Looking to figure out who’s who in your sea of applicants? If you’re using search engines or social media, you are in good company.
Today, over 70% of employers are manually screening applicants. In other words, over 13,000 large U.S. businesses and 4.2 million small and medium enterprises are searching candidates online, but few have considered the costs. How much will it cost to screen all these candidates by hand? How do you make sure each profile matches the individual in question, and how do you make sure you don’t miss the critical detail that makes all the difference? Manual screening can lead employers to spending thousands of dollars on research, only to misidentify a critical profile or make a costly oversight.
Beyond being a financial and logistical burden, manual screening can also land your business in legal hot water. To ensure full compliance, companies need to adopt a set of best practices for online screening that includes involving the candidate in the hiring process, avoiding protected classes of information, and making principled hiring decisions. If not, they risk getting caught in a storm of mass employment lawsuits. Manual online screening has grown by over 500 percent over the last 12 years. Along with it, FCRA litigations have quadrupled, growing over 400 percent without a decrease in over eight years.
As both toxic employee behavior and employment lawsuits continue to trend upward, applicants are not only wreaking havoc once they get into a company—they are now so highly attuned to non-compliance practices that some will submit defective applications for the sole purpose of litigation before they ever walk into an interview. When it comes to pre-employment screening, companies must find a way to screen at high volumes with rigid compliance or face the consequences…
Just how costly is a bad hire? It depends on who you ask. If you were to Google “cost of a bad hire,” you’d find percentages, arguments, and even calculators promising to show you the “true cost of a bad hire” while offering little insight beyond the fact that they cost more than the worker's salary and turnover. As a result, the discussion on the direct and indirect costs of bad hires has become somewhat obscured. Some sources cite the “astronomical costs” of an unfortunate appointment while offering few measurable impacts, while others claim that a bad hire costs $240,000 while citing outdated and unavailable sources.
None of these sources tell you how often you’re making a bad hire, making it hard to know how these figures apply to your company. They often don’t tell you how the calculations are made or where the numbers come from, making it impossible to say whether the issue is of genuine business concern. When it comes down to it, they offer vague ideas about how to definitively avoid paying the costs of a bad hire. All of this has led HR to rely on "hope for the best" approaches to personnel management, with no clear insight into their hiring risk or effective actions they can take to manage it.
How much are toxic hires costing your organization? Relative to hiring a standard, non-toxic worker, a single toxic employee on a team of 20 will cost $25,600 per year due to increased voluntary turnover and absenteeism alone. This means that a company of 1,000 employees is losing at least $1.2 million to toxic workers each year…
From a young age, we’re taught to go to the doctor regularly to catch potential health issues before they arise. But as we all know, many people wait until something goes wrong before they seek help. Rather than work to stay ahead of potential illness, people fall into the trap of thinking they’re invincible. Unfortunately, we see many companies make this same mistake. When it comes to managing their workforce, companies are notorious for choosing the emergency room when regular, preventative care would have done the trick.
Now that employee conduct and culture are becoming increasingly tied to a company’s reputation, companies who limit their background checks to the hiring process are missing a wealth of critical information about their hiring risk. According to the Bureau of Labor Statistics, the average employee has a tenure of 4 to 10 years. This means that companies who rely exclusively on pre-employment background checks may be missing up to 10 years of important job-related issues per employee.
There’s a lot that can happen after an employee is hired. A senior level director may play nice during the interview but later take to the internet to publicly shame a fellow employee. A customer service rep may clear the background check and later embezzle funds from customers. A government employee may pass a 12-step interview process and security clearance and still be found to have engaged with terrorist activity. In each case, the employee displayed red flags that could have alerted the employer and helped them stop the issue. Instead, the employer missed the signs and was left asking, "How did we miss this?"
What are the costs of sexual harassment?
Companies have long known that sexual harassment can lead to costly lawsuits. But since the explosion of #MeToo and the fall of Harvey Weinstein, the costs of misconduct have grown. Today, harassment is no longer just a cultural or legal issue, but a financial and brand issue that reaches every corner of the company. That means that no matter how good your training and reporting may be, they’re no longer enough.
Story after story has shown that when a brand loses authenticity over sexual harassment, they also risk losing their hard-won earnings. Uber has lost nearly 15% of its market share over the two years of its harassment scandals. After it was announced that Steve Wynn had received multiple allegations of sexual harassment, Wynn Resorts lost $3.5B in company value.
Your company should be armed and prepared to deal with toxic behavior as well as the brand damage that results when people hear about it. Companies are owning up to faults and taking action faster than ever when CEOs misuse their power. If you turn a blind eye to identifying and preventing toxic behavior, you’re risking more than legal fees and turnover—you risk irreparable damage to your market share, merger outcomes, and your name…
TV and film studios are scrambling for ways to protect themselves from the controversy and expense of a social media scandal, without having to actually read through thousands of old tweets. The proliferation of digital content has outpaced the industry’s tools for staying on top of it all, leaving companies wondering what to do—and who will be next.
With Roseanne's scandal costing over $60 million in lost ad revenue and Gunn being just the latest star to run into financial and reputational losses over online content, it has become clear that Hollywood has deeply entrenched issues when it comes to screening and managing stars for reputational risk online. At this rate, the industry is slated to lose over $1 billion in the next year over social media issues alone.
Shouldn’t companies be able to mitigate risk up front, before another high-profile social media or sexual harassment scandal arises…?
Standard background screening methods can help uncover and verify some valuable info. They help ensure that a candidate actually went to certain schools, worked for certain companies (with the correct titles and at the correct times), and didn’t commit criminal offenses. Depending on applicable state laws and company interests, they may also help spot drug usage and excess spending. With all these methods in the tool belt, why are we still on edge about who we’re hiring?
The reality is that traditional background checks don’t catch everything they should. Even when all of your background checks have done their jobs correctly, none of these checks will accurately predict a proclivity for criminal, toxic, or unprofessional behavior—and that means a clean ‘background check’ may still miss indicators of trouble to come.
While you might feel that your screening methods have been sufficient, the truth is there might be more falling between the cracks than you realize. In a time when companies in all industries are at risk, companies need a new safety net for their hiring process to capture massive volumes of user-generated content, and internal systems to manage a complex workforce that can make or break their company…
In the popular imagination, sexual harassment evokes images of men who ask women on dates and can’t take a hint, or powerful male bosses who request sexual favors from less powerful women. But the scope of unwanted remarks and behaviors go well beyond instances dealing directly with sex.
The term “sexual harassment” can lead to an poor understanding of the full range of abusive workplace behaviors. What is sexual harassment? Sexual harassment stems from highly subtle, interconnected, and systemic behaviors that can be both sexual and nonsexual. Without a proper understanding of how harassment works, it’s easy to miss things that don’t immediately escalate but pull the thread and set genuine sexual misconduct in motion.
In the face of such social and cultural complexity, the temptation is to ban all references to gender, sex, class, and other potential points of controversy. However, we’ve seen that banning all of these behaviors can sometimes cause more harm than good. In fact, discrimination lawyers have said that such sweeping prohibitions tend to be unhelpful and can even inhibit the elimination of workplace harassment…
Influencer marketing has skyrocketed in the last 10 years. Since the arrival of social media, companies have witnessed the rise of a new personality called the influencer. With the ability to engage fans online and offline, influencers can drive purchasing decisions more powerfully than ever thought before. Companies clamor for influencers because their ads look authentic: rather than send a traditional ad into the news feed, brands can have influencers share a post of themselves using or endorsing the company’s product.
With an ability to connect with niche audiences and drive purchase decisions more quickly than most digital ads, influencers are an advertiser’s dream. However, that doesn't mean it's safe to dive right in. In their search for stars who bring in millions of dollars, many brands have foregone due diligence, which has led companies to spend thousands of dollars and hurt their brands in the process. Why does this happen? In part, it’s because only 29% of influencers are asked about their audience demographics. But to more fully understand how influencers can hurt your brand, we need to understand their motivations…
Interested in knowing the full costs of influencer risk? Download our Media & Entertainment risk packet here.
More and more Americans have grown to consider sexual harassment a problem in the last 20 years. In 1998, 53 percent of adults surveyed by Gallup said that people were too sensitive about sexual harassment. But something has turned in the last two decades: in 2017, 59 percent of adults now say that people are not sensitive enough. The general public is expecting more from businesses than ever when it comes to creating a safe, inclusive work environment. So how is sexual harassment in the workplace still so widespread?
In 1998, the Supreme Court determined that for a company to avoid liability in a sexual harassment case, it had to show its employees were trained and given a way to report offenses. At the time, this ruling was revolutionary. In response to the new federal code, companies across the U.S. adopted training seminars and videos, understanding that any company that shrugged off sexual harassment would now pay a steep price. Companies tracked attendance at trainings, clicked through a PowerPoint, and collected signatures on the employee handbook, and this was unprecedented.
But in recent years, trainings have reinforced gender stereotypes, received more backlash when delivered by women, and failed to promote accountability unless done by a supervisor. Women and minorities who support diversity have even been found to be penalized in performance reviews. If everyone believes training and reporting are integral to corporate culture, then why aren’t they working—and how are businesses expected to meet the standard today?