CASE STUDIES

THE IMPORTANCE OF EMPLOYMENT BACKGROUND CHECKING

People are often the greatest investment a company can make, yet many employers put their business at risk by not verifying the accuracy of a candidate's claims on their CV before making a hiring decision. 

Research has shown that up to 43% of resumes contain false information on academic qualifications and previous work history.  In a recent survey by KPMG, which looked at all Australian business sectors, the incidence of fraud has doubled in the last two years.  Out of the 475 companies surveyed, 47% had experienced at least one fraud case in the two year period covering 2004 to 2006.  The average value of the fraud was $714,000 but eight companies reported cases where the value exceeded $4 million.  Furthermore, 14% of employees had a history of dishonesty with previous employers.  The Australian Institute of Criminology estimates the cost of fraudulent behaviour in Australia amounts to a staggering $5.88 billion a year.

Many employers continually rely on the good faith of their candidates and business associates and accept copies of resumes, certificates and letters as sufficient documentation to support their claims, despite the risk that some or all of the documentation may be falsified or untrue.

Damage to an organisation caused by failing to undertake employment background checks validate has come in many forms in recent years, consider the following:

	Industry/community reputation;
	Decreasing share price;
	Statutory non-compliance resulting in litigation;
	Negligent hiring litigation;
	Embezzlement of company/client funds;
	Mis-use of confidential information;
	Disruptive and dangerous staff;
	Theft of goods and equipment;
	Low employee morale/productivity/workplace culture; and
	Terrorist threats.

Employment background checks will reduce the risks to a business associated with hiring or working with deceptive, incompetent or inexperienced individuals.