A $138,350 Mistake. Why We Do Background Checks, and Why We Sometimes Cost More

Often, when I am talking to clients I am asked "why are your rates, or fees higher than some of your competitors?" While I have numerous responses to that question, a recent court decision came to my attention that will provide me with another answer to this question in the future.

As I read through the case, it became clear to me that the various background checks that we conduct on all of our candidates, along with the extensive skills, and personality assessments we perform are critical to our success. Do they costs me more money? Sure. Do they then lead to some price differences with my competitors? Absolutely. More importantly, do they help me provide better candidates and reduce mine, and my clients risks? You bet!!!

To summarize the case, a national staffing firm was contacted by a prospective client to supply a secretary / bookkeeper on a temp to hire basis. The staffing firm supplied an employee, but formal background checks were not part of their normal procedures. They failed to determine that the candidate they supplied, and whom the client eventually hired, had been previously convicted of felony fraud. NOTE - I WOULD SAY THAT THIS IS RELEVANT FOR A BOOKKEEPING POSITION - NO?) The candidate did not check "felony", or "breach of trust" on their application to the staffing firm. (NOTE - A CANDIDATE NOT BEING TRUTHFUL ON AN APPLICATION? - THAT NEVER HAPPENS RIGHT?!?!). What really flabbergasted me was that this national staffing firm - come on they have more resources than my little company - stated that background checks were not a company policy or industry standard.

Well, it turns out that unfortunately the client lost the case due to background checks not being policy, among other things (I've provided a link to the decision below so you can read more). The damages listed in the case are reported at $138,350! A simple, and relatively inexpensive background check performed by the staffing company should have shown the felony conviction and either resulted in that candidate not being selected, or at the very least allowed the client company to impose strict monitoring and controls should they have chosen to hire the candidate.

At TriStarr Staffing we perform background checks on ALL candidates as part of our screening process. We also do a lot of other things that our competitors may not. Among other things, we ask for detailed job descriptions so the we know all the duties that the position requires, and we ask to meet with hiring manager to further identify what tasks and responsibilities are required of the position. Does this cost me more money? Yup. Does this lead to the prices for my services possibly being higher than my competitors? It may. Are my prices $138,350 higher than my competitors? Not to the best of my knowledge.

If you would like to read more specifics about the case they can be found here: http://bit.ly/9wX3mQ

Today, criminal background checks, skills assessments, personality and behavioral assessments are relatively easy and inexpensive to conduct. In my opinion, these services are part of what the clients of staffing service providers should come to expect. Shaving these costs in the name of price competition can be dangerous. I urge all hiring managers to think about and ask their staffing services provider what types of background checks they conduct. A couple of bucks saved during the hiring process could cost a lot of money later - in this case $138,350! Would you really want to have to explain that to your CEO, CFO, or shareholders?