What is Background Screening & Why is It Important for Hiring?

People are the most important asset in any business. They work so a company can run and soar to new heights. Thus, it becomes extremely crucial for HR teams to look for employees who are not only proficient in what they do but also meet the company’s requirements in the best way possible.

This is exactly why they indulge in background screening – a verification process to corroborate the identity, credentials, and work history of prospective candidates. For one bad hiring choice on their part can result in unprecedented financial losses, frauds, legal liabilities, and a toxic work environment for the company in question, with no going back.

Read on to get a comprehensive understanding of what background screening software actually does and what makes it so important in the realm of hiring…

What is Background Screening?

Background screening, in layman’s terms, is when companies conduct a thorough verification of their job candidates’ personal, professional, and criminal history before recruiting them. This is done to make certain that all the claims made by an applicant are true and their hiring isn’t going to hinder the functioning of a company in any way.

The verification process typically involves checking…

Identity & personal details
Employment history
Education credentials
Criminal records
Credit history
Reference checks

Though how hiring is done varies from company to company, background checking continues to be at its core to ensure safety and compliance with recruitment laws and regulations.

Checkr

4.5

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$ 30.00

Why is Background Screening Important for Hiring?

As already established, companies that hire without proper screening run the risk of getting legally and ethically robbed. To prevent themselves from landing in such situations thus, they must perform background screening. There are, in fact, a host of other reasons that necessitate it. Some of them are listed below for your convenience…

1. Ensuring Workplace Safety

An organisation must keep its employees and customers safe at all times. Individuals with criminal records, such as swindling, substance abuse, sexual offenses and more, if hired, can obstruct that from happening and make the work environ unsafe for all.

This especially holds true for companies operating in healthcare, education, and finance-related domains. Workplace safety thus is the most important thing that background checking lays foundation for.

For instance, if, as an HR executive in a healthcare firm, you mistakenly recruit a quack or a criminally charged medical professional, you expose your patients and employees to a host of risks. Your patients might even end up losing their lives at their hands.

The same goes for those working in an educational institute. If the teachers hired aren’t skilled enough or have a past record of committing heinous crimes against children, your students would have to pay for your choices, necessitating background checks.

2. Reducing Employee Fraud & Theft

As per a PwC report, Indian organizations lost an estimated 59% of their annual revenue to economic frauds in 2024. A major portion of these losses was attributed to frauds committed by employees; frauds such as swindling, identity theft, and financial mismanagement. Background screening thus is essential for companies to identify bad hires and evade financial risks.

If a company, for instance, is hiring someone to manage their finances, it is crucial for them to conduct a background check on the individual in question, so any past bankruptcies or fraud-related offenses come to light before it gets too late.

GoodHire

4.2

Starting Price

$ 29.99

3. Verifying Credentials & Preventing Resume Fraud

It is a common practice for people to exaggerate their qualifications, both educational and professional, in their resumes. This, so they can get into job roles they aren’t qualified for and fraudulently get paid for it. While some attach fake degrees, others jot down erroneous employment histories to attain the same.

As per a CareerBuilder report from 2023, around 75% of hiring managers have come across people lying on their resumes, shedding light on the significance of background screening. For only by scrutinizing listed qualification claims can companies determine an applicant’s legitimacy whilst recruiting.

4. Enhancing Regulatory Compliance

Companies operating in finance, healthcare, government, and transportation sectors are required to comply with a host of recruitment laws and regulations. Owing to the very same reason, they need to conduct elaborate background checks on their prospects whilst hiring. In case, they fail to do the needful, they are bound to face major legal, financial, and social consequences.

This highlights the importance of background verification when it comes to fulfilling regulatory compliance.

5. Lowering Employee Turnover Rates

If companies hire people without performing proper background screening, the probability of them hiring wrong people increases manifold. This further increases their turnover rates and overall recruitment costs. For finding replacements for bad hires is time-consuming and leads to additional costs for the company.

On the contrary, however, if companies conduct proper checks on their potential candidates, they can make sound hiring decisions, optimizing their employee retention rate and overall standing in the market.

AuthBridge

4.5

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6. Protecting Company Reputation

A company with a bad reputation in the market can never attain success. This goes on to show how valuable maintaining reputation is for businesses. However, one bad hire, say, hiring someone with a history of crime, can destroy the same in seconds. Not just that, but it can also make your customers lose trust in your overall credibility.

If a company, for instance, hires someone with a past record of swindling to manage their finances, it will not only lead to monetary losses for them but also negative publicity. The latter would further cost them their investors and clients, leading to closure. Background screening can easily prevent the same from happening and shield their reputation in the market, if conducted properly that is.

Types of Background Screening Checks in Hiring

Companies perform a range of background checks on their prospects, depending on the industry they are operating in and role they are looking to fill. Some of their most common kinds are listed below for your understanding…

onfido

4.3

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Criminal Background Check: This check is performed to identify an employee’s past convictions, arrests, and minor breaches of law. These are necessary for companies looking to fill positions in finance, healthcare, law enforcement, and childcare.
Employment Verification: This check verifies an employee’s work history, responsibilities, and dates of employment to make certain they have the experience and skills they claim to possess.
Education Verification: This type of background screening is conducted to corroborate an employee’s educational degrees and certifications, so companies don’t end up hiring people with fake credentials.
Credit History Check: This screens an individual’s financial behaviour, including bankruptcies and fraud indicators. Companies planning to hire finance executives should conduct this check mandatorily.
Drug Testing: This test is performed to know if a potential candidate is into drugs or has a history of substance abuse that could put workplace safety at a major risk.
Reference Checks: This background check is all about contacting a candidate’s previous employers to know if they are reliable enough and work appropriately.
Social Media Screening: This screening is done to assess if an employee has a toxic online presence or has behaved inappropriately on social media handles.

How to Implement an Effective Background Screening Process?

If you are looking to optimize your company’s background screening process, here are some best practices that we swear by…

Determine which background screening is important for each job role
Do not perform background checks without informing the candidates about them in advance
Only make use of licensed background check agencies or software solutions to perform screening. This, is so you remain well within the ethical and legal guidelines.
Do not discriminate between candidates whilst screening them for roles, that is to say, you should apply the same background check standards to all the applicants.
If you happen to find something bad about a potential employee, make sure you inform them about it and give them a chance to explain.

OnGrid

4.2

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Conclusion

Background screening thus is an integral part of the hiring process and can lead to costly mistakes if left undone. The best part is, companies can make use of a host of screening software solutions which are equipped to do it in their stead, making recruitment more structured and compliant. Some popular tools that they can rely on in this regard are OnGrid, Checkr, GoodHire, AuthBridge, Onfido, etc.

You can also refer to our blog on Best Background Verification Software for Easy Onboarding to further evaluate your options in this respect. For investing in background screening is not just a healthy practice but also a necessity for companies looking to secure their workplace and make it best in the market!