By: Michelle Houbeck

It pays to know with whom you are doing business or employing.  But the key is to be proactive not reactive. We hear it from clients all the time:  “I can’t afford the cost of a background investigation.”  However, this important preventive measure is not only intended to save clients money but also protect their reputation.   Numerous investigations have been conducted after clients have already incurred a substantial loss – either by hiring an employee with a history of embezzlement or acquiring a business in which the officer is a registered sex offender.  

The previous examples are based on actual cases and sadly many more instances could be sited.  All of these could have been avoided by conducting a background check.  It’s startling to think that a person would consider investing several thousands of dollars with someone or entrust their business with them, but balk at the cost or even the thought of conducting a background check.  The truth is, with the current percentage of revenue lost due to fraud hovering around 5 percent of a small business’ income, a business professional may not be able to afford to skip one.  So what does a background check entail? 

It’s important to understand what types of background checks exist so that an informed and cost-effective decision can be made. Although the term “background check” could refer to several types of investigations, two of the most commonly utilized background investigations consist of pre-employment and due diligence.

Pre-employment backgrounds – as their name implies – are used to screen an employee before hiring.  They fall into one of the following categories:

• Entry level – generally consist of confirming identifiers such as Social Security number and date of birth. Education and employment verification as well as criminal records checks may also be included.  This initial stage may also consist of reviewing professional and social networking sites (i.e. Facebook and LinkedIn).   People tend to divulge more than they should on these sites which may be cause for concern to a potential employer
• Management – these more in-depth inquiries include those items listed above as well as litigation history, regulatory sanctions, professional licensing checks, financial status, associated business and court searches (at the local, county, state and federal levels)

Pre-employment checks may also be tailored to specific positions (i.e. a credit check and analysis for accounting professionals; a driving record for positions specified around transportation).

Due diligence investigations – can be conducted for either an individual or a business.  Suggested queries may include, but are not limited to:

• Confirmation of identifiers (ensuring that the person is who they claim to be)
• Fiscal profile (ensure the individual does not have numerous liens/judgments filed against them or has not filed for bankruptcy)
• Litigation history (ensuring the person is free of lawsuits)
• Associated business history (ensuring that the person has a history of financially stable businesses)
• Possible criminal involvement (ensuring the individual has not been previously linked to any criminal activity)

Whether as part of a due diligence investigation or pre-employment background screening, a background investigation can assist business owners in making sound business decisions and avoiding costly mistakes.  Background services are customized to meet individual needs, whether conducted on an individual or business.  

For more information or to initiate a background investigation, contact Rehmann Corporate Investigative Services.