employees to customers.

When you take the time to run the appropriate background checks, you show your community that you care about their experience and well-being.

3. Manage organizational risk

Employee and customer safety is one part of this; mitigating organizational risk is another important component.

Background checks provide information to verify candidates are eligible and qualified for the role, trustworthy to perform the job, and protect the company’s assets and reputation. Employers should be careful their screening process is in accordance with applicable federal, state, and local laws.

Failing to take the necessary steps to make smart hiring decisions can inadvertently lead to claims of negligent hiring. In these situations, an employee contends the employer failed to properly screen a job candidate prior to their employment, resulting in some type of harm to the organization. Given the possibility of potential damage to your company’s reputation —and even possible litigation —foregoing background checks can present a level of risk most small businesses may not be able to afford.

4. Reduce costs with preventive actions

It may seem counterintuitive to invest in background checks as a way to reduce costs, but background checks may help small businesses save money in the long run.

One source of cost savings may include reduced insurance premiums. Depending on the type of business you’re in, completing regular background checks may signal to insurance providers that you’re practicing due diligence. This preventive measure to lower risk is typically rewarded with lower insurance premiums, which could result in significant potential savings.

5. Improve retention and decrease turnover

Employee retention benefits organizations in a multitude of ways: continuity in workflow, established leadership, increased morale, and improved productivity. Improving employee retention starts with an investment in recruiting and hiring the right individuals.

Research shows that companies spent over $92 billion on training in 2020-21, with small businesses spending the most per employee. Additionally, a recent Gallup report found replacing an existing worker can cost up to two times that employee's annual salary. The current labor shortage is also a consideration, with 41% of small business owners saying it’s impacting their businesses.

By committing to hiring the right candidates in an effort to decrease turnover, a comprehensive background check could make a difference between investing in long-term candidates or ongoing recruiting and hiring.

Why Checkr works for your small business

Running a small business means you have many competing priorities, from operations and customer service, to record keeping and marketing. An investment in background checks is an investment in your team, but they don’t have to add to your administrative burden, or be cost prohibitive.

Offering pre-bundled or customizable background check packages, Checkr’s easy-to-use, pay-as-you-go solution lets you conduct fast, accurate, compliant background checks. Our automated processes streamline your workflows, while our responsive, US-based customer support team is there for you and your candidates every step of the way. Checkr empowers small business owners to make confident, fair hiring decisions. Get started today.

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Disclaimer

The resources provided here are for educational purposes only and do not constitute legal advice. We advise you to consult your own counsel if you have legal questions related to your specific practices and compliance with applicable laws.

About the author

Sara Korolevich serves as checkr.com’s editor and content manager. In this role, she produces educational resources for employers on a broad range of screening topics, including background check compliance and best practices. She also writes about Checkr’s company and product news to keep customers updated and informed.

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