How Background Screening Saves Money

by Larry Jarvis | Nov. 19, 2012

Copyright (c) 2012 SafeGuard Background Screening, LLC

Statistics prove that organizations who implement a comprehensive background screening process enjoy greater morale and productivity, and see decreases in accidents, absenteeism, downtime, turnover, and theft.

Additionally, studies show that a company who just advertises the fact that they conduct pre-employment background checks and drug testing can eliminate up to 95% of the applicants who would potentially fail these tests. This translates to a higher quality level of the pool of applicants being interviewed, which decreases the potential for accidents, absenteeism, downtime, turnover, and theft - before the first penny has even been spent on a background check.

Consider these other factors:

Turnover. On average, in U.S. businesses, at least half of all new hires "don't work out." The U.S. Department of Labor estimates that the average cost of a bad hiring decision can equal 30% of the employee's potential earnings during the first year of employment. But that estimate is low-many submit that the number is closer to 100% for non-management personnel and 150% to 200% for management.

On-The-Job-Theft. The U.S. Chamber of Commerce estimates that theft by employees costs American companies $20 to $40 billion per year. U.S. consumers absorb this cost at the yearly rate of $400 per working adult. An employee is 15 times more likely than a nonemployee to steal from an employer.

Workplace Violence. According to the Workplace Violence Research Institute, On-the-job violence costs employers $36 billion each year, with the average award in a workplace violence lawsuit exceeding $1 million per case. Furthermore, a Pinkerton "Top Security Threats" survey showed that workplace violence is the foremost concern of corporate security directors at Fortune 1000 companies. Other top concerns include employee selection and screening concerns, fraud and white-collar crime, theft, drugs and alcohol in the workplace, and unethical business practices.

Substance Abuse. An estimated 14.8 million Americans are current illicit drug users. The Substance Abuse and Mental Health How Background Screening Saves MoneyAdministration reported that 77 percent of illicit drug users in the United States are employed. That's 9.4 million people. The chances are good that your organization employs one of these workers.

-- Substance abuse causes accidents and injuries. Up to 40 percent of industrial fatalities and 47 percent of industrial injuries can be linked to alcohol use and alcoholism.
-- Substance abuse increases absenteeism and turnover. An estimated 500 million workdays are lost annually due to alcoholism.
-- Substance abuse increases an employer's medical costs. Employees who use drugs cost their employers about twice as much in medical claims as do non-drug-using employees.

While there is a cost to conducting a background checks, it pales in comparison to the costs associated with many of the examples listed above.

About Larry Jarvis

SafeGuard Background Screening, LLC is a leading pre-employment, employment, and tenant screening firm located in Beachwood, Ohio.

About Chia-Li Chien

Chia-Li Chien Chia-Li Chien, CFP®, CRPC, PMP; Chia-Li “like JOLLY!” Succession Strategies for Women Entrepreneurs. She is Chief Strategist of Value Growth Institute dedicated to helping private business owners increase the value of their firms. She is the award-winning author of Show Me The Money and faculty member of American Management Association. Her blog and newsletter was named a top small business resource by the New York Times “You’re the Boss” blog.
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