17 Intriguing and Must-Know Outsourcing Statistics for 2024

What Does a Background Check Consist of? An In-Depth Look + Outsourcing Insights

As a business leader, you know that hiring the right people is critical to your company‘s success. A bad hire can cost you time, money, and even your reputation. That‘s why conducting thorough background checks on job candidates has become standard practice across industries. But what exactly do these investigations entail?

In this comprehensive guide, we‘ll break down the key components of a typical employment background check. We‘ll also explore the latest trends and statistics around outsourcing this important function. By the end, you‘ll have a clearer picture of how to approach background screening to build the best team while mitigating risks.

The Anatomy of a Background Check

A background check is a review of a person‘s commercial, criminal, and financial records. For employment purposes, the goal is to verify a candidate‘s qualifications and identify any red flags in their history. While the exact scope can vary, here are the most common elements:

  • Criminal records check: Searches county, state, and federal criminal databases for any arrests, charges, or convictions. Employers want to avoid hiring someone with a serious criminal past, especially for sensitive roles.

  • Employment verification: Confirms the candidate‘s past job titles, employment dates, and reasons for leaving. This helps ensure their resume is truthful.

  • Education verification: Similar to employment verification, this involves contacting past schools to confirm degrees earned and academic performance. Educational credentials are important for many professional roles.

  • Reference checks: Reaching out to a candidate‘s professional references to discuss their qualifications, work ethic, and personality. Offers valuable third-party insight to complement the interview.

  • Drug screening: Many industries also require candidates to pass a drug test, such as transportation, manufacturing, and healthcare. This is for workplace safety and liability reasons.

  • Credit check: For certain financial or executive roles, a credit history check may be warranted to gauge the candidate‘s level of responsibility. However, this is strictly regulated.

Other potential components include motor vehicle records checks, civil court searches, and even social media screening. The key is to tailor the background check to the specific job requirements and responsibilities. For example, a childcare worker would undergo a much more extensive criminal check than an accountant.

The Business of Background Checks

So why do companies invest so heavily in this process? Put simply, the risks of not doing proper due diligence are too high. According to a 2017 survey by HR.com:

  • 84% of employers found misrepresentations on a resume or job application
  • 77% uncovered an issue with a candidate‘s background during screening
  • 2 in 3 employers reported a bad hire due to lax screening practices

In the age of negligent hiring lawsuits and workplace violence incidents, you can‘t be too careful. Background checks are a critical risk mitigation tool. And the demand keeps growing – the global background screening market is projected to reach $7.64 billion by 2028, up from $4.95 billion in 2021.

The question is, who should conduct these investigations? More and more companies are turning to outsourcing.

The Case for Outsourcing Background Checks

Traditionally, the HR department would handle all aspects of a background check in-house. But as the scope and complexity has increased, it often makes sense to partner with a specialized provider. According to Professional Background Screening Association (PBSA) surveys:

  • 95% of employers conduct one or more types of background screening
  • 94% outsource to a background check company for some or all of the process

Outsourcing offers several key advantages:

  1. Expertise and technology: Background check providers have the latest databases, software, and compliance knowledge to conduct accurate, efficient screening. In-house HR staff may lack these specialized capabilities.

  2. Time savings: Screening can be a time-consuming process, especially for high-volume hiring. Outsourcing frees up your internal resources.

  3. Liability protection: By working with an accredited provider, you transfer some of the legal responsibilities around background checks. Reputable firms will have strict compliance procedures.

  4. Candidate experience: The top background check companies offer user-friendly online portals and timely, transparent communication to facilitate a positive candidate experience. Clunky in-house processes can deter quality applicants.

  5. Scalability: Partnering with an external provider allows you to easily ramp background screening up or down based on hiring needs. You‘re not constrained by internal bandwidth.

Of course, outsourcing isn‘t without risks. You are trusting a third-party with sensitive candidate information. It‘s critical to thoroughly vet providers and ensure they have robust data security and privacy practices. Costs can also add up, so look for transparent, flexible pricing models.

Choosing a Background Check Provider

If outsourcing sounds like the right path for your organization, the next step is finding the ideal provider. Here are some key criteria to look for:

  • PBSA accreditation: This voluntary accreditation demonstrates the provider‘s commitment to the highest professional standards. Only 5% of firms currently meet this bar.

  • Compliance expertise: Background checks are heavily regulated under the Fair Credit Reporting Act (FCRA), Equal Employment Opportunity Commission (EEOC) guidance, and an increasing patchwork of state and local laws. Choose a provider who is meticulous about compliance.

  • Customization and flexibility: Avoid a one-size-fits-all approach. The best providers tailor their screening packages to your specific needs and integrate with your existing HR tech stack.

  • Candidate consent and transparency: Background checks are a two-way street. Your provider should have clear protocols for obtaining candidate consent and handling disputes or inaccuracies.

  • Responsive service: You need a true partnership, not just a vendor. Look for dedicated account management, online chat support, and extensive self-service resources.

Some of the top background check companies include HireRight, Sterling, First Advantage, Checkr, and GoodHire. But there are hundreds of providers out there, from the big global players to smaller, specialized firms. The key is finding the right fit for your hiring goals, budget, and risk profile.

The Future of Background Screening

As we look ahead, several trends and issues are shaping the background check landscape:

Blockchain and digital credentials: Some experts predict that blockchain technology could revolutionize background screening. Candidates could have a secure, verified digital identity that streamlines the process. However, adoption is still in the early stages.

Continuous screening: With remote work on the rise, some employers are opting for continuous or periodic background checks to monitor current employees, not just new hires. While this can enhance security, it also raises privacy concerns.

"Fair chance" hiring laws: A growing number of states and localities have passed laws restricting when and how employers can inquire about criminal history. The goal is to reduce barriers to employment for qualified individuals with records. Employers must stay on top of these evolving regulations.

Data privacy: In an era of high-profile data breaches, background check firms are under pressure to protect sensitive candidate information. Expect continued focus on data privacy compliance, especially as laws like the California Consumer Privacy Act (CCPA) take effect.

Global screening: For companies with international operations, conducting background checks across borders is increasingly complex. Data protection rules like the EU‘s General Data Protection Regulation (GDPR) add another layer of compliance challenges.

While the background check process isn‘t always simple, it‘s an essential investment in your company‘s most important asset: your people. By understanding what goes into a comprehensive check, carefully weighing the pros and cons of outsourcing, and staying attuned to emerging best practices, you can make informed screening decisions. The result is not only a stronger workforce, but also a safer workplace and more trusted employer brand.