The ROI of an Employee Background Check 24 Oct 2017


One of the most important questions managers and businesses ask is, “What kind of return will I see on my investment?” Even small, relatively inexpensive procedures such as employee background checks lead to questions about what the ROI will be and whether the benefits will outweigh the cost.

While there might not be a direct measurable between, say, cost of the background check for employers and the total amount saved by the background screening, there are numerous benefits that ultimately tip that scale to show there is an overwhelming advantage to performing background screenings.

  1. Hiring the wrong employee is expensive. According to the Society for Human Resource Management, the average cost-per-hire is $4,129. Skipping a background check and hiring someone who otherwise would have been flagged due to a mark on their record could be a mistake that leads to letting that person go and beginning the search over again, costing the company thousands of dollars.
  2. Decrease turnover and avoid firing. Background screenings can give you the extra assurance that you are hiring the right person and dramatically reduce turnover and firings. The small cost of a background test can curb the high expense involved in recruiting and hiring new employees to replace those who leave prematurely or are fired.
  3. Reduce the training time. Training is expensive, yet there’s no way around it. Every new employee requires some time to be trained in, but how long this training lasts largely depends on their experience and competency. A comprehensive employee background check can increase the quality of hire and ensure they are the right person for the role. This will cut down on the time it takes to train them, potentially saving the company thousands of dollars.
  4. Provide a safer work space. Regardless of cost, there are strong reasons to screen employees to ensure the safety and security of other workers, as well as the company’s assets and more. The fact is, workplace violence also has a significant financial impact, accounting for a total of $55 million dollars a year in lost wages, according to the U.S. Department of Justice.
  5. Protect yourself from claims of negligent hiring. As an employer, you are obligated to provide a safe work space and so are liable for your employee’s actions on — or even off — the clock. Conducting a thorough background check that includes prior employment, criminal records and license verification can show you have taken “reasonable care” in hiring this person and so exempt you from charges of negligence due to their misconduct.

These factors and more make it clear that there are potentially significant financial reasons to utilize an employee background test in your hiring process.