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Overlooking the true costs of background checks can have serious consequences for your organization. For HR leaders, failing to recognize the hidden expenses can lead to significant financial strain, inefficiencies in the hiring process, and even damage to your employer brand. Understanding these hidden costs is crucial for maintaining a smooth, cost-effective hiring process and attracting top talent.
Let’s dive into the often-overlooked complexities of background check costs to make sure you’re fully informed to make the best decisions for your team and budget.
Table of Contents
- Published Costs vs. Actual Costs of Background Screening
- 4 Types of Hidden Background Check Costs
- How to Calculate True Costs
- Evaluate Your Current Program
- 3 Questions to Ask Your Background Check Company
Published Costs vs. Actual Costs of Background Screening
When evaluating background screening vendors, it’s essential to differentiate between true costs and published costs. Published costs are the initial prices quoted by vendors for their services. In contrast, true costs include all the costs that were incurred, including hidden costs like using internal resources, fixing errors, and delays.
Many vendors calculate their cost based on the time it takes to run the background check, but speed isn’t the most important factor to consider. The vendor’s thoroughness, accuracy, and efficiency greatly affect how useful and effective background checks are.
4 Types of Hidden Background Check Costs
When it comes to background screening, the price per check that vendors advertise is often just the tip of the iceberg. Here are some unexpected background check costs you need to consider.
1. Employment Background Check Additional Charges
When evaluating the actual cost of a background screening, it’s crucial to account for different types of background check charges that may not be immediately visible. These can include:
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- Access Fees: Fees for accessing certain databases or records can vary significantly.
- Employment Verification Fees: Verifying a candidate’s employment history can incur additional costs, especially for international checks.
- Drug Testing: Drug tests are often an added expense not included in the basic background check pricing.
- National Criminal Record Checks: Comprehensive criminal background checks can be more expensive than standard local checks.
- Maiden Names, Aliases, and Nicknames: Many vendors charge a separate price for each name developed.
- Professional License Verification: Ensuring that candidates hold valid professional licenses can add to the overall cost.
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2. Incomplete or Inaccurate Verifications
Many background screening vendors use a “three and out” process. “You’re going to have a considerable percentage of verifications that are incomplete or inaccurate,” says Patrick Espie, enterprise sales director at PreCheck. “Behind the scenes, there are costs to having your highly compensated HR professionals doing this work to backfill the incomplete or inaccurate verification.”
This can significantly drive up the cost of what initially seemed like an affordable service. Incomplete or insufficient background checks can expose your organization to negligent hiring risks, potentially leading to costly legal issues.
3. Delays in the Onboarding Process
Delays caused by slow or inefficient background checks can result in lost productivity and revenue. This can lead to increased costs, particularly if the hiring process is prolonged. A slow onboarding process not only affects your team’s efficiency but can also impact your bottom line.
Additionally, if your provider doesn’t use criminal adjudication matrices to outline your hiring criteria, it may result in longer screening times and higher, unnecessary costs.
4. Poor Candidate Experience
A cumbersome or frustrating background screening process can damage your employer brand, making it harder to attract top talent. Job candidates may choose to withdraw their applications if they experience delays or issues, leading to increased recruitment costs.
How to Calculate True Costs
To accurately determine the true cost per completed verification, consider both accuracy and completion rates. For example, a vendor offering low prices might offload verification processes to offshore teams, resulting in lower accuracy and higher completion times. It’s crucial to factor these aspects into your cost calculations.
An advertised price might look appealing, for example, but if the vendor conducts limited criminal record searches or offshores part of the process, the initial savings could be offset by the hidden costs of inaccuracies and delays.
Evaluate Your Current Program
Identifying and addressing potential cost overruns in background screening can help you streamline your operations and avoid unexpected expenses. Here’s how you can uncover these hidden costs and take control of your screening budget.
Gather Data from End-Users
Speak directly with your HR team members and hiring managers who interact with the screening process. Their insights can reveal inefficiencies or pain points that might not be immediately apparent from a purely financial perspective.
Review Your Invoices
Look at your invoices carefully to uncover any hidden fees. “We can actually look at what they are doing with their current provider,” Patrick says. “Compare the price of that, and we see all sorts of things.” Sometimes, the true costs are buried in fine print or appear as additional charges that weren’t part of the initial quote.
Use Calculators or Worksheets
Use tools designed to help analyze the cost implications of your current program. These can provide a detailed breakdown of your expenses and highlight areas where costs can be reduced.
3 Questions to Ask Your Background Check Company
When choosing a new background screening vendor, transparency and alignment with your organization’s goals are paramount. Here are some key questions to ask potential vendors:
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- “What is your criminal record search policy?” Make sure the vendor’s search policies align with your organization’s standards and regulatory requirements.
- “Do you offshore any part of your operations?” Offshoring can affect the quality and speed of verifications. A good background screening partner will be transparent about where and how the work is being done.
- “How do you handle incomplete or inaccurate verifications?” A reliable vendor should have robust processes in place to manage these issues quickly.
“These are just some of the questions that impact the quality and output from your background vendor,” Patrick says. Additionally, consider the value of vendor partnerships, such as integrations with your existing HR systems. Seamless integrations can save time and reduce the likelihood of errors, further lowering your overall costs
Understanding the true costs of background checks goes beyond looking at advertised prices. By taking a strategic, data-driven approach, you can uncover hidden costs, evaluate your current program’s efficiency, and select a vendor that meets your needs. This approach not only ensures cost-effectiveness but also enhances your overall hiring process.
Take the time to analyze your background screening program thoroughly, ask the right questions, and make informed decisions to support your organization’s growth and success. For further insights and personalized advice, consider consulting with experts who specialize in background screening.
Want to learn more? Schedule a call with one of our background screening experts.
