November 13, 2008
In this tough economy hiring good employees who are both efficient and well-qualified can play a significant role in boosting an employer’s ROI. On the other hand, a bad hire can have a major impact on a company’s bottom line. It’s not uncommon for one poor hiring decision to result in hundreds of thousands of dollars in damage. Today, you’ll discover 4 ways in which employee screening and background checks can translate into a higher ROI.
#1 – Avoids Negligent Hiring Lawsuits
If one or more of your staff is injured at the hands of another employee, there may be grounds for a negligent hiring lawsuit. If an employer failed to properly screen the offending employee, that employer can be sued. Keep in mind that the average settlement for this type of lawsuit is over $1 million.
#2 – Minimizes Employee Turnover
Hiring and training a new employee is expensive. If an employer discovers that the employee has a substance abuse problem, criminal record, or history of violence, there may be a need to replace that person. By conducting pre-employment background checks, employers can avoid bad hires, reducing employee turnover costs in the process.
#3 – Increases Staff Productivity
Along with reducing staff turnover, hiring competent employees increases your staff’s overall productivity. There’s less likelihood of a disruption in the workplace caused by a bad hire. Plus, by limiting turnover, an employer can allocate fewer resources to redundant training.
#4 – Reduces Employee Theft
A bad hire is more likely to commit theft in the workplace. Even small, seemingly benign incidents (for example, stealing a box of pens) can signal the beginning of a habit. Eventually, the employee may begin pilfering valuable assets. Employers can limit employee theft by thoroughly screening applicants before hiring them.
Protecting The Bottom Line
A company’s bottom line involves more than merely revenues and the costs of doing business. Hiring a bad employee can have a devastating effect on an employer’s profitability. Negligent hiring lawsuits, employee turnover, low staff productivity, and employee theft can each have a significant impact. By performing comprehensive background checks and conducting pre-employment screening, employers can protect their staff while boosting their ROI.
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Photo Credit: AMagill
October 31, 2008
In case you missed any of our employee screening articles for October, here’s a quick recap:
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September 29, 2008
According to the 2007 National Retail Federation survey, retailers lost 41.6 billion dollars to theft and fraud. The majority of retail shrinkage last year was due to employee theft, at $19.5 billion, which represented almost half of the losses (47%).
While large corporations can usually weather the financial impact of employee embezzlement, the problem hits smaller organizations much harder. In many cases, business owners have lost their life savings to a bad hire. Even medium-sized companies can falter under the impact. Below, I’ll describe 4 ways in which an employee can steal from you. Then, I’ll explain the best way to prevent it from happening to your business.
#1 – Inflated Expense Accounts
Expense accounts are important for a variety of businesses. However, left unchecked, an employee can easily fabricate expenses, claiming reimbursement for money that was never spent.
#2 – Tampered Payroll
Payroll fraud is more prevalent than many employers realize. A bad hire may add ghost employees to the payroll, claim wages that are unearned or unauthorized, or even steal and cash blank payroll checks.
#3 – Fraudulent Billing Schemes
A lot of organizations work with vendors, yet have no formal process by which purchase orders are reviewed and approved. Employees can easily establish fictitious vendor accounts, diverting payments to a P.O. box.
#4 – Register Theft
Businesses that operate in a retail setting can be victimized by an embezzling employee who steals directly from the register. In simple cases, the employee collects money from a legitimate customer for a purchase, but instead of ringing the sale, the employee pockets the cash. It can go much further, including falsifying refunds, voids and taking advantage of customers’ credit cards.
How To Prevent Employee Embezzlement
A major portion of employee embezzlement can be prevented. Employers must maintain a strict employee screening process and perform thorough background checks on job candidates. While uncovering past incidents of theft or misappropriation of funds can be difficult, the profiles of bad hires who are likely to commit fraud are often similar. The worst thing an organization can do is neglect the importance of screening applicants and doing comprehensive background checks.
Eliminating bad hires from the applicant pool can save your company the headache of dealing with theft, fraud and embezzlement.