The ideal candidate just left the interview room. You can’t wait to offer them a job. Do you go with your gut and let a couple of Google searches tell you about the person’s background, or do you run a compliant background check and verify your hunches? 

Even if a candidate looks perfect on paper and has managed to impress you with his eloquence in the interview, it’s crucial to ensure he is the right fit--gut instinct isn’t enough. Some job applicants could fabricate their credentials to help beef up their resumes. Others may not be bold enough to lie outright, yet their resumes may still be misleading.

Hiring the right candidate might just be the missing piece to a company's success. That said, a bad hire can have the opposite effect. The wrong pick may cost a company money and time while impacting morale among existing team members.

To help reduce the risk of making a bad hire, business owners and hiring managers should thoroughly vet prospective employees by conducting thorough background checks. 

 

Index What is a Background Check? Types of background checks Understanding the difference between background checks and reference checks When to Run Reference Checks? Conclusion FAQs

What is a Background Check? 

Background checks are a staple of most hiring processes. Running a background check gives important insights into the person being considered for employment and can help gauge whether a prospective employee is a good fit for the position and the organization. This empowers employees, allowing them to make informed hiring decisions. 

There are different types of background screenings available, and the right one for any business depends on the industry and the organization’s needs. 

Types of background checks 

It can be difficult to keep track of all of the different types of background checks that need to be run, particularly as they may vary based on the requirements of the job. Employers should always consider the specific needs and duties of a position when choosing which background checks to conduct. Here is an overview of the six most important types of background checks for employers to use.

1. Identity verification
   Identity verification is one of the more basic forms of background checks. The purpose of identity verification is to ensure that the candidate is who they say that they are and that the identifying information provided, such as their National Identity Card Number (NIC), is accurate. 
   
   This form of background check is typically conducted for legal compliance. Occasionally, candidates give fake identification, such as using someone else’s license or credentials, this can result in an employer hiring someone who doesn’t meet the regulatory requirements for that role.
   
   Moreover, identity verification also ensures employers get accurate results on the rest of their background checks. Suppose a potential candidate's full legal name, date of birth (DOB) and NIC is not verified before running a background check. In that case, an employer may receive incomplete or inaccurate results, such as a criminal record that actually belongs to someone with the same name but a different DOB.
   
   
2. Criminal Background Checks
   All employers should conduct a criminal background check, but it’s especially important for employers looking to fill roles that involve access to sensitive financial information, security responsibilities, and proximity to vulnerable populations, such as children or the elderly.
   
   Most savvy employers run criminal background checks as part of their hiring process. Furthermore, performing a criminal background check is crucial to avoid taking on unnecessary risks with a new hire. These employee background checks typically include county, state, and/or federal records of any arrests, convictions of misdemeanours and felonies, court records, warrants, incarceration records, acquitted charges, pending charges, and dismissed charges.
   
   And - as with any background check - a criminal background check must meet federal credit reporting FCRA regulations. Be sure to check local laws and the local government resources before running a criminal background check. 
   
   
3. MVR (Motor Vehicle Record) Checks
   According to OSHA, the average crash costs an employer $16,500. If an employee has an on-the-job car accident causing injury, it can cost an employer around $74,000. If a death occurs during an on-the-job car accident, the employer could be liable for around $500,000 in related costs!!! 
   
   Motor vehicle record (MVR) reports provide a record of the potential employee’s driving history. This is an important type of background check to run if a role requires driving. An MVR report will show information such as accidents, moving violations, license suspensions, and other notable incidents. It will also show information about the applicant’s driver’s license, such as its expiration date, and whether they’ve held a commercial driver’s license.
   
   Any employer who requires employees to drive company cars or transport clients or customers should check motor vehicle records to ensure they hire the safest, most responsible drivers. 
   
   
4. Credit background checks 
   Jobs requiring a security clearance, access to finances, and sensitive data from clients and the company frequently require a credit background check. A credit check would reveal any reported tax liens, debt issues, poor credit, and other money issues that suggest irresponsibility with money.
   
   Even if not hiring for a financial position, all employers should be concerned with a candidate’s financial responsibility. Issues with finances may indicate other ongoing problems or a general lack of maturity or trustworthiness. 
   
   It’s important to know that there are certain legalities associated with running credit checks during the pre-employment process. The Fair Credit Reporting Act (FCRA) regulates how employers may use the reports received. After running a credit check, if the hiring team decides not to move forward in hiring a candidate, they need to allow them to provide an explanation or to fix any background check misinformation on their report. 
   
   By getting the full picture of a candidate who will potentially handle company finances, employers may be more likely to find and hire a reliable, responsible employee.
   
   
5. Education verification 
   Education verification is a type of background check conducted by employers to verify a candidate’s educational record and qualifications, most likely checking for a high school diploma, undergraduate, or graduate degree to cross-reference the resume information provided. Candidates may exaggerate their education, breadth of experience, job responsibilities, or even their actual job title within their resume and cover letter, so it’s a good idea to verify the information they’ve reported is true. Some employers go a bit further and verify an applicant’s GPA and honours earned. 
   
   Employers can help mitigate the risk of hiring the wrong employee by using a thorough education background check to vet any new hires. Verification also helps spot diplomas from diploma or degree mills.
   
   
6. Social media background checks
   Social media background checks are a newer addition to the pre-employment background check lineup. A social media background check consists of a review of the prospective employee’s social media profiles and activity. Social media screenings are typically used to look for red flags in the candidate’s online activity such as hate speech or online bullying. 
   
   Inappropriate or offensive behaviour online, even on an employee’s accounts, can reflect poorly on the company and cause public relations issues. Such behaviour can also be an indicator that the individual may harass others in the workplace. For example, posting offensive commentary online can indicate that the candidate does not align with your company’s values and might make other employees feel unsafe in the workplace. Thus, a social media check can work in the favor of employers looking out for candidates who not only are diligent but also align with the company’s values and morals.

Understanding the difference between background checks and reference checks 

Background checks are great for gathering concrete data such as criminal history or employment verification. However, most hiring managers require more information to make the best hires, and this is where background checks fall short.

According to Inc. 89 percent of hires fail within the first 18 months as a result of low motivation or the inability to be coached. These attributes or tendencies will not come out in basic background checks. For gathering tangible information about a prospective candidate, which helps the hiring team recruit the best professionals, they need to run reference checks. 

A reference check is when a potential employer contacts people who can verify the candidate's skills, experience, anecdotal performance data, and even their personality and work ethics. References are provided by the prospective employee but typically include former bosses, colleagues, and professional mentors, depending on where that employee is in their career. Employers utilize this method to determine whether the candidate possesses the abilities listed on the resume and whether they are a good fit for the position.  

It's critical to understand the difference between these two diverse types of screening when recruiting candidates, also knowing when to use which check is crucial to hire well. 

When to Run Reference Checks? 

Reference checks should be pursued in the early stages of the hiring process, well before any red flags arise in an employee’s application. Time is valuable, and getting too far in the process with an employee only to discover they are not a good fit, after all, is a waste of time and resources.

Many organizations today enlist the help of screening services that make the background screening process less time-consuming. Those service providers can provide employers with aggregated data from those reference checks, including red flags and any information that may benefit from follow-up.

Conclusion

Both reference checks and background checks are part of a comprehensive screening process that allows for better employee hiring decisions. Checking references allows employers to dive deeper into aspects of a background screening process or ask questions that may not be clear from traditional background checks.

A full-service company like Check Xperts can help make sure that there are no missing steps in the employee onboarding process. We know the importance of following up on professional references and supporting companies in creating thorough screening processes that instil confidence in hiring procedures. 

Check Xperts can help create a customized screening process that will meet the organization’s needs and help companies run safely and efficiently. 

FAQs

1. Do companies check references before hiring?
    Yes, most companies conduct reference checks before finalizing a hire. This helps confirm the candidate's qualifications, interpersonal skills, and work history, providing insights that aren't covered by standard background checks.
   
   
2. Does my employment gap show up in the background check? 
   Yes, employment gaps can be revealed during a background check. This check compares your reported work history with records from previous employers, highlighting any periods of unemployment.
   
   
3. Can an employee refuse a background check? 
   Yes, an employee can refuse a background check, but this may affect their job prospects as it reveals that they have something to hide. Employers often require background checks as part of the hiring process, and refusing one could result in the withdrawal of a job offer.