From November 2007

By Len Lewis

They say that retail is a people business. But are the people you’re hiring right for you, and will they be an asset to your business – or a liability?
Much of the discussion these days centers on how to recruit and retain the best people – those that offer customers a positive shopping experience and, perhaps, give stores a competitive edge. And many human resources departments still depend largely on a “gut feel” about job applicants.

But in a business fraught with government compliance and legal issues that can extend to international markets, gut feel is no longer enough to protect a company’s interests. Employee screening – pre- and post-employment – is emerging as an essential science. It is giving new meaning to the term due diligence.

“Employee screening is becoming a best practice,” says Kristen Turley, director of market development for USIS, a Tulsa, Okla.-based employee screening and security investigation firm. “Some companies choose to go more in-depth than others . . . but in general, it’s not something you can afford not to do these days.”

Screening frequency
A recent survey of HR professionals by the Society for Human Resource Management found that 96 percent of companies perform background checks for new hires, up from 66 percent a decade ago. Another survey by staffing agency Spherion found that 79 percent of companies conduct background checks for all or some candidates, half perform drug tests and one-third do credit checks.

The reason for this increase is clear. Research by the U.S. Chamber of Commerce indicates that as many as 30 percent of job applicants may exaggerate their accomplishments, 10 percent “seriously” misrepresent their backgrounds and 11 percent misrepresent why they left a former employer. Furthermore, an estimated 12.3 million workers use illicit drugs and 30 percent of all business failures are caused by employee theft, according to the Chamber.

“An increasing number of companies are at least taking a cursory look at criminal records, theft history and other basic information for all potential employees,” Turley says. “But if you are looking at certain positions like cashiers, you’ll probably want to do a more in-depth search of credit history and past employment.”

Many companies choose to perform assessment testing as a precursor to a full background check. Those deemed desirable then undergo background screening that can include criminal, credit or theft database checks. At USIS, this means drawing on a database that includes approximately 230 million records from county, state and federal courts, as well as credit bureaus, motor vehicle departments and its own criminal records database.

The screening process can vary by employee and employment types. “We’ve found that if retailers are hiring for seasonal jobs in the spring or Christmas they will probably do a little less-intensive search than if they are looking to fill a full-time permanent position,” Turley says. “Minors are also handled differently [because] there’s not much public information available on them.”

Particularly useful has been the National Retail Theft Database, to which retailers contribute information on employee theft, which accounts for between 40 and 45 percent of retail theft – or “about 2 percent of annual sales,” Turley says.

On average, “something” turns up in 15 to 20 percent of employee screenings: Whether the information has any impact on hiring depends on each company’s matrix or hiring criteria. “Some retailers choose to overlook certain misdemeanors,” Turley says, but “if a person has a history of domestic violence, you may not want them working in your store.”

Immediately after an application is completed, USIS performs an instant check “while that person is still in the store. We found that retailers don’t want to lose a potential employee to a competitor, so they want as much information as quickly as possible,” Turley says. “Additionally, they may use this information to make a conditional job offer, then more in-depth checks are done later on.”

Both the HR and LP departments are driving these investigations, she says. “Loss prevention tends to focus more on criminal behavior and theft, while HR focuses on things like assessment and basic credit.”