As Covid made employee verification tough, 32% firms turned to tech: EY

Survey makes a case for tech-driven tailored approach, rather than one-size-fits-all process.

As corporate India jostles with the disruptions caused by the Covid-19 pandemic, one challenge--of the many--that organisations are facing is how to conduct background checks of potential employees. With traditional methodologies proving inadequate, 68 per cent of companies faced challenges in completing background checks during the lockdown; 36 per cent were unable to complete the verification process; and 32 per cent leveraged technology tools as an alternative mode of verification. These are the findings of a survey by EY Forensic & Integrity Services with key human resources (HR) executives from large corporate entities. The findings of the survey have been released in a report entitled “Digital transformation drives employee background checks in the new normal”.

Since in-person interviews stopped due to the Covid-19 pandemic, HR teams and recruiters had little option but to conduct only preliminary checks or skip this step altogether, says Arpinder Singh, global markets and India leader at EY’s Forensic & Integrity Services, in the report. The study draws attention to the need to explore new avenues for such checks, especially the use of technology tools and digital platforms. The survey also found an industry-wide disparity on the right stage for the checks, with many companies conducting such background checks only after an employee had been onboarded. “The scope of the check undertaken was also largely standardised, irrespective of levels, roles and responsibilities,” says Singh in the report. One of the key reasons cited for not conducting a pre-employment check, according to the report, is the time it takes, which in turn delays the onboarding process.

The survey was conducted through an online questionnaire and over 115 responses were received. The respondents – all of them based in India – were senior executives from HR functions, representing a mix of Indian enterprises as well as the Indian subsidiaries of multinational companies. The industries surveyed included banking and financial services, manufacturing, technology, media and entertainment, IT/ITeS, life sciences, automotive, retail and consumer products.

Covid-19 challenges

68% faced challenges in completing background checks during the Covid-19 lockdown

36% were unable to find alternative ways to complete the checks

33% consider employee background checks as a leading industry practice

32% leveraged technology tools as an alternative mode of verification during the lockdown

Discrepancy levels in corporate India

96% experienced negative results during background checks in up to 10% of existing or new employees

Experience also shows that for companies hiring in volumes, the actual number of cases can turn out to be substantial. Also, risk may not be immediate but can snowball over time.

Common reasons for a negative background checks

87%: Incorrect employment records

45%: Incorrect education history

44%: Termination at previous employers

Action by organisations when a background check is found to be negative

88%: Termination or withdrawal of the job offer

10%: Warning letter

2%: No action taken

Pre-employment checks as a strong defence mechanism

27% do employee background checks after onboarding

45% consider background check reports mandatory before a new employee is given active business responsibilities

98% of the respondents confirmed that employee background checks are conducted by their organisations

Countering fraud risks is a priority

Employee background checks are conducted to

80%: Mitigate the possibility of a fraud or theft

79%: Safeguard the company’s reputation

Need for role and responsibility-based background checks

53% have the same scope for background checks across levels and roles

70% preferred engaging independent third-party service providers for background checks

Global hiring increasing complexities

21% conduct background checks for permanent employees at certain roles and levels

Contract workers in a gig economy

38% conduct background check for permanent as well as contractual employees

Reverification processes yet to pick up momentum

78% do not conduct employee reverification

Unexpected challenges in the background verifications

36% were unable to complete the checks

31% could only manage preliminary checks of new employees

27% stated no alternative modes were explored for background checks

19% conducted manual checks through telephone calls or self-verification

Digitally driven background checks is key

The process of employee background checks can be strengthened through technology and digital platforms

72%: Digitisation of records with educational institutions

66%: Usage of modern technology tools to make preliminary assessment of employee credentials

56%: Automation of processes

Significance of a tailored approach for employee checks

53% have the same scope for background checks across levels and roles

38% conduct background check for both permanent and contractual employees

While urging them to leverage technology, the report recommends that companies should typically watch out for: Gaps between employment; unknown past employers; and unknown universities and colleges. According to the EY survey, about half of the respondents stated that the scope of checks conducted is the same across all levels, functions and roles. This “one size fits all” approach, it adds, can have several gaps and adverse ramifications. A “bad” hire, after all, translates to lost time, effort and money.