One of the most common arguments we hear against background and reference checking is that it is “too expensive.” This is a fallacy and a potentially dangerous attitude. In reality, background checks can be the difference between making an excellent hire, and making a poor hiring decision.
The experts at Barada Associates created this blog post to show the costs associated with making a bad hiring decision.
How Much Can Making a Bad Hire Cost Your Company?
Making a bad hire is likely to lead to high job turnover. Replacing an employee can cost a company from 50%-200% of the employee’s salary. For example, replacing an employee that makes $50,000/year can cost a company anywhere from $25,000-$100,000 to replace. This is due to the costs of benefits, recruiting, training, salary, and more. Additionally, you’ll also be stuck with the sunk costs associated with hiring the bad hire.
Employee Theft or Fraud
Making a bad hire can leave your business prone to theft or fraud. This is a serious issue that can have long-lasting negative effects on your company. In fact, around 30% of all business failures result from theft or embezzlement. Having a background check performed before making a hiring decision can help to protect your company.
Drug and Alcohol Use
Bad hires are far more likely to abuse drugs and alcohol. It’s estimated that substances like drugs and alcohol cost employers roughly $81 billion per year. Drug and alcohol testing can ensure that your employees are clear of any drug or alcohol abuse.
Cases of negligent hiring can cost companies hundreds of thousands of dollars. In fact, the average negligent hiring case settlement is around $1 million. With the right background checking systems in place, you can steer clear of negligent hiring.
How Much Do Background Checks Cost?
Performing a background check on all potential employees can help to significantly lower your risk of making a bad hire. Depending on the depth and the goal of a background check, it could cost anywhere from $10 to $500 to perform a background check. Therefore, the real question has to be, “Can an employer afford not to perform background and reference checks, as well as drug screens, on employment candidates?”
At the end of the day, the cost of having a background check performed is nowhere near the cost of a bad hiring decision. We recommend that hiring managers mention in the job description that a background check will be part of the hiring process. This will help companies identify the best candidates.
Contact Barada Associates for Background Checking Services
Background checking services from Barada Associates can be the difference between making a good or bad hire. Protect your company and your existing employees by performing background checks on any potential employees. Contact us today to learn more about any of our background checking services, or to request a quote online.