Increasing demand for thorough employment background checks strains HR departments
A bad hire can cost employers 30 per cent of the employee’s potential first year earnings. (Shutterstock)
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The UAE may gradually move to introduce mandatory background checks on job applicants in the financial services sector, many experts believe, as the sector grows to place more emphasis on compliance to an increasing list of regulations.
However, many human resources (HR) departments remain unequipped to conduct thorough application screenings, placing demand for third-party service providers.
“Using third party service providers is not yet common practice despite a large percentage of HR departments not being equipped to conduct detailed pre-employment screenings. This is despite the obvious benefits and cost saving of reducing the risk of recruiting the wrong employee,” said Annalinde Nickisch, an HR consultant at The Thought Factor in Dubai.
She added that many companies have few HR personnel handling everything from payroll to recruitment, meaning reference checks are often not thorough enough and are undocumented.
Nickisch said hiring a new employee without having a complete picture is an uncalculated risk that is now becoming even costlier after the recent change in the UAE for businesses to provide mandatory medical insurance to employees.
“Though most companies with established HR Departments conduct reference checks, the depth in which pre-employment screenings are conducted varies significantly from organisation to organisation. Whilst some employers merely validate the previous employment and the performance of the candidate, others conduct additional screenings such as extensive social media reviews, or a criminal history check,” she said.
According to estimates by the US Department of Labour, a bad hire can cost employers 30 per cent of the employee’s potential first year earnings. This would put the cost of a bad hire of an employee who makes, say, Dh10,000 a month (or Dh120,000 per annum) at Dh36,000 - and that’s just one bad hire.
HireRight, a California-based provider of background screening services, recently opened an office in Dubai specifically to meet that growing demand for more thorough vetting.
John Fennelly, HireRight’s chief executive officer, said the region has been underserved in terms of third-party screening services providers, and that the company’s Dubai office will meet demand specifically from customers in financial services and energy sectors.
“You have some companies that do [screening] themselves, but increasingly, they’re outsourcing to people like us for a variety of different reasons that are typical with why companies have outsourced lots of [services] over the years to focus on their core competency.
If you look at the US, the majority of companies do background checks before they hire people … We have also seen that it is growing phenomenon across the world and that increasingly more companies are looking to do background checks. It’s typically pushed by security concerns,” he said.
In Dubai, a number of international companies are mandating screening programmes on applicants regardless of where around the world these applicants are based, the CEO said.
HireRight also has a number of clients in Saudi Arabia that had been performing screening checks internally, but started to outsource the job to increase their efficiency. The company’s checks include verifying applicants’ professional experience, education background, address, criminal record, and sometimes credit scores, but do not span social media presence.
In a white paper issued by HireRight on the UAE market, the company said vetting is becoming more and more important and is a necessary part of working in financial services.
The paper also says experts in the banking industry expect the UAE will introduce regulations that mandate background screening “on par with international financial centres as financial services sector seeks to protect itself from the likes of convicted fraudsters and debt defaulters.”
HireRight currently provides its services to around 43,000 clients around the world, and is aiming to grow that number.
“We have fairly aggressive expansion plans. We just got to Dubai so we’ll reassess in a year’s time where we are, and then our next planned expansion is in Latin America, which is in early 2017,” Fennelly said.
By Sarah Diaa
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