The Why and How of Background Checks:
What Savvy Executives Must Know

by Shawn Rucks

Today, the necessity of background checks is a stand-alone fact. Who among us wishes to incur the expenses of high employee turnover, workforce violence, and criminal activity from non-existent background checks? Which C-level executive wants to miss opportunities to make the correct hires due to slow background checks, and who desires lawsuits resulting from inaccurate background checks and data theft?

While background checks are indeed necessary, they must be done both quickly and accurately to be of optimal use and maximum value to executives and their companies. Today, while many employers are making employment screening a priority, knowledge of the background check process is marginal compared to the prevalence of its use. Although the structure of the background check process and how it works may seem insignificant to the end user, such knowledge can affirm the quality of background checks you receive.

This overview of the background check process is intended to raise your awareness as to which vendors and researchers are involved, simultaneously exhibiting whether the data sources accessed are relevant to your inquiries. Maintaining an awareness of the status of the background check industry and its inner working will allow your HR department to remain abreast of developments, so that they--and you--ultimately possess the knowledge you require to make or suggest improvements.

What is a background check?

A background check is a view into a person's past which includes histories on several behavioral domains, such as criminal, civil, social security, and employment history. First and foremost, background checks are essential to preventing negligent hiring liabilities. In 2004, Info Link Screening Services reported that 8.4% of prospective employees failed to reveal their criminal history. This seemingly small percentage belies a large risk factor to employers, as those who fail to perform a background check on employees involved in any wrongdoing will ultimately be held accountable for the ensuing consequences.

While employers understand the significance of background checks, many are hesitant to implement a background check policy or are dissatisfied with the status quo, due to the perceived (and sometimes real) inconveniences of the process. Such inconveniences manifest themselves in the inability of background checks to consistently provide accurate, cost-effective, and timely reports. So the question is this: Why do these problems exist? An overview of the complexities of the process will reveal why such inefficiencies arise.

The Current Delivery System

The process of ensuring that the most productive and qualified applicant is hired begins in HR, with the consent of an applicant. There are three resources available to HR to perform a background check:

  • Consumer Reporting Agency (CRA) - also known as a background check company, these are private agencies comprised of individuals who specialize in the retrieval of specific background check information such as credit history, social security number trace, criminal background search, motor vehicle information, prior employment tracking, etc. These agencies are the primary resource for delivering a background check.

  • Human Resources Management System (HRMS) - is an interactive filing cabinet for HR. It is a software application that aggregates human resource functions such as payroll, compliance, salary, performance analysis and review. Additionally an HRMS must contract with a CRA to perform a background check.

  • Applicant Tracking System (ATS) - is a software application aimed at assisting HR recruit employees more efficiently. Like an HRMS, an ATS must work in conjunction with a CRA to perform a background check.

Depending on the type of background check needed, HR will either work directly with the CRA, or indirectly through an HRMS and ATS. In the cases when HR works through an HRMS or ATS, the process by which the information flows is more automated.

Whether directly or indirectly used, the CRA is an integral part of the background check process. Only with the help of a CRA can HR, HRMS, and ATS access the information needed to complete a background check. CRAs' possess many options as to where and how they retrieve information. There are four main sources by which a CRA can extract data:

  • Researcher- This is an individual who gathers specific information on an applicant from a specific information source. This individual may be a private contractor or an employee of a screening company. Example: This could be a criminal court records retriever who physically gathers criminal data from a county court house.

  • Specialized Vendors - These are companies that specialize in collecting and reselling a specific type of information to screening companies, i.e., employment history, data.

  • Online Criminal Database - This is an aggregation of criminal data from instantly accessible sources, such as a courthouse.

  • Data Aggregator - A data aggregator compiles information from suppliers that maintain databases and/or maintain gateways to information, including credit bureaus and local, state, and federal governments.

Once the information is extracted by a source, it is then sent back to the consumer reporting agency (CRA). The process by which the information is transferred to the CRA is often very tedious. Whether it is via facsimile, email, or regular mail, multiple transactions will likely occur. This leads to longer turnaround time and a waste of resources. One by one, as each source's information arrives at the CRA, it is oftentimes manually filtered, organized, and compiled into a report. Depending on the location to which the CRA is sending the report, either directly to HR or indirectly through an HRMS or ATS, it must be converted into a format compatible for transmission.

This lack of process integration contributes to longer turnaround time, increased opportunity for error, and increased operating costs. Obstacles arise when the process from report request to fulfillment is not integrated and standardized. These inherent complexities of the information flow often times leads to a less accurate background check which can increase HR's liability.

The fact is, the current delivery system is inaccurate as well as costly in terms of time and money. What, then, can you do to ensure fast, accurate, data-safe service for background checks?

Consideration for the future

In a world of abundant technology, when obstacles arise, there is an effort made to rectify the situation and provide a progressive solution. Due to the increasing importance of HRMS and ATS, the technology solution is automated data exchange. Automation will become the standard by which the framework of the background check delivery system is based. CRAs' are in the process of connecting to these systems to automate data exchange and reduce HR costs. Presently, the HR-XML consortium represents an important step towards enabling these connections. The HR-XML consortium is a non-profit and independent organization that is already established in twenty-two countries. It provides a variety of HR solutions to improve automation the background check process. Most importantly, HR-XML is a standard for the data exchange between clients and vendors despite the varying technology used within the industry. Tomorrow's HR will be able to work within a seamlessly integrated and standardized system allowing information. These systems will decrease operating costs and turnaround time while increasing accuracy and return on investment (ROI).

Conclusion: The recipe for success

Within the HR industry, background checks have become essential due to an increase in the demand for a safer work environment. To protect against negligent hiring, HR must take the extra step and implement background checks for their own security. As you can see, there are weaknesses in the background check system, but there are also developments aimed at improving the process. HR-XML integration to HRMS and ATS, along with background check company automation, is just the beginning of a new era of technology that can be leveraged to make your company safer and your HR more effective.


About Shawn Rucks and deverus, Inc.

deverus is the background check logistics company that creates and delivers the technology to quickly consolidate background check information, and to manage business operations for their clients. Shawn Rucks, President and CEO, launched the Austin-based firm in 1998, having already founded e-screening.com, an employment screening company he subsequently sold to APSSI. As the only background check logistics provider to begin as a background check company itself, deverus provides the right information fast for background checks.

deverus' customers are background check providers and researchers serving a variety of industries concerned with making the right hiring decisions quickly. deverus' technology is thus directly and indirectly involved in helping human resource company decision-makers, human resource management systems, and applicant tracking systems. deverus makes the background check process better. For additional information, please visit: www.deverus.com .

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Copyright 2005 by Shawn Rucks. All rights reserved.

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