Consequences If You Don't Perform a Background Check

Entrepreneurs often are reluctant to look into the backgrounds of job applicants. They don't want to appear distrustful of potential employees, fearing that good candidates will resent perceived intrusions

There are good reasons to look into an applicant's background, however. Before you decide to trust applicants with your business's money, equipment and reputation, you should be sure that their history doesn't indicate they'll take advantage of that trust. Moreover, you make a substantial investment in a new worker's training and compensation. As with any investment, you want to make sure you're not wasting that investment.

Fact is, not everyone can be trusted. When polled by executive search firm Ward Howell International, 17 percent of 501 executives surveyed said their new hires had misrepresented job qualifications. What's more, applicants with especially scary skeletons in their closets aren't likely to tell you about them. Finally, state laws require you to perform background checks on applicants for certain positions, especially ones dealing with children or the elderly.

Here are some of the areas you should consider checking, along with the potential consequences of not doing so:

• Credit. The people you hire to handle money must be trustworthy. If you fail to check the credit histories of applicants for such jobs, you may end up hiring an applicant in financial trouble and who may be motivated to steal from your company.
  
  
• Education. The right education is important for jobs that demand specialized training or licensing, or that require workers to deal with dangerous materials or machines. A worker who tries to perform such a job without the proper education can be inefficient and unsafe.
  
  
• Criminal record. Many state supreme courts have upheld lawsuits that target employers for negligent hiring when employees with criminal records injure other citizens. For example, one Midwestern company unknowingly hired an applicant who had been convicted of driving drunk in another state. The worker later drove a company vehicle into a car full of senior citizens. The court found the company negligent in its hiring and awarded the plaintiffs $1.8 million.

So, while it's certainly laudable to trust the people you hire, it's good business to check their backgrounds. As Finley Peter Dunne said, "Trust everybody, but cut the cards."