The Vital Role of Employment Screening in Human Capital Risk Management

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Does your risk management plan look at the risks involved in the hiring process? Your workforce is your human capital. Its value is based on how well it contributes to your productivity and profit, but also on the risks it imposes that may have significant costs when something goes wrong.

Background screening that takes the organization’s risk profile into account is a vital part of managing human capital risk. The process has to begin with a risk assessment of each role focusing on the responsibilities and authority of the position, and its access to valuable assets (including financial and legal compliance, reputational, brand, customer, and supply chain partner assets). The framework created in doing this work is an invaluable foundation for creating job descriptions, as well as the basic risk profile of the organization’s human capital.

The resulting role-related job descriptions, which include a risk dimension, determine the types of background checks you’ll use in your hiring process. Thus, hiring for a position that has significant customer contact may require different kinds of research than for a job stocking shelves in a warehouse. Obviously, the higher the position and the greater the authority, the greater the potential costs of a hiring failure, and the more the background screening must dig into past behaviors and performance.

Some of the risk-related functions of background screening include:

Verifying that your applicant’s claims about experience, education, and accomplishments are accurate.

There is abundance of anecdotal data that people use to “stretch” resumes, or even commit outright frauds in order to gain a step up in competition for a job. In a few spectacular cases, a bad hire has damaged an organization almost beyond repair. But even at a lower level, a hire who is not really qualified for a position can reduce the organization’s performance.

Demonstrating due diligence in the hiring process.

Negligent hiring and retention are commonly found in lawsuits against organizations that have suffered a major failure. Background screening can help to mitigate this risk when it is deep and focused enough to demonstrate an effort to control the risk.

Helping to create a safer and more productive workplace environment.

Workplace violence and other pathologies can be reduced by background screening that incorporates the risk factors leading to these outcomes. Some of these issues are character related, while others might be mitigated with an appropriate criminal background check.

Improving your organization’s ability to keep good employees.

A good background screening program can help to identify the candidates who are the best fits for a job. Over time, the resulting workforce should include people who are successful and happy with their job roles, and they will be more likely to stay in them.

Reducing outright organizational fraud.

There are many reasons people commit fraud, and some of these are subject to background research. Past behavior is an important element in predicting future actions, but even the most seemingly well-adjusted employee can sink into fraud. Being alert to background issues like financial stress and personal distress can help prevent organizational frauds.

Employment screening works in two dimensions. The first, obvious one is to find and select candidates most likely to perform at a high level. The second is to help mitigate common human capital risks that exist in almost any pool of applicants or employees.

Is your background screening program successfully contributing to your overall enterprise risk management plan?

About Michael Gaul

A security industry professional since 1988, Michael has extensive expertise in the fields of human capital risk management, physical security, and background screening process management. Michael leads Proforma’s sales, marketing, and strategic customer relations efforts.
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