5 minute read 7 Jul 2021
Digital background check

How can digital transformation boost employee background checks in a post COVID-19 world?

Authors
Arpinder Singh

EY Global Markets and India Leader, Forensic & Integrity Services

Leading forensic accountant and veteran expert witness. Advising global clients on compliance, anti-corruption and corporate governance. Disruptive thinker. Technology aficionado. Author.

Vivek Aggarwal

EY India Forensic & Integrity Services Partner

Transformation leader in forensics and white-collar crime. Focused on creating technology powered solutions to mitigate fraud and corruption risks. Innovative and creative thinker.

5 minute read 7 Jul 2021

The use of technology tools and digital platforms can bring much needed respite to conduct employee background checks during uncertain times.

The COVID-19 pandemic has triggered an unexpected disruption in corporate India, spurring the digitalization in human resources (HR) practices. Remote working, training, hiring and virtual onboardings has become the new norm in workforce management. The benefits of HR digital transformation are substantial but one of the key challenges that persists is the inability to conduct in-depth or digital background checks of potential employees. The primary reasons for employee background checks are a pressing need to bring in superior talent with the right capabilities and legitimate credentials, mitigating potential instances of misconduct at the workplace and adopting it as a leading practice in the overarching risk and compliance framework.

Even though many organizations are enabling HR digital transformation, recruitment processes in most companies were disrupted during the lockdown as in-person interviews ceased. HR teams and recruiters had little option but to conduct only preliminary checks or skip this step altogether. The unfavorable economic climate highlights the criticality to explore new avenues to conduct digital employee background checks. The use of technology tools and digital platforms can bring much needed respite during uncertain times.

The key findings from EY Forensic & Integrity Services survey Digital transformation drives employee background checks in the new normal highlights an industry wide disparity on the right stage for the background checks. The scope of the check undertaken was also largely standardized, irrespective of levels, roles and responsibilities. However, a tailor-made approach is recommended by digital HR. During the lockdown, many organizations faced issues conducting even basic employee verification screenings due to lack of any alternatives. The need for transforming the employee background verification process has become imperative.

Navigating negative background checks of employees

96%

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

88%

would terminate or withdraw the job offer if the employee background check was negative

Screening potential employees to authenticate their background can be a strong risk mitigating tool. With several companies operating across sectors and geographies, confirming the credibility and past conduct of employees is essential.

According to the EY survey, 96% of the respondents experienced negative results during background checks in up to 10% of the existing or new employees. 82% of the respondents stated that 5% (or less) of the employee background checks turn out to be negative. Experience also shows that for companies hiring in volumes, the actual number of cases can turn out to be substantial. Risk may not be immediate but can snowball over time and the margin of error during the initial hiring should be as low as possible, if not eliminated.

Digital background checks in the new normal

32% leveraged technology tools as an alternate mode of verification during the COVID-19 lockdown

Employee background checks in the new normal will have to be supplemented by technology driven tools and solutions to overcome challenges. The EY survey highlights that only one third of the respondents said that their organizations could leverage technology tools as an alternate mode of verification during the lockdown. The business ecosystem must evolve to align with the current requirements and organizations should harness the benefits of HR digital transformation.

Background checks processes can be strengthened through several ways and technology will be a key enabler in this journey.

72%

Digitization of records with educational institutions

66%

Usage of modern technology tools to make preliminary assessment of employee credentials

56%

Automation of processes

A digital background verification model can boost organizational and HR confidence so that well deserving and ethically sound individuals are brought into the folds of the company.
Arpinder Singh
EY Global Markets and India Leader, Forensic & Integrity Services

The EY survey highlights that the use of new age and innovative tools will strengthen the employee background checks process.

  • Using digitized data to reduce manual processes
  • Harnessing the power of blockchain for enhanced integrity and greater efficiency
  • Leveraging automation and machine learning to enable faster processing and strengthen the reliability of the process

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

Employee background check has evolved to form a key element in for the digital HR. There has been rapid adoption across several sectors such as ecommerce, logistics, staffing and manufacturing, going beyond the typical sectors (IT-ITeS). However, the emphasis given to the scope based on the role and responsibility of the prospective employee is not perceived vital.

  • One size doesn’t fit all

Digital HR and recruitment teams should explore a tailored model, based on the criticality of the potential employee’s level, role, department and responsibility.

  • Global hiring increasing complexities

Today’s hyperconnected world has led to many business executives moving across several cities or countries. The process of a background screening gets complex in such cases. Multinational employers must be careful to adhere to local laws and cultural sensitivities in these situations.

The COVID-19 impact

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

36% were unable to complete the checks

With remote working and work from home, organizations are exposed to several risks. The threats associated with onboarding unverified employees tend to be high in general but are higher during crisis times. The EY survey conducted amid the lockdown period stated that many organizations faced several challenges in conducting employee background checks and digital background checks can be key.

The survey also results show that recruiters were not equipped to conduct even the first level of screening — comparing originals with the copies of the documents. Some cases had potential candidates reluctant to share information over phone calls, rendering the process unfinished.

The way forward

Background checks must be done for all employees as a leading practice. A prioritized and phased approach can be adopted to streamline the process. Several areas should be explored when selecting a trusted partner for digital employee background checks.

Digitization is the way forward. The adoption of emerging technologies by HR is key to continue digital employee background checks efficiently in the future.

Summary

Organizations will need to accelerate their digital adoption journey to bring efficacy in operations in a post COVID-19 world. Current methodologies will have to transform to digital employee verifications, if not done already.

About this article

Authors
Arpinder Singh

EY Global Markets and India Leader, Forensic & Integrity Services

Leading forensic accountant and veteran expert witness. Advising global clients on compliance, anti-corruption and corporate governance. Disruptive thinker. Technology aficionado. Author.

Vivek Aggarwal

EY India Forensic & Integrity Services Partner

Transformation leader in forensics and white-collar crime. Focused on creating technology powered solutions to mitigate fraud and corruption risks. Innovative and creative thinker.