Reducing Employee Turnover Rates

Reducing Employee Turnover Rates

The most effective way to reduce employee turnover rates is through conducting employment background checks on all new hires. Certain industries experience higher employee turnover rates than others. The retail industry, for example, has a 30% employee turnover rate.

This chart indicates employee turnover rates by percentages based on industry:

Organizations invest a great deal of time, capital, and resources to effectively on-board their new hires. If organizations lack an effective background screening program, however, the money spent to train and on-board is wasted.

Continuity among employees is a major driver to increase profitability and improve the overall culture of a business. Being a team player is what every hiring manager desires. If there is a high employee turnover rate, employees are not able to build those strong business relationships.

Case Studies

A large clothing retailer was experiencing unusually long delays in receiving completed employment background screening reports from their background provider. On average, each completed report was taking up to five business days. Due to the delay in receiving background results, they could not place employees fast enough and qualified applicants were beginning to take employment offers from their competitors.

Their background screening provider was directly affecting their efficiency at filling vital positions within their organization. The clothing retailer reached out to Employers Choice Screening and explained the issues they were having with their background vendor.

Employers Choice Screening did a complete analysis on how the organization was conducting their employment background checks through their current provider. Employers Choice Screening determined that the searches being conducted were not comprehensive in nature and the turnaround time was unacceptable. After a month of conducting employment background checks through Employers Choice Screening, the clothing retailer was receiving completed background reports within 35.4 hours turnaround time on average. This drastic improvement allowed for the employer to hire rapidly, add a drug screening program for all new hires, utilize industry-specific searches for specific positions, and reduce their employee turnover rates.

Employers must consider three big factors when implementing and utilizing background checks to maximize the greatest return on their investment:

1. Accuracy of the information being reported

In a perfect world all background check records would be the same and reported consistently from third-party vendors. As we do not live in a perfect world, third-party background screening organizations, otherwise known as consumer reporting agencies (CRAs), have reporting requirements that differ drastically. CRAs have a duty to ensure maximum possible accuracy when reporting public record information.

This means a county criminal record found by a court researcher must be reviewed by the CRA to ensure the record(s) belong to the subject of the report by matching at least two identifiers. Examples of identifiers would be full name or date of birth match.

2. Competitive rates for screening services

How does an organization measure an overall cost by implementing employment background checks? By conducting background checks, organizations are reducing legal liability, increasing profits, and improving employee morale as their pay out. Background checks should still provide value based on cost alone. Some CRAs may charge a hefty upfront set-up fee or monthly minimums to get set up. Other CRAs may have “pay-as-you-go” services. Whichever pricing model employers prefer, they need to have a full grasp on the pricing structure itself. Contrary to popular belief, not one background check is exactly the same.

There are certain factors that may contribute to the overall cost associated with a background check. These factors are driven by:

• Geographical location of the applicant – Some county courthouses (where information regarding all felony and misdemeanor convictions are held) have imposed court access fees to anyone inquiring about criminal records. This is considered a “pass-through” fee and must be paid in order to acquire accurate “real-time” public record information. These fees range from $0.75 to $65 and are passed on to the end user of the report.
• Employment and/or education verification fees – When CRAs conduct verification of employment or education, they contact the various employers and institutions to validate information provided by the subject of the report. Larger employers and institutions have outsourced their verifications to 3^rd parties that facilitate the verification with the CRA. These third-party verification organizations charge a fee to requestors (employers or CRAs) to verify applicant information. This fee would also be considered “pass-through” and must be applied to the cost of the background check.
• Turnaround time – Another major buying factor for employers is how long results are taking to come back from screening reports. On average, a compliant background screening report should take no longer than 24 – 72 hours to complete in most cases.At times, there are certain factors that may delay a background check such as the county courthouse policy where only the county court clerk may search court records. Requests are usually on a “first-come first-served basis” and court researchers must wait for the clerk to complete their requests.

  Another explanation for a delay in results would be associated with response time from employment or education verifiers not responding to the CRA requests for verification. CRAs are essentially at the liberty of the employers and institutions to respond to their requests for verification. CRAs should be making at least 1 – 2 attempts each day to gather verification details. If the verifier is not corresponding with the CRA and is frankly unresponsive, then the completion of the background screening report may be delayed.

What employers should look for when selecting a consumer reporting agency:

• What is the coverage area? Do they provide nationwide services to meet employer growth?
• Do they belong to any industry-related trade associations? (i.e. NAPBS)
• Are they accredited by any compliant regulatory agency? (i.e. NAPBS Accreditation, ISO Quality, or Management System)
• How do they handle applicant personal identifiable information? (i.e. Data breach policy or data recovery plan)
• How do they stay ahead of ever changing laws affecting employment screening (i.e. “Ban the Box” or Equal Pay Act)
• How do they keep their clients compliant with the Fair Credit Reporting Act (FCRA)?
• What type of past performance do they have in providing solutions to other employers?