Press release

23 Jun 2021

Digitalization of employee background check processes can transform HR functions: EY

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Related topics Workforce CHRO Insights
  • 96% of respondents experienced failures in up to 10% of employee background checks
  • 32% leveraged technology tools as an alternate mode of verification
  • 45% conduct mandatory checks before a new employee is given active business responsibilities

India, Mumbai, 23 June 2021: The pandemic’s striking effect on organizations continue to challenge human resource (HR) functions and has made the use of technology assets and tools for employee background checks a priority, according to EY Forensic & Integrity Services’ report, Digital transformation drives employee background checks in the new normal. 72% of the respondents said technology can be leveraged to digitize records, 66% highlighted its use for preliminary assessment of employee credentials and 56% pointed to automating processes. A rising trend of negative background verification is concerning, with 96% stating that they experienced failures in up to 10% of the background checks conducted on existing or new employees.

Disruption during COVID-19 lockdown proved onerous as traditional practices were inadequate when onboarding new hires. 68% of respondents faced challenges in completing background verifications during the lockdown while only 32% leveraged technology tools as an alternate mode of verification.

Arpinder Singh, Global Markets and India Leader, Forensic & Integrity Services, EY said The lessons learnt from the current crisis outline a dire need for a dynamic and automated work model for talent teams. While business continuity and employee safety has been the core focus, leaders need to pivot and recraft HR strategies, right from the fundamentals of hiring to virtual onboarding, training, and skilling their employees. The adoption of next-generation technologies for employee background checks will be invaluable, can enable to hire deserving and ethically sound individuals quickly and at the same time, protect organizational culture and reputation.”

Vivek Aggarwal, Partner, Forensic & Integrity Services, EY said “Employees are the keystone of organizations and recruiting the right candidate for the right role is vital. Implementing a holistic employee background check process is not just good practice but a smart, prudent and safe way to chart out an ethical future for organizations. New age and innovative technological tools can help strengthen this process and enhance efficiency of HR functions”.

EY Forensic & Integrity Services conducted a survey with over 115 senior HR executives from Indian and multinational corporations. The report reveals the trends observed, risks and ramifications of hiring candidates without an adequate background check and leading practices that may be considered by companies. It further outlines that the ongoing pandemic necessitates integrating emerging technologies with traditional employee background check methodologies can play a critical role in balancing organizational interests along with minimizing potential fraud or misconduct. Key findings of the report include:

Negative verification due to discrepancies in employee records

96% of the respondents experienced failures in up to 10% of the background checks that were conducted on existing or new employees. Some of the most common reasons were incorrect employment records (87%), false education history (45%) and undisclosed termination by previous employers (44%). Pre-employment checks are still not an industry wide practice, only 45% considered it mandatory before a new employee is given active business responsibilities. The margin of error during the initial hiring should be as low as possible, if not eliminated. The risk may not be immediate but can snowball over with time.

Leveraging technology tools and solutions as an alternate

The report highlights that only 32% of the respondents said that their organizations could leverage technology tools as an alternate mode of verification during the lockdown. But employee background verification in the new normal will have to be supplemented by technology solutions to enhance its integrity and overcome risks. 72% of the respondents said technology can be leveraged to digitize records with educational institutions, 66% said it can aid in the preliminary assessment of employee credentials and 56% pointed to automating processes. Blockchain and robotics can enhance security, automation and Machine Learning can enable faster processing, while Artificial Intelligence and software algorithms can decrease risks during the recruitment process.

Role and responsibility-based screening

Over 50% of the respondents said they had the same scope for background checks across levels, function and roles. This “one size fits all” approach can have several gaps. Organizations need to adopt a tailored model based on the criticality of the level, role, department and responsibility. Verification should also be extended to contract staff as the risk implications remain the same. As per the report, only 38% of respondents conduct background check for permanent as well as contractual employees.

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This news release has been issued by Ernst & Young LLP.