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SHRM Finds Fewer Employers Using Background Checks in Hiring

Survey suggests that negative credit information often is not barrier for job candidates

ALEXANDRIA, Va., July 19, 2012 — Fewer employers are conducting credit and criminal background checks on job candidates today than two years ago, the Society for Human Resource Management (SHRM) found in newly released research.

More than one-half (53 percent) of respondents to a SHRM survey said they don’t use credit background checks in hiring. That’s an increase from 2010, when 40 percent of organizations reported not using credit checks, and from 2004, when 39 percent did not.

In a second survey released today, SHRM found an increase in the percentage of employers that don’t conduct criminal background checks, from 7 percent in 2010 to 14 percent in 2012.

“Human resources professionals are looking more closely at the job-relatedness of these practices,” said Mark Schmit, SHRM’s vice president of research. “As a result, fewer employers are using background checks, and checks are often done for specific jobs or to comply with the law.”

The surveys of randomly selected HR professionals from SHRM’s membership showed that safety and liability drive the use of background checks. Criminal checks are used to reduce legal liability for negligent hiring (according to 52 percent of respondents) and to ensure a safe work environment for employees (49 percent). The top reasons why employers conduct credit checks are to reduce or prevent theft (45 percent) and to reduce liability for negligent hiring (22 percent).

Credit and criminal background checks are used primarily at the end of the hiring process. Ninety-four percent of criminal background checks are conducted after a job offer or a job interview, and 91 percent of credit checks are conducted after a contingent job offer or job interview.

Respondents to SHRM’s surveys said previous work experience, a good fit with the job and organization, and specific skills are the most important factors that influence hiring decisions.

Background Checking — The Use of Credit Background Checks in Hiring Decisions”In a finding that suggested negative credit information is not often a barrier to hiring, 80 percent of employers reported hiring a job candidate whose credit report contained information that reflected negatively on the candidate’s financial situation.

Sixty-four percent of employers allowed job candidates to explain the results of their credit checks before a hiring decision was made.

The survey also found:

• Most employers focused on credit histories of two to seven years. Only 6 percent of organizations said that all years of credit history were equally important, a decrease from 17 percent in 2010.

• Of the 34 percent of employers that conducted credit checks on selected job candidates, 87 percent did so for positions with financial responsibilities and 42 percent used them for senior executive positions.

Background Checking — The Use of Criminal Background Checks in Hiring Decisions”

Sixty-nine percent of organizations conducted criminal checks on all job candidates, while 18 percent conducted them on selected candidates.

Checks continued to be made most frequently for positions with fiduciary responsibilities and those with access to highly confidential employee information. Survey results also showed a heightened sensitivity to vulnerable populations. Background checks for job candidates who work with children, the elderly and the disabled were more likely than for positions for which state law requires background checks or for job candidates who have security responsibilities.

What discoveries would lead to a decision not to extend a job offer? Ninety-six percent of respondents said a convicted violent felony, and 74 percent said convicted nonviolent felony.

The survey also found:

• More organizations saying that complying with state law requirements was among the primary reasons criminal checks were done, up 8 percentage points from 2010 to 28 percent.

• Fifty-eight percent of organizations allowed job candidates to explain the results of their criminal checks before the decision to hire was made.

For more information about poll findings, visit http://www.shrm.org/Research/SurveyFindings/Articles/Pages/CreditBackgroundChecks.aspx and http://www.shrm.org/Research/SurveyFindings/Articles/Pages/CriminalBackgroundCheck.aspx

Follow SHRM’s Research Department on Twitter @SHRM_Research.

 

About the Society for Human Resource Management
The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Representing about 260,000 members in more than 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. Visit SHRM Online at www.shrm.org
 and follow us on Twitter @SHRMPress.

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