First and foremost, you should run background checks to help keep your clients, your employees and your business safe. Lack of background checks, or poorly done background checks, can lead to horrific crimes. The sad fact is that people rape, people murder, people steal. You don't want anyone to experience that, but you have a responsibility to protect your clients and your employees. Protection of your employees is imperative in any business. A 2005 survey found that 2.3% of all businesses experience some form of co-worker violence, ranging from .6% to 8.1% for businesses with up to 250 employees and up to 34.1% for businesses with 1000+ total employees. In addition, a 2006 survey discovered that 13% of all workplace fatalities were caused by assaults and violent acts. This includes homicides, which accounted for 9% of all workplace fatalities.
Another very important factor is protection of your customers. In an article appearing on bnet, the Journal of Business and Entrepreneurship, the author cited a case in which an unnamed company hired Jesse Rogers as a home healthcare aide without running a background check. Rogers, who had a number of larceny convictions, killed the 32-year-old quadriplegic and 77-year-old woman he was supposed to be caring for in an attempt to cover up additional thefts. Claiming that the failure to run a background check was negligence in hiring, the parents of the 32-year-old successfully sued the company for $26.5 million in 1999. Even aside from lawsuits, failure to complete background screenings can cost the company. According to the 2010 National Retail Security Survey, 45% of all retail shrinkage is due to employees - an annual price tag of about $15.9 billion. Moreover, the same study found that the average employee theft was over $960, while the average shoplifting incident was just $337.
In addition, a non-industry specific study released in late 2008 found that 24% of respondents saw a rise in employee theft following the economic downturn. Monetary repercussions can come through more circuitous routes as well. According to the book Freakonomics, an estimated 50% of the population lie on their resumes. In addition, according to available data, about 50% of all references checked in 2004 contained inaccurate information.
These cause monetary loss when your new employees cannot perform the services they claimed they could, or when the news breaks that your CEO never actually graduated college. The negative media attention hurts your company as well. All of these facts point to a distinct need for background screenings.
While we all wish we could trust in the basic goodness of humankind, background checks are a critical way to protect the many facets of your business that need to be protected.