GETTING THERIGHT PEOPLE

ON BOARD

Tips for a Fair and Effective Hiring Process

Best Hiring Practices

INTRODUCTION

“Leaders of companies that go from good to great start not with “where” but with “who.” They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats.” JIM COLLINS, GOOD TO GREAT

The future of every organization depends on having the

right people in place. Finding the right people requires

an approach to hiring that is both fair to applicants and

delivers the best employees possible to the organization.

With the average direct cost of hiring a new employee

at about $4,000—and much greater for most higher

level positions—there is obviously a strong incentive to

find employees who will pay back your investment.

In this ebook, we argue that hiring costs should also

account for the potential costs due to risk. At every step

in the hiring process, and particularly in background

screening, HR managers should address the threats of

risk directly. The whole employment process should be

analyzed with the perspective of a comprehensive risk

management strategy.

WHAT’S INSIDE?

Key steps in the hiring process (sourcing,

screening, interviewing, hiring)

Best practices and pitfalls to avoid at each step

A special focus on background screening

today’s workforce

The critical connection between human capital,

risk management, and employment

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HIRING IS AN ACT WITH STRATEGIC IMPLICATIONS.

Taking a new employee onboard is a commitment of

resources and an acceptance of exposure to risk with

uncertain consequences. As such, it should be governed

by a set of policies and procedures that help to identify

where the risks exist and how to mitigate them.

Some risks are inherent in the organization and

the job roles it requires, while others are brought

into the roles by the humans who inhabit them.

The procedures—or tactics—intended to mitigate risks

have to be well designed and sufficiently robust to serve

the strategic purpose. Short cuts like do-it-yourself

Internet research can subvert strategic intentions. As you

will see below, an important element in a risk managed

hiring process is to adjust the level of resources devoted

to the level of threat (cost) that is possible due to a failure.

BACKGROUND SCREENING IS A STRATEGIC TACTIC.

If the hiring process itself is a strategic function with risks

that need to be managed, then one of its most important

supporting tactics is background screening.

OVERVIEW

The hiring process needs to incorporate tactics that

help to achieve twin goals: to find and employ the best

qualified candidates, and at the same time to mitigate or

avoid the legal and human risks that always accompany

hiring choices. In some ways these goals appear to be

fused around finding that person who is the perfect fit

for a job, who seems to have all the right skills, training.

and experience. Indeed, some of the tactics we talk about

here help hiring managers evaluate candidates’ positive

attributes.

But the seemingly perfect hire is not always as he or she

appears. Many headlines have trumpeted the failure of

a hiring process when a prominent leader or employee

turns out to have falsified or exaggerated qualifications—

or worse. The higher in the organization, the greater the

damage from these episodes, but hiring failures can be

costly at every level.

We understand that HR managers are fully aware of the

need to include steps in the hiring process that evaluate

the claims by applicants and verify their records.

The facts that laws mandate background checks for some types of jobs and that 90% of U.S. corporations use background screening, indicate that avoiding mistakes has become a standard part of the hiring process.

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Screening helps to verify outstanding candidates’ claims

and qualifications, but also uncovers the risks they bring

with them. At the same time, the screening process itself

carries risk, partly due to compliance risk, that has to be

recognized and accommodated.

Therefore, in this e-book we briefly describe our view

of the hiring process, with some comments on the

risks attendant at each step. Then, we expand on the

critical tactic of background screening and establish a

link between screening practices and a complete risk

management strategy. Our aim is to provide information

and analytical tools you can use to ensure that your

hiring process is fully supporting the strategic objectives

of the organization.

KEY STEPS IN THE HIRING PROCESS

We have seen any number of versions of “the hiring

process,” whose steps are both well-known and subject

to terminological variation. Generally, each step in the

process brings the organization closer to finding the

best person(s) for the role in question. The point here

is to point at some places in the process where a risk

assessment approach would be beneficial.

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POSITION DESCRIPTION:

Once a role is proposed and accepted within an

organization, managers have to produce a position

description that is used consistently in communications

with all applicants as well as internally. Over time, the

organization will accumulate position descriptions for

every role, updated as needed. These descriptions are

based on the functional requirements of the job, including

the skills, training, and experience needed, as well as a

role-specific description of its actual responsibilities and

location in the hierarchy.

The information in the position description is the

basis for a risk assessment of that role.

Every role, however minor, poses

some degree of risk, and this view of the position is an important input to a comprehensive risk management plan. The variations in the requirements and responsibilities of the role will determine the value of the risk and therefore the appropriate level of effort for risk mitigation. Wherever risk assessment is not performed as part of the initial position description, it would be useful to return to that description as part of an on-going risk management strategy.

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For the same reasons, these positions justify deeper, more

individualized reviews and more flexible rejection criteria.

THE FIRST INTERVIEW:

The aim of the first interview is to identify candidates who are likely to be successful in the job in question in order to justify the expense of more extensive background research. Sometimes HR practitioners or observers argue that successful interviewing is an intuitive affair, built on experience and the ability to connect with the applicant. This is a dangerous assumption if there’s nothing more behind it—

some estimates claim that 40% of resumes and applications contain exaggerations or outright falsehoods. Even the initial interview has to be well-prepared and fact-based.

Candidates do not waive legal rights in a face-to-face setting. You should not make inquiries based on membership in a protected class, or any characteristic of the individual that you cannot show convincingly is job-related. This kind of risk can be minimized with intelligent interviewing techniques, such as making sure a person is permitted to work in the United States rather than asking about their national heritage. Once such a person is hired, you can follow up on their legal right to work by conducting an Everify search. Further, the interview should not contain promises or descriptions of the job that will be contradicted by the realities of the position in any way. These misrepresentations can trigger legal actions later.

SOURCING:

Recruitment, like so many other organizational functions,

has acquired an online component, especially for more

routine roles. However, traditional sources like job

fairs, college recruiting, outside professional recruiters,

networking, and referrals continue to be important. From

a risk management point of view, the important point

is to correlate the value of the sources with the quality

of candidates they yield. Over time, it should become

apparent which sources produce more qualified applicants

but also which applicants become valued employees who

do not pose unacceptable risks.

FILTERING:

After a position availability announcement has been made,

you will usually begin receiving applications. In most

processes, the first step is to compare applicants against

the position description to eliminate people that clearly do

not have the capabilities required, often called “candidate

profiling” or “candidate pre-screening.”

The most important risk here is actually an

opportunity cost: rejecting an applicant who

would excel.

This problem becomes more acute for higher level

positions where the value of the opportunity cost

increases—these are the people who can add most to the

organization, and also pose the greatest threats if they fail.

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FINAL INTERVIEW:

A final interview may not be needed to make hiring

decisions for more routine positions. However, one or

more interviews with an assortment of stakeholders

might be appropriate for applicants who have survived

the evaluation process to this point if their impact on the

organization might be substantial. Issues of character

are most difficult, making personal referrals and possibly

extensive custom background research most valuable.

BACKGROUND SCREENING:

We will describe the background screening step in more

detail below. Suffice it to say that it is a critical step in the

evaluation process. It is important to recognize that the

screening process interacts with the overall hiring process

in ways that can either increase or mitigate risk. It’s

important to get it right.

THE OFFER:

Deciding to choose an applicant starts a job offer process

that may or may not involve negotiation. For every

position, but in much more detail for higher level positions,

the employment contract has to address the needs and

expectations of both parties. It should also address

the risks inherent in the position, making clear where

responsibilities lie and how the organization and employee

will proceed if risks materialize. Most organizations have

standard procedures in place for this purpose, but shrewd

managers will consider putting unique job characteristics

in writing in the final offer where the risk value is high.

BACKGROUND SCREENING FOR TODAY’S WORKFORCE

Background screening is designed to bring an objective

view to the decisions made around hiring, promoting,

retaining, and dismissing employees. Rather than relying

on “gut feel” or what’s stated on an applicant’s resume,

employment screening gives you clear methods by which

to verify claims and check the background of a prospective

or current employee. It helps you choose the best

candidates.

Screening programs can also strengthen

an organization’s defense in the event of a

negligent hiring or negligent retention lawsuit by

demonstrating ‘duty of care’ in the employment.

process. Further, properly structured screening programs can

help employers show compliance with laws that promote

fairness in the hiring process.

Background screening is ubiquitous, but it isn’t always

done well. Here are some guidelines for a background

screening process that will help you manage hiring risks

rather than create them.

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THE PROCESS WITHIN THE PROCESS

Within the hiring process, background screening stands

out as an intricate procedure governed by both practical

needs and compliance requirements. Screening is a tricky

process because it seeks, by definition, to learn about the

personal character and experiences of a job applicant. It is

a portal to employment, fulfilling a critical need for most

people to be fully part of the community.

The aim of employers is to learn whether a specific

individual will be a good hire. The aim of legal policy is to

make sure that the information acquired in background

research is used fairly and

only for job-related

purposes. Through legal

interpretations by trial

(in courts) and error (by

some employers), we have

learned what features a

compliant background

screening process should

have.

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A properly designed screening process can achieve the employer’s goals and meet standards of fairness. Here are some conceptual elements of that process:

Employers have a right to use background

screening in making employment decisions.

This right has been affirmed many times in

law, case law, and regulation.

Screening should be job-related and serve a business necessity. Both court decisions and

Equal Employment Opportunity Commission

(EEOC) guidelines stress that background

screening has to be pertinent to the job in

question, and exclude asking about or using

personal information that has nothing to do

with performance on that job. Clearly, the

kind of personal information sought will vary

with the job in question. If the employer can

show that a piece of information is a business

necessity and job-related, it can be used.

The specific items researched in a background check for a job should be consistent for every applicant, and used

consistently in decision-making.

In general, employers should avoid blanket background check policies. Both EEOC

and Ban the Box laws in various state and

local jurisdictions target the use of simple

“check box” criminal background checks

in employment. The thrust of these legal

initiatives is to induce employers to use more

individualized assessments, and to do the

background research at a later point in the

hiring process where the applicant has shown

basic qualification for the job.

Adverse action against an applicant should follow the two-step process defined by the Fair Credit Reporting Act (FCRA), at least if

a third party agency provides the background

report. We will amplify this procedure below,

but its purpose is to ensure that the applicant

is aware that his or her personal background

will be researched and used in the employment

decision, and gives them the right to approve

and contest the outcomes.

If a background check for an applicant indicates they have arrest or conviction records, an individualized assessment is recommended. Regarding arrest records, which

are not conclusive evidence of wrong doing, it

is especially important to give the applicant an

opportunity in an individualized assessment to

explain the circumstances of the arrest.

Employers who follow a screening process built on these

concepts will greatly mitigate hiring risks due to both

the applicant’s characteristics and compliance. So what

exactly might your process look like?

THE EMPLOYMENT SCREENING PROCESS: A BIRD’S EYE VIEWJOB

POSTINGRESUME

QUALIFICATIONINTERVIEW PROCESS

CONTINGENT OFFER

APPLICANT CONSENT FOR BACKGROUND CHECK

CONDUCT BACKGROUND SCREENING

This step should be done by a professional background screening firm.!

EDUCATION

CREDIT CRIMINAL BACKGROUND

REFERENCES DRIVING HISTORY

EMPLOYMENT HISTORY

EVALUATE RESULTS

GOOD TO GO REQUIRES REVIEW

Evaluation should be based on role-related risk criteria.!

INDIVIDUALIZED ASSESSMENT

THE “GREEN” FACTORS

1. Nature & Gravity of Offense

2. Time Passed Since Offense & Sentence

3. Nature of Job

ACCEPTABLE DECISION POINTOK NOT OK

HIRE!

ADVERSE ACTION 2-STEP

1PRE-ADVERSE

ACTION NOTICE

2ADVERSE

ACTION NOTICE

NOT ACCEPTABLE

NO HIRE

CANDIDATE RESPONSE EXPLANATION / DISPUTE

OK NOT OK

FINAL DECISIONACCEPTABLE

HIRE!

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ASSESSING ROLE-RELATED RISKS

In order to implement a screening process like the one

outlined above for any given job, employers have to

know what kinds of information about the applicant are

a business necessity and job-related. These factors are

where the risks for the job in question exist.

An employment background check must always balance the employer’s need to know with the fair employment rights of employees. Yet the challenge is how to avoid discrimination while meeting the due diligence requirements the role or position requires. To do this right you need to start by comparing the value of role-related risk against company rejection criteria and make employment decisions consistently without bias.

One approach to this assessment is simply to list the

possible background factors such as experience or skills

that might apply to a job, or any job, and then assign

a score to each factor as it pertains to the position in

question. For instance, you might list personal factors

such as educational attainment, credentials, driving

record, and details on criminal history as considerations.

For most jobs, you would then add job-specific factors

such as degree of supervision, access to financial assets,

or the need to drive a commercial vehicle. Then, for the

job in question, you could determine how important each

factor is and assign a score (or monetary value if your

system is that sophisticated). For more important factors

(the ones that are a business necessity and job-related),

you would make sure to investigate the applicant’s

background.

KEY COMPLIANCE CONCERNS

The compliance requirements for the hiring process

have come into sharper focus in the last few years. The

foundational law, the anti-discrimination Civil Rights Act of

1964 (as amended) and especially Title VII, has been on the

books for a long time, but case law and agency regulations

have evolved to clarify requirements for employers.

Remember that the aim of these laws is to foster

fairness in the hiring process, and particularly to

improve the job prospects of people who may be

disadvantaged.

APPLICANT NOTIFICATIONS AND COMMUNICATIONS

The FCRA is under the auspices of the Federal Trade

Commission, and its point is to protect consumers who

are subject to decisions about their credit, housing, and

employability. It applies whenever an agency, landlord,

or employer uses a “consumer report” created by a

third-party “Consumer Reporting Agency” (CRA) to

make one of these decisions. A consumer report can

include a report on almost anything about a person’s

background, from driving records to criminal history.

The FCRA requires employers to take certain steps in order to use consumer reports in an employment decision:

Tell the applicant in writing in a stand-alone document that you may use information from a background check in your employment decision.

Get the applicant’s written permission to do the research.

Certify your compliance with FCRA to the consumer reporting agency doing the research.

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TAKING ADVERSE ACTION

If you use the background check in whole or in part to

decide against employing an applicant, you should follow

the two-step adverse action procedure stipulated by FCRA

before taking the action:

Inform the applicant that you are considering taking adverse action and give him or her a copy of the background report used.

Give the applicant a copy of the FCRA’s Summary of Your Rights document.

Allow the person time to review and refute the report.

If you continue to pursue adverse action, your next steps include:

Notify the person of your decision.

Give him or her the contact information of the consumer reporting agency used.

Notify the person that they may dispute the information in the report with that agency, and that they have the right to another report within 60 days.

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TREATMENT OF CANDIDATES WITH CRIMINAL RECORDS

Criminal history plays an outsized role in employment

law, and some special considerations apply. The best

single statement of these issues is in the EEOC’s arrest

and conviction guidelines issued in April 2012.

The guidelines restate policies that had evolved through

court cases and regulation over a considerable period

of time. The most prominent case was the 1975 Green v.

Missouri Pacific Railroad Company, in which the company

followed a screening policy of excluding applicants for

any criminal history other than a minor traffic offense.

Green, the employee who sued claimed that the

company’s policies discriminated against blacks, like him,

because blacks were substantially more likely to have

committed offenses.

The court decided for Green, and laid out the “Green

criteria” for when and how criminal history can be

considered in employment. In using criminal history, hiring

decisions should consider:

Whether the nature of the offense is

sufficient for disqualification.

How much time has passed since the

conviction.

Whether the job in question would be

affected by the conviction.

The Green case informs the EEOC guidelines, which have

extended to include some more restrictive elements.

The EEOC emphasizes “disparate impact” discrimination, which is discrimination that is an unintended consequence of using a certain screening approach.

For example, a blanket exclusion

of applicants with any kind of

criminal history may discriminate

against a protected class, such as

blacks. This echo of the Green

case is found in several recent

lawsuits brought against employers

by the EEOC in recent years.

1.

2.

3.

In other words, if you learn something about an applicant

that might be construed as falling under a protected class

issue, or as a privacy right, you cannot prove at a later time

that it did not affect your employment decision.

NEGLIGENT HIRING AND RETENTION

Negligence is the failure of a reasonably informed agent

to act in response to information that he knew or should

have known. This doctrine survives from common law, and

is still a potent basis for a lawsuit. Background screening

can provide a defense against this kind of threat because

it demonstrates a good faith effort to comply with the

general requirements of the doctrine.

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To cope with the limitations of disparate impact and still

allow employers to screen for employment, the EEOC

introduced the idea of individualized assessments.

Wherever an applicant might be excluded on the basis

of criminal history, the guidelines recommend using an

individualized assessment that looks more deeply into

the Green criteria—and similar other factors—in making a

decision for that person. This approach moves background

screening away from the industrial model of bulk blanket

background checks to a process built around the

individual.

PRIVACY AND SOCIAL MEDIA

Many employers use or want to use online sources to

simplify the screening process at a very low cost. One

problem with doing that is that the use of social media

content is subject to most of the same laws that cover

the use of personal information from other sources in

employment decisions. Members of protected classes are

still protected, and your compliance is still required.

If you use a third party screening agency to review social

media content, it is covered under FCRA. The same

processes of notification and communication apply.

And this information has to be verified against objective

sources in the same way.

The deepest problem with social media, especially when used directly by a prospective employer, is that once it is viewed it cannot be “unviewed”.

6 GREAT REASONS TO BACKGROUND CHECK YOUR EMPLOYEES

Just in case you think you’re immune to hiring bad

employees, we offer some compelling reasons to set up

a background screening program. And, by the way, even

if you do have a program in place, these reasons may

suggest ways you could improve it.

1. Background screening helps to create a safer, happier workplace.Human beings present certain risks that are always

present in the hiring process. You can mitigate these risks

with appropriate background screening. Think about it

this way: your goal is to reduce the chances of violent

or disruptive behavior in the workplace, and at the same

time find employees who will contribute positively.

Background reports can help to identify character

attributes that will help promote a good working

environment.

2. Organizations with background check programs attract higher quality employees over time.Background screening can create a virtuous circle in which

higher quality applicants are found and hired, thereby

increasing the overall quality of the experience in the

workplace. This workplace can serve to attract better

applicants in the future. Over time, the entire organization

can benefit from a better workforce.

3. Reduce the incidence of negligent hiring lawsuits with screening—and have a better defense if it is alleged.Negligent hiring and retention lawsuits can be very

expensive, damaging to reputation, and corrosive to

workplace culture. Background screening helps reduce

the chances that you will have to cope with adverse media

or customer reactions due to negative employee action.

It also helps to establish crucial affirmative defense by

demonstrating due diligence in the event a situation goes

sideways.

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4. A properly structured screening program helps you comply with regulation, and meet requirements of clients or partners.Many states, the Federal government, and even your

business partners, customers, and suppliers expect you

to be able to verify that your employees are qualified

and secure. In some cases, the laws define compliance

requirements explicitly, and you are expected to know

them.

Compliance is an increasingly tricky issue for employers

since state and local mandates allow employers to exclude

applicants with certain histories which may be in conflict

with Federal anti-discrimination law (see the EEOC). In

that case, the Federal law prevails, and your screening

process has to straddle competing demands. Systematic

background screening helps you select the right people in

the first place, and then provides documentation that you

meet standards and expectations.

5. Background checks are an essential part of the verification process to ensure an applicant or employee fulfills the requirements for the job.An obvious benefit of screening is that it is needed to

verify that the applicant has the credentials, education,

and job history he or she claims. Depending on the job,

you may want to evaluate credit history, criminal history,

or even perform an investigation into references.

6. Companies can reduce the risk of employee theft or fraud by screening for risk factors in an applicant’s background.Employee fraud and theft impose huge costs on

organizations. For example, in retail operations, losses to

employee theft are usually the single largest source of

inventory shrinkage. While it is difficult to predict human

behavior, we cannot afford to ignore it. Therefore, it

would be prudent to avoid relying on intuitive feelings to

assess a potential applicant.

We need solid information to make sound hiring decisions. Quality background screening can help uncover the histories and traits of workers so organizations can make better employment-related decisions.

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THE CRITICAL CONNECTION BETWEEN HUMAN CAPITAL, RISK MANAGEMENT, AND EMPLOYMENT SCREENING

One only needs to read the latest

news to find stories about what

happens when human capital risk

rears its ugly head:

Neglecting to background check an oil spill cleanup worker meant a sex offender got a job, and later was accused of raping a colleague: read about it

A school board in Illinois was embarrassed to learn that one of its board members was discovered to have a DUI on his driving record. read about it

Bausch & Lomb CEO, Ronald Zarrella, falsely claimed an MBA from New York University’s Stern School of Business. He did attend the program, but never earned his MBA. His claim was never checked by his prior employers.

Examples like these go on and on…

So how do you address the risks your employees bring to

the table, while at the same time respecting the fact that

your employees are the single most important factor in your

success and should therefore be treated fairly? Knowing your

risks is only half the battle. But an important half nonetheless.

In the real world, organizations do have humans engaged in

many complex ways to achieve common purposes. Inevitably,

their interactions within the organization and between it and

external entities create risks of different types, including risks

not directly caused by the formal function or purpose of the

organization. These human-generated risks create liabilities

or expose the organization to losses of capital, reputation, or

market share.

We sometimes ignore human factor risks in Enterprise

Risk Management (ERM) because they don’t seem to be

part of the standard economic analysis of a firm. However,

it’s important to highlight how managers can use

specific background screening tactics to mitigate

risks due to human action within a strategic ERM

framework.

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THE CRITICAL CONNECTION BETWEEN HUMAN CAPITAL, RISK MANAGEMENT, AND EMPLOYMENT SCREENING

One only needs to read the latest

news to find stories about what

happens when human capital risk

rears its ugly head:

Neglecting to background check an oil spill cleanup worker meant a sex offender got a job, and later was accused of raping a colleague: read about it

A school board in Illinois was embarrassed to learn that one of its board members was discovered to have a DUI on his driving record. read about it

Bausch & Lomb CEO, Ronald Zarrella, falsely claimed an MBA from New York University’s Stern School of Business. He did attend the program, but never earned his MBA. His claim was never checked by his prior employers.

Examples like these go on and on…

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5 CLASSES OF HUMAN CAPITAL RISK, MITIGATED THROUGH EMPLOYMENT SCREENING

Organizations strive to manage risk in their own

organizations by looking in some detail at five important

classes of employee-related risk:

1. Occupational fraud

2. Employee profile changes

3. Employee turnover

4. Catastrophic workplace events

5. Negligent hiring and retention

Each of these risks occurs in a very wide array of

organizations. Each of them may have numerous causes

or consequences, or legal implications. What they have

in common is that they can be mitigated by carefully

managing the human resources of the organization.

1. Occupational Fraud: It Can Happen to YouOccupational fraud is the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.

Fraud is a “hidden” risk because you will not know about

it until after the crime is revealed, and this may tempt you

into thinking it is not a risk to your organization. Recent

research published in the ACFE Report to the Nation

should quickly dispel any complacency toward fraud risk

management. This report estimates that 5% of top line

revenue is lost to fraud in any given year. According to

2014 statistics this translates to a potential global fraud

loss of nearly 3.7 trillion. Fraud occurs in all types of

organizations and at all levels, with losses per incidence

higher among the managers and owners, many of whom

have been long term employees.

Background screening is an important part of a

comprehensive fraud prevention strategy. Typically, it is

used for initial hires since criminal background checks

compliant with civil rights regulations will help identify

applicants with previous fraud convictions or criminal

behavior relevant to the job in question.

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3. Employee Turnover: Inadvertent Risk RenewalTurnover is an unavoidable cost in almost every business. The U.S. Bureau of Labors Statistics (BLS) reports the average turnover is 3.3% per month, with slightly lower rates during the steep recession.

For the purpose of this discussion, turnover is defined as

the need to fill a vacated position for any reason. When

this happens, there is a new hire to acquire with all the

attendant risks always faced in hiring. In a “normal”

business cycle with steady growth, the risks from turnover

can be addressed routinely.

However, there are times when turnover itself can pose

additional or unusual risks. For instance, in seasonal

hiring, many more independent hiring decisions occur

in a short time that may expose the “bad apple” in the

barrel. In short, when there is a shortage of supply in an

occupational category, increasing the demand for each

applicant, there can be a tendency to hire less qualified

applicants or to hire out of desperation, causing decisions

to be made in haste.

2. Employee Profile ChangesFor both personal and professional reasons, employees

can change on the job in important ways. If an employee

is promoted to a new role with significantly different

responsibilities, the employer should conduct a new

background check. For example, a change in supervisory

roles within vendor payment processes will provide an

opportunity to review an internal applicant’s training and

experience for the new level, since the applicant’s original

background screening may not have included a search for

information directly relevant to the new position.

Even in cases where an employee’s role has not changed within the organization it can be wise to perform regular background screening to verify such factors as maintenance of professional licensing, maintenance of acceptable driving records (for positions that involve driving), drug use, and criminal histories.

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One of the most predictable elements of a catastrophe

is the strong possibility of litigation in the aftermath. The

potential damage from these events can be staggering to

people, brands, and profits, justifying risk mitigation even

when the events have very low probability of occurrence.

You don’t need a Hurricane Sandy to experience a

catastrophe. OSHA reports federal and state summaries

with three or more fatalities or hospitalizations. To put

this into perspective, the fertilizer plant explosion in West,

Texas killed “only” two workers, and would not have

qualified as a disaster even if the twelve first responders

who died had not sacrificed themselves. Does anyone

think West was not a catastrophe?

Bureau of Labor Statistics data for 2013 shows

Every single one of these events can be a legal

catastrophe in addition to the human suffering as a result

of the event itself.

Your employment screening program can be adjusted to

mitigate turnover-induced risks:

Take advantage of repetitive hiring for specific positions by analyzing your employee performance data to ensure the screening process is more targeted and more efficient.

In competitive markets, use background screening to help identify replacement candidates within your workforce, especially if they are in positions that are marginally easier to fill.

Boost the number of applicants you screen if

possible. Work to find those “good apples.”

4. Catastrophic Workplace EventsIn the workplace, we refer to catastrophes as violence, terrorism, natural disasters, health epidemics, accidents, and any other unplanned event that significantly disrupts the organization or one of its subunits.

The many types of catastrophic events suggest that a

business-specific catastrophe risk analysis is an important

part of ERM, where industry, occupational types, location,

weather, and other factors will inform the analysis.

1,162,210

nonfatal injuries and

illnesses in private

industry, with 4,405

fatalities and 397

homicides.

For another view, OSHA

reports over

3,000 workplace homicides

for the years 2006-2010,

and about 15,000 injury

cases per year.

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Employment screening is not a panacea but it can help

mitigate risk from catastrophic events. Performing

employment background screening correctly:

Helps prevent workplace violence and promotes a more productive workplace culture.

Helps to verify key qualifications and characteristics that may improve the chances of an employee performing well on the job.

Prepares your organization for the likelihood of a litigious aftermath of a catastrophic event.

5. Negligent Hiring and Retention Negligent hiring and retention (including negligent supervision and training) are a trial lawyer’s dream. Based on standards of common law and extensive case law, lawyers have managed to satisfy judgments against employers in almost every state.

In fact, most estimates indicate about 75% of cases are

decided against the employer, with settlements often into

seven figures.

The ‘negligence’ in this body of law is due to the fact that

(1) the employer has a duty to perform according to a

certain standard, (2) the employer has failed to conform

to the standard, and (3) the claimant was injured by the

employer’s failure. The standards in question will vary from

case to case but the claimant’s attorney will work hard

to show that the employer failed his duty in a way that

caused harm.

A key to an employer’s defense is to be able to show that

he or she has tried to conform to standards in order to

minimize the risk to others. While many elements of a risk

management strategy may come into play here, the fact

that hiring decisions are the focus of these cases makes

background screening an essential tactic. Background

screening can provide an effective defense against claims

of hiring negligence.

Background screening helps to mitigate the risks of negligent hiring and retention in two ways:

Screening helps to exclude risky applicants.

Screening for relevant factors helps provide an effective defense against charges of negligence.

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BETTER HIRING DECISIONS LEAD TO MORE EFFECTIVE RISK MANAGEMENT

Considering most risks start and end with people,

human capital risk is a significant part of the ERM puzzle.

Employment screening offers an objective approach

to help manage the risks associated with hiring and

retaining the people in your organization. Rather than

relying on a “gut feeling” or what’s printed on an

applicant’s resume, employment screening gives you

clear methods by which to verify stated facts and check

the background of a prospective or current employee.

When you make better hiring decisions, you can better mitigate the human capital and hiring-related risks that impact your organization. It’s a win-win.

24

CONCLUSION

“If you have the wrong people on the bus, nothing else matters.” JIM COLLINS, GOOD TO GREAT

Your employees will ultimately determine your success,

no matter how hard you work or how brilliant you are

personally.

We have written many times about the importance of

the “tone from the top.” Top management determines

the culture of the organization by its methods, its

commitment, and its example. This is true in hiring

the right people as it is in most other aspects of the

organization. If you, the employer, show a strong

positive attitude and a commitment to excellence the

chances are much better that your employees will follow

suit.

We have discussed in this ebook a number of the steps

you can take that affect your ability to hire the right

people. One of the most important things about these

steps is that they require your unwavering attention to

design and detail. This gives you a double benefit. First,

your hiring process will work efficiently to find, screen,

and select the best people available. And second, the

people you do hire will recognize the diligence you put

into the process, and they will reward you for it by acting

the same way.

Make Better Hiring DecisionsStart today with E-Authorize, the secure web-based employment screening system that puts the quality of your workforce and efficiency of your hiring processes first.

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