Every company understands that employee turnover is a cost of doing business. However, many companies don’t fully understand how effective background screening can help mitigate these costs. An effective screening program reveals information that helps your company avoid a lot of future problems, such as absenteeism, bad performance, workplace violence, fraudulent workers compensation claims, and more.
Background screening gathers information that allows hiring managers to thoroughly assess a job candidate, helping them make informed hiring decisions. Through making the right hiring decision the first time, employers can avoid the considerable impact of turnover.
Employee Turnover Has Both Hard Costs and Indirect Costs
A study from the Center for American Progress states that the cost to replace a bad hire is approximately 20% of an employee’s salary. This cost is factored through examining how
companies experience a productivity loss when someone leaves, pay for hiring and training new workers, and have slower productivity until a new employee gets up to speed. For the average worker, this cost can range between $6,000–$15,000.
Aside from hard costs, turnover creates other negative impacts that affects the bottom line of a business. If a bad hire was influential with your staff, replacing them could be demoralizing for current employees, leading to weaker production. A sudden departure could also act as a red flag and encourage other employees to leave the company. Finally, a sudden loss of an employee creates a burden for other employees and teams that relied on that individual. These challenges are exacerbated in high impact positions, where the new hire commands a greater salary and has more influence in your company.
Background Screening Evaluates Candidates
To reduce the impact of turnover, background screenings are a sound business practice. There are many types of background screenings that allow you to uncover specific information about a candidate:
● Employment and Education Verification. An 2017 article from Inc. Magazine noted that 85% of employers caught lies on resumes or applications, which was a sharp increase from 66% of employers five years ago. Conducting an employment and education verification will allow you to screen out unqualified workers.
● Professional License Verification. If an unlicensed or uncertified worker has an incident, it could endanger lives and place your company in danger of costly lawsuits. Through confirming a candidate’s licenses and credentials, you may avoid workplace injuries, compensation claims, and the hassle of having to rehire.
● Criminal Records and National Sex Offender Registry. You have a responsibility to protect the safety of your existing employees and clients and it starts with making safe hiring choices. Hiring the right people can help mitigate the high costs of theft, violence, and other dangerous behavior.
● Drug and Alcohol Screening. It’s well-documented that drug and alcohol abuse exacts a heavy cost in the workplace. The National Institute of Drug Abuse (NIDA) reports that annually, the average cost of drug abuse per employee is $10,000 because of turnover, absenteeism, Workers Compensation claims, theft, violence, and use of health care benefits.
Avoid Rehiring Expenses—Make the Right Choice with Background Screenings
Correctly implemented background screenings will mitigate your risk and reduce turnover in your workplace. Because of the considerable costs of turnover, both in hard and indirect costs, background screenings are one of the best investments that a company can make.
If you’d like to reduce turnover in your company through a comprehensive approach to background screening, click here to learn how Verified First can improve your recruiting process.