what is an employment background check?

Have you ever read over an applicant’s resume and thought it sounded too good to be true? If so, you’re not alone. According to Monster’s Future of Work 2021 Outlook, nearly two-in-three employers believe that candidates embellish their true skills, attributes and credentials on their resume. Applicants also tend to omit negative information that may hinder their hiring potential.

One of the best tools your organisation can use to decipher facts from embellishment on the resume and detect any negative concerns are  comprehensive reference and background checks. While both types of pre-hire checks can help your organisation avoid a bad hire, this guide specifically discusses the value of background checks and why they are an important part of the recruitment process.

what is a background check for employment?

A background check is done to validate some of the information on an applicant’s resume, such as name, employment history, educational achievements and certifications. It’s also used to check the integrity of the applicant. For example, a criminal background check can let you know if the candidate has a criminal record, whereas a credit check can determine if the applicant has any financial struggles that could impact their employment.

It’s important to note that many countries have rules and regulations dictating what types of information you can and can’t collect on potential candidates. For example, many countries make it illegal for employers to obtain an applicant's medical records, except for very limited reasons. 

what is the difference between reference and background checks?

Background checks and reference checks are both used in the hiring process to gather more information about prospective candidates. In most cases, these checks are performed in the late stages of the recruitment process. In fact, these checks are often used to help employers decide between the top candidates or to verify facts on the resume before extending a job offer.

The main difference between a reference check and a background check is their purpose and the type of information obtained.

Background checks are typically used to verify information on the candidate’s resume and job application. For example, a background check may be used to verify the applicant’s work history and educational experiences. Background checks can also be used to detect any potential risks associated with the applicants, such as a criminal history or poor driving records (if the role requires driving for the company).

A reference check, on the other hand, is used to assess prior work performance and gauge for job and culture fit. Reference checking requires contacting a list of referees, whose name and contact information is typically provided by the applicant. These references are almost always current and former managers and colleagues, but could include university professors and past clients or other stakeholders.

During the reference check, you can ask the referee a variety of questions pertaining to the candidate. While some information provided by references can be used to verify facts on the candidate’s resume and job application, the majority of this feedback revolves around workplace performance, on-the-job skills and personal attributes.

why are background checks important?

As mentioned previously, background checks are commonly conducted near the end of the recruitment process. Chances are, the applicant has already moved through the interview process and completed any pre-employment testing. These checks are often done to ensure the integrity of the applicant before extending a job offer.

There are several reasons why a background check is important, such as:

verifying candidate’s credentials

According to a recent study, 85% of candidates lie on their resumes. While some of these lies may be more of an embellishment of their specific skill set than an out-and-out lie, other misinformation could be critical. For example, if the role requires a candidate with a bachelor’s degree in a specific field, and the candidate lies about their credentials, it could make the company liable for any mistakes the potential employee makes.

A background check can avoid these issues by making sure the information on the candidate’s resume and job description is accurate and up to date. A background check can verify everything from past employment to university qualifications to professional certifications and licences.

maintaining workplace safety

Hiring the wrong candidates can adversely affect workplace safety. First, applicants that lie about their skills and experience may not have received the right types of safety training and could pose a safety risk to themselves and others. Secondly, hiring a candidate with a history of violence or sexual harassment could make the company liable for any issues caused by this potential employee in the workplace.

For example, if your company hires an applicant with a long history of violence and abuse, and then he or she goes on to hurt a co-worker on the job, you could be guilty of negligent hiring. Additionally, you’re putting your workers at an increased risk. A complete criminal background check can alert you to candidates with any negative history.

protecting company reputation

A company’s reputation can be damaged due to the actions of one of its employees. While you can’t control every action of your employees, you can take steps to minimise any potential risk. Ensuring the candidate doesn’t have a history of violent behaviour or a habit of posting offensive comments online can prevent your company from having to handle damage control later.

maximising productivity

Some jobseekers list a variety of skills that they simply don’t have, or they embellish upon the skills that they do have to make them appear more capable than they are. Hiring candidates without the right skills can significantly increase the time to learn and impact productivity in the workplace. Conducting both background and reference checks can help you determine if the applicant actually has the skills listed on their resume.

what does a background check consist of?

There are numerous components of a background check, including:

criminal background check

A criminal background check is conducted when it is clear that the job being performed requires no criminal history. This could apply for example, in some government departments or when working with vulnerable people.  A criminal history check  provides information such as, the exact crime a person is convicted of, the dates of the conviction and what punishment (sentence) was ordered. Where one exists, an employer needs to determine whether or not the conviction is relevant to the job role and  decide if and how to treat this information in their decision making process. It is important to note that Australia’s anti-discrimitation laws, prevent an employer from discriminating against an employee with a criminal conviction unless the absence of a conviction is an inherent requirement of the job for which they are applying. 

All applicants should be told that their employment is dependent on an assessment of the results of their criminal record check. This should be stated clearly on the job application form and explained carefully in the interview.

Ideally, an employer should not make a final job offer before receiving the results of a police check if it is a role requirement.

drug testing

Some employers, especially those hiring workers that drive for the company or use any type of machinery, also require a pre-employment drug test. As the name suggests, this test is often done to ensure that there are no traces of any type of illegal drugs or alcohol in the applicant’s system. Most drug tests are conducted at local clinics and can provide results in just a few hours or days.

educational verification

There are a few ways to conduct an educational verification. First, you can simply call the university or college in question and ask them to confirm that the applicant is a graduate of the institution as well as what field they received a degree in. Many Universities in Australia also offer this as an online service. Secondly, you can request the applicant submit a full academic transcript. In these cases, the applicant would contact the university and have them submit a transcript directly to your company. Transcripts can show everything from grade point averages to a list of classes the applicant took.

credit check

Personal credit checks on applicants are usually reserved only for those roles that involve finances or handling money. According to a recent study, only 25% of all employers routinely conduct credit checks. Some industries, such as banks, however, conduct credit checks on nearly all employees. Credit checks detail any outstanding bills owed by the applicants as well as any long-term debts. It’s important to note that some regions of the world, such as several states in the United States, have made it illegal to conduct pre-employment credit checks for most positions.

motor vehicle licence check

If the position in question requires any type of driving for the company, for example Truck Drivers or field sales representatives, employers may do a motor vehicle licence check prior to employment. In this case, it would be  important to make sure that the applicant doesn’t have a dangerous driving history that includes multiple traffic violations and accidents. Not only could an applicant’s poor driving record increase the cost of the company’s motor vehicle insurance, it is incumbent on the employer to ensure a safe working environment for their employees. 

employment verification

One of the most common aspects of a background check is to verify past employment. This process is done by simply contacting all current and former employers on the candidate’s resume or job application and verifying that the applicant did work there, the date of employment and the position or positions held. Many employers today have a policy that discourages line managers from providing any additional information, but you can feel free to ask additional questions and see if they’ll answer them.

social media checks

Studies show that 70% of employers now conduct some type of social media check prior to hiring a candidate. In this day and age, where people are so connected on social media, this type of check makes sense. Barely a day goes by, when a company’s reputation isn’t in jeopardy due to comments made by one of their employees on social media. To protect your company, it’s recommended that to check candidates’ public social media profiles to ensure that there is nothing offensive or inappropriate posted online.

what does a background check show?

A comprehensive background check can reveal a lot about the candidate. For example, it can verify educational qualifications, ensure they have the proper licencing and meet the necessary requirements of the role. The exact information you can obtain from a background check, however, depends on the type of process you use. For instance, a criminal background check is not going to provide information about past employment. Whereas a simple drug test will not reveal any information about previous drug convictions.

It's important to determine exactly what type of information you want to verify or uncover about your candidates, so you know which types of background checks to request. For example, if the role doesn’t require the applicant to drive for the company, there would be no need to run a motor vehicle check. 

Reference checking is another great tool for obtaining crucial information about your potential employee. The trick is to know which questions to ask. Download our guide today for a list of questions to ask during the reference checking process.