Background Checks: Key Insights

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A successful business is reliant on employees who are dependable and come vetted from reliable sources regarding their past experience and general background. There are several steps associated with assessing the talent you are inviting into your business, and one of the initial, and typically most formal, steps is background checks.

What Are Background Checks?

Background checks are one or more verification checks that determine whether the candidate you are considering for a job has provided accurate data about themselves. Background checks are also associated with a candidate’s criminal record. They help an employer ensure that the candidate is safe to induct into the business and won’t be a legal risk to the business or a threat to other employees.

The scope of a background check can vary greatly from country to country and from one organization to the other, but it generally includes the following elements:

  • Identity check. This may or may not involve fingerprints and usually relies upon government-regulated tools.
  • Verification of educational history and credentials. This involves analyzing the educational credentials to verify they are legitimate. An employer may leverage relevant tools for this verification or reach out to the institute(s).
  • Verification of professional licenses. Most professional licenses across different domains, like nursing, aircraft maintenance license, etc., are valid for a specific period of time. Verifying whether the license a candidate claims to have is currently valid and will remain valid for an adequate amount of time is one of the types of background checks.
  • Validating former experience is another one of the background checks you may conduct. You can reach out to the former employer to verify that the candidate served in their company for the period specified in their resume and held the title they claim. You can also ask about any specific projects they worked on or the scope of their responsibilities.
  • Criminal background checks are another common check, but they may be limited by local government regulations. For example, In Germany, the rights of private employers are severely limited when it comes to background checks associated with their employees’ or candidates’ criminal records. They may only request a criminal check if they can claim a direct connection to the position/role a candidate may be applying for.
  • You may also run a credit check with a candidate’s or an employee’s express consent.

It’s imperative that you are aware of the labor laws and the employees’ rights to privacy before you run any background checks. Even then, a good practice would be to convey your intention to run a background check and to let them know that it can impact your decision to hire or reject them.

Why Are Background Checks Important?

Background checks help you “know your talent.” They supplement the technical evaluation you perform and give you the necessary information you need to ensure that the individuals you are hiring are the right fit for the role you might be hiring them for. If background checks reveal any inconsistencies and hints of deliberate concealment and false information, it’s a major red flag. Because even if an employee is technically competent and talented, they may end up being a liability to the organization.

A criminal history background check (where allowed) ensures that you are hiring law-abiding people that won’t be a threat to other employees, your business image, and your reputation. Hiring honest and “safe” candidates can lead to better employee morale and a good business image, which in turn results in more productivity and profitability.

It’s important to understand that there is no inherent harm in hiring people with criminal records, and it can be an important moral win for a business. Giving people a second chance to successfully reintegrate into society as productive members can actually lead to good things because these employees might be more driven and motivated. A background check simply gives you all the necessary facts so you can make an informed decision.

Background Checks and Expansion

A business can grow outside of its borders in multiple ways. If it is only your products and services that are global and you have no physical presence and no employees in another country, you don’t have to worry about background checks.

However, if you are expanding your business into another country, background checks could be an important part of your expansion strategy. The extent of how important it may be is determined by the type and direction of your expansion.

If you are opening a branch in a new country that’s operated directly by the head office in the business’s home country, the employees may be directly on your payroll. They will also be legal and reputational assets (or liability). So, background checks are a must to ensure that you are hiring the right people. You can outsource this part or the entire hiring process to the right expansion partner or a reputable local talent management service. Or if you are handling the entire process by yourself, you should become well-versed in the legal limits and methods of background checks in the country.

The approach may be slightly different if you are establishing a business entity in the country. As a locally based business, possibly with a local board member, you may have more rights when it comes to background checks. You can work with local talent management agencies or hire a few key players (managers, C-suite executives, HR professionals, etc.) from the local talent pool that you have identified to be the right fit for your business goals and leave it to them to devise an adequate approach to background checks that is in line with the local best practices.

An expansion that is focused only on the talent pool, i.e., hiring from a different country, would warrant a different approach to background checks. Since most such hiring is for limited projects and the talent is usually classified as a third-party contractor, the need for background checks might be limited.

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