Lessons from 2022 That SMMEs Should Carry Into 2023

Small and medium-sized businesses (SMMEs) still face a challenging environment as we head into the new year. In fact, companies at every level of scale continue to face difficulties, from managing a hybrid or remote workforce to recruiting and retaining talented individuals. Avoiding the risks and costs associated with a bad hire is still a top-level concern. How are big business players globally responding to some of these situations, and what can SMMEs take away for themselves from those responses?

Our newest white paper digs into the data discovered in HireRight's 15th Annual Benchmark Report and considers how small business operators can better position themselves for successful workforce management in 2023. Learn how a good screening partner looks, where background screening in America might fall short, and other important topics today.

Lessons from 2022 That SMMEs Should Carry Into 2023

After the rush towards work-from-home solutions, the subsequent return to the office and the Great Resignation that followed, the economic landscape looks much different than it did even five years ago. Several years after the global pandemic began, new waves continue to cause economic disruption in some nations while the far-reaching effects on workplaces continue to be felt. How are companies today continuing to adapt to these challenges?

HireRight’s 15th Annual Benchmark Report presents a comprehensive review of how the “Talent Game” changed and evolved throughout 2022. Even businesses operating on a global scale have had struggles related to the need to attract, recruit, hire and retain talent. Despite these struggles, there have been successes, too, and there have been many lessons to learn from the struggles of the last few years. These lessons are vital for small, medium, and micro enterprises, or SMMEs. With greater pressures to be effective and efficient with resource management, there’s little room for error in the hiring process.

What important lessons about employment screening from 2022 does the Benchmark Report highlight, and what are the takeaways for SMMEs? From understanding the impacts of bad hiring to developing processes that uncover important applicant details, there are actionable items your business can start considering right now. Let’s explore.

The Cost of a Bad Hire 

Many of the report's biggest takeaways applicable to SMMEs revolve around the hiring process—specifically, the continued need for in-depth screening. Even as “Fair Chance” and “ban the box” laws take hold across the United States and limit how and when employers can consider background checks, such vetting products remain a critical part of the hiring process. Most legislators across the aisle agree that background checks are an essential safety element, offering a layer of protection for both companies and the public. Even if they cannot predict future behavior, they can allow employers to avoid potentially dangerous situations.

The cost of getting it wrong can be massive, with the losses associated with one bad hire stretching into the thousands or tens of thousands of dollars. For SMMEs, such a significant financial blow—and the accompanying setbacks—can be incredibly limiting. Where does such a significant cost impact originate?

Losing an employee to a sudden termination, especially in a situation that was avoidable with a thorough background check, incurs costs in several ways:

• The loss of investment in the hiring process and the need to repeat the process. This includes fees paid to conducting due diligence and the payroll for HR professionals working on recruitment and onboarding.
• The cost of training a new employee again includes the actual training cost and the time necessary to bring them up to speed.
• Payments to recruiters or temp agencies when in-house resources can’t support active hiring.
• The cost of productivity lost to the sudden drop in work capacity.
• The potential for tangible and intangible costs to your brand in the form of damage to your reputation and loss of public trust.
• The possibility of facing a negligent hiring lawsuit and the costs associated with defending against it should a lack of due diligence result in harm done due to an oversight.

These costs are often the primary motivation companies must hire with care. According to 67% of businesses in North America surveyed for the Benchmark Report, 67% said that the need to find better-quality candidates drove them to screen candidates regularly. 49% of those responding said that safety, security, and consistent candidate quality were the biggest benefits they saw.

For SMMEs, quality talent is the foundation for growth and success. Many companies have already learned the hard lessons that accompany a bad hire—be careful not to make the same mistakes.

Consistency Counts in Background Screening

Consistency in how you think about screening is a key part of building a successful hiring pipeline for small to medium-sized businesses. Avoiding a bad hire is critical, and better screening can help you sort through applicants to find trustworthy talent. However, just as important as having a screening program is having the framework and commitment to follow through on your plans.

There is compliance to think about, too. If you do not use a repeatable, consistent process from candidate to candidate, you could inadvertently engage in behavior some might consider discriminatory. Defending against such a suit is not a good use of your time or resources, so you must start with a strong foundation.

According to the Benchmark Report survey, consistency for most companies comes from using a reliable background check provider. 74% of respondents in North America said that they use a single consumer reporting agency as their provider instead of working with two or more agencies spread across different locales. 

Of the 26% of companies that use multiple partners, nearly a quarter said they would look to consolidate to a single provider over the next year for better results. SMMEs should prioritize finding a provider that can meet their needs today while remaining ready to scale tomorrow to ensure that their hiring pipeline never hits a significant bottleneck.

What Does a Good Screening Partner for SMMEs Look Like?

The importance of a robust screening program and the need for the appropriate expertise to help your business implement one are evident. However, the path to deploying a reliable routine might be less apparent. Most importantly, what should SMMEs look for in a partner agency that will supply background information and due diligence support? Let’s discuss what survey respondents identified as the most important attributes of a background check provider.

• Accurate results reporting was the most prized attribute for North American businesses. 75% of companies said this was their most important factor when selecting a partner.
• Fast access to those results is also essential to most providers. 53% said this was their top priority.
• The cost of screening weighs heavily on many minds, too, with good value for money and effective package options being most important for 52% of companies.
• Helpful customer service and support were listed as the top factor for 23% of companies, but that doesn’t mean support isn’t essential. On the contrary—a good screening partner helps you navigate compliance issues and understand changing legislation.
• What candidates experience was most important to merely 18% of businesses—but don’t forget that legal compliance is a part of that experience. Efficient screening impacts businesses more directly, but an agency that communicates well with all parties is vital.

Even when these same questions were asked across global market regions, including Europe and APAC, these results remained remarkably consistent. SMMEs should take note of these factors and look towards any potential partners with an eye for examining these aspects of their service. Consider what your company should prioritize based on your situation and make a smart decision about a screening service.

Looking Overseas for Fresh Lessons

In an increasingly global economy, even small businesses might have overseas obligations or a small office for opening a foothold in new markets. Although a rare situation—most SMMEs remain domestic operations for years, if they ever consider going global at all—there are lessons to learn from international businesses, too. The Benchmark Report noted some interesting differences in screening practices that could reveal areas where American employers might not have all the necessary information

Overseas, especially in an APAC country such as India, competition for jobs is so fierce that many people take the concept of lying on one’s resume to a new level. Diploma mills and degree farms make it easier for unscrupulous individuals to buy fake educational credentials—leading to many scandals and much economic damage to companies embroiled in them. 

Encountering embellishments on a resume is common, but outright lying about credentials also happens. Could it be that SMMEs have put too much focus on other areas, throwing the hiring process out of balance?

Educational Verification Remains a Stumbling Block in American Business

While screening for criminal history is often considered the most important part of doing due diligence for hiring, other elements are just as vital. As we’ve seen, overseas businesses facing unique conditions have already had to adapt their screening processes to consider more than criminal verification. Only 53% of businesses in America said they conducted educational verification, compared to 63% for identity verification and 85% for criminal record checks. 

Contrast this to Europe, where 70% of respondents verify education, along with 76% of APAC who do the same. Yet nearly a third of American businesses, about 31%, found falsehoods or discrepancies in their applicants’ educational credentials when they conducted additional vetting. How many more continue to employ people who’ve misrepresented or fabricated a critical part of their skill set?

The takeaway is clear: SMMEs, especially those focused on recruiting experienced talent in specific industry niches, shouldn’t look to criminal record checks as the ultimate in due diligence. Instead, they are just one important part of what should be a broader, farther-reaching examination of candidates.

Social Media Screening Increases, But Beware of the Risks

A portion of employers, wary of damage to their brand or risks to other employees because of personal behavior, have begun looking more critically at the social media presence maintained by today’s applicants. Some may even see it as a way of keeping tabs on a remote workforce, policing time theft or identifying potentially harmful behaviors. 30% of APAC businesses and 13% of Europeans responding to the report said they were carefully considering incorporating social media screening over the next year—but only 13% of American companies said the same.

Why? In some cases, it has to do with a patchwork of privacy laws—some states outright ban the use of social media monitoring for hiring or employee oversight. In other cases, the problem runs deeper: analyzing social media could mean inadvertently considering or using information that is protected under anti-discrimination laws. 

In the future, the popularity of this type of screening seems set to increase, especially as companies become more risk averse. However, for SMMEs, an investment in a robust traditional screening process and ongoing monitoring may yield a better outcome in a confusing regulatory environment often in flux.

Time to Hire Remains High, Increasing Importance of Speed 

In the wake of the pandemic, filling vacant positions has been challenging, especially in many skilled job roles. Survey respondents indicated that “increased time to hire” remains one of the biggest frustrations for many businesses. Recall that a majority also said speed was the essential factor in selecting a background check partner. Are SMMEs leaving a solution on the table that’s working well at scale for much larger organizations?

61% of global enterprises employing 500 or more people use an applicant tracking system to manage the entire process of recruitment, vetting, and onboarding—but 65% of SMBs (Small and Midsize Businesses) under 500 employees don’t use any ATS (Applicant Tracking Software). Only 4% said they planned to deploy one over the next year.

Yet about half of all US respondents who use an ATS said that it integrates directly with their background check provider—offering a rapid way to vet one or more candidates while continuing with the hiring process. When regulatory compliance in “Fair Chance” states can be so tricky to navigate, the security, stability, and ease of use offered by an integrated ATS could be an essential asset for SMMEs to leverage in 2023.

How Should SMMEs Approach Remote Workforce Management?

Remote work poses some unique challenges for management and vetting. Even with a vigorous return to office campaign underway in many industries, the appetite for remote work remains high. Even some significant businesses have recognized the benefits and remained devoted to this alternative office arrangement. How have businesses responded?

Deploying criminal record checks for remote work positions was the most common tactic, with 38% of North American businesses saying they started the practice in 2021 or earlier. Just 15% said they deployed ongoing criminal monitoring post-hiring, compared to about 30% for Europe and APAC. 

However, it was the second most popular strategy worldwide—and SMMEs, especially those operating in a fully remote environment, should take note. Ongoing monitoring is a simple, cost-effective tool that alerts a business to potential changes in someone’s status. Evaluating whether these changes have an impact on your business requires a way to know about them in the first place. When you don’t meet people face to face in an office every day, such a safety net can be a valuable tool for SMMEs building a competent, safe, and effective workforce.

Preparing for Another Year of Talent Acquisition, Hiring, and Safe Workforce Management

While no single formula or approach will generate wins for every business, applying lessons learned from the successes and failures of others offers the best chance for positive results. The Benchmark Report provides much food for thought that leads to important questions. Is your business aligned with a consumer reporting partner that offers the speed, reliability, and support you need to stay ahead in the talent game? Are you equipped to manage remote work where necessary? Are you missing out on important, potentially decision-altering information on your job applicants?

For SMMEs, 2023 will be an important year for continuing to bounce back and adapt to a new normal. By looking to the lessons of today to inform your work tomorrow, you can better position yourself to develop a talented team to carry you through to the next growth stage. Those preparing to launch new ventures should also carefully consider the impact of recruitment processes on business development and health.