When it comes to the background check, never assume. Part II
May 28, 2009
Another company is in the news because a former employee allegedly found it easier to take clients’ money instead of investing it as promised.
Firm pays $2M for bad hire
Man accused of rape, embezzlement
This employee allegedly had over $400,000 in debts before he was hired, a fact easily identified within seconds after running a credit report, which costs about the same as lunch at Applebee’s.
And a more comprehensive background check, one that includes education and employment verifications, a criminal records search, a motor vehicle report plus a credit check? Roughly a single day’s pay. If the new hire is a financial advisor handling millions of dollars of client assets, a background check probably costs the same as one hour of their salary.
We have seen more stories about embezzlement these days. My colleague blogged on another example just last week. It’s saddening but not surprising to see companies get burned because they do not background checks. And while there is FAR more awareness of the need to conduct employment screening compared to 10 years ago, many organizations still have a ways to go in terms of reducing their risk and evaluating potential damage.
Consider this company. It’s not only the out of pocket cost to investors this financial services firm has to contend with. There’s the hidden expense as well. Current and potential investors who may leave track marks sprinting in the other direction. When all is said and done, this will cost far more than $2 million dollars. It’s too bad so much money could have been saved by spending so little in advance.
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