Magazine Article | May 17, 2007

Screen Once, And Again (And Again)

Source: Innovative Retail Technologies

Applicant background screening helps you hire, but how are you ensuring the quality of vendors, contractors, and veteran employees?

Integrated Solutions For Retailers, June 2007

Applicant background screening is pervasive in the retail industry. The University of Florida's National Retail Security Study suggests that 85% of retailers large and small currently execute some semblance of a background screen as part of the hiring process. Some execute background checks better than others though, with the best retailers integrating the task tightly with their overall recruiting and retention campaigns. We delve into the topic this month with several experts in the field, starting with Jerry Thurber, VP for applicant management services at ADP.

Compel Candidates To Want The Job
When asked about the role of applicant screening in retail, Thurber is quick to point out that employee recruiting is very competitive, and very important, in this industry. "Differentiation is important in today's retail environment, especially for those that sell commodities," he says. "Retailers that get this concept are finding that their people are a key component to creating that competitive differentiation." But, he says, the retail labor pool, especially for entry- and store-level positions, is bigger than the number of jobs available. This makes finding good employees a competitive endeavor. "A retailer that wants to use its employees to differentiate itself has to have a better offering for its candidates," he says.

Establishing that differentiation during the recruiting phase, however, presents a challenge. Most retailers run lean in the HR department and offer entry-level positions that are much the same as that of their competitors across the street in terms of function and pay. Most also have overworked store managers who lack the bandwidth to dote on potential recruits. The employee recruiting function must therefore be automated and systemic for efficiency, yet customizable enough to pay close attention to the details that set your company and its culture apart in the minds of your candidates. "Retailers aren't handling the recruiting and applicant tracking process very well today, which results in an application abandonment rate of anywhere between 40% and 60%," says Thurber. He says poor presentation of the data (e.g. job descriptions, applications) is a major cause of abandonment and suggests keeping the process efficient by keeping narrative to a minimum. Thurber also advises retailers to pay close attention to the way applications are written. "I recommend you give special attention to the 'human factors' element. Don't sell, but compel. Make your candidates want to turn the page."

Background Screening Narrows The Field
Improving the efficiency of the application process will result in less application abandonment and more candidates, which makes thinning them out an imperative early step toward selection. Retailers should therefore conduct comprehensive criminal background screens prior to investing time and money in a candidate. Robert Capwell, chief knowledge officer at Employment Background Investigations, Inc., says leading research underscores the risk of poor hiring decisions. "The Department of Justice pegs 45% of retail theft on retail employees. The University of Florida estimates that number is closer to 48%. Generally, the retail employee has far greater opportunity to steal than the shoplifter," he warns. Some retailers, he says, have the misperception that they can't afford background checks of store-level employees because those employees turn over so rapidly. Others question making that investment for an hourly wage employee. But according to the statistics, risk mitigation is compelling and financially sound reasoning for background screening.

For many years, retailers have worked with organizations including the NRF (National Retail Federation), RILA (Retail Industry Leaders Association), and the FBI to build an expansive database of offenders of retail-related crimes, in many cases even those that were not prosecuted. The tools that have been built around this database, coupled with traditional national and local registries that document criminal data, leave no shortage of resources for applicant background screening. But while Capwell urges retailers to screen comprehensively using as many of these tools as feasible, he also acknowledges that unless tightly integrated with recruiting, background screening can slow the speed-sensitive selection process. Speed and volume of hires is so important, in fact, that some retailers conduct posthire background checks, only weeding out unacceptable employees after they've been brought onboard and, sometimes, even trained. While most experts advise ongoing background screening, posthire initial screening is in most cases not advisable due to the risk of investing unnecessarily in a soon-to-be-terminated employee.

Capwell also points out that a criminal record might not always preclude employment, and that employers should set standards for their hiring criteria. "Retailers should have a documented policy for acceptable hiring limits. In some cases, hiring those with misdemeanor criminal records might not be a bad decision."
Joe Langford agrees with Capwell's point about standards for hiring those with criminal records. Langford is president of Edge Information Management, and he encourages retailers to fit backgrounds to positions. "You screen positions, not employees," he says. "Home delivery positions, for instance, are high risk. You don't want to negligently hire a pedophile or a sex crime offender for this position." This is exemplary of an oft-overlooked concern as retailers adopt service models and create nontraditional positions.

Ongoing Certification, Vendor Certification Mitigate Risk
As mentioned earlier in this article, it's estimated that 85% of retailers conduct applicant background checks, yet between 45% and 48% of retail theft can be attributed to employees. There's clearly a breakdown here, one that's perhaps best addressed by ongoing training, certification, and background screening of employees at regular intervals. Langford says that driving-intensive positions in other industries have been subject to ongoing background checks for some time, and he advises the same for retailers. "Screening for criminal activity at six-, twelve-, or eighteen-month intervals is a good idea, because an individual can get arrested and remain working for weeks, months even, leading up to a trial. All employers need to be as concerned about negligent retention as they are about negligent hiring," says Langford. He points out that ongoing screening is especially important in positions that, if filled by the wrong person, could put customers, employees, and assets at risk.

Jim Mackenzie, senior VP of retail market sales at ChoicePoint, draws out another overlooked risk — outsourced service providers and vendors. "From outsourced IT consultants to the people who mop the floors at night, many retailers are exposing assets to individuals they don't know anything about," he says. "We're seeing a mandate-style trend among some of our bigger retail customers. They're requiring their vendors and outsourcers to submit any employees that will be working on or around their assets to a standard background screen," he explains. "Outsourced IT help has access to digital assets. Outsourced maintenance crews have access to products and infrastructure. These are important positions to monitor," he maintains.

Keep An Eye On Immigration Reform
ChoicePoint's Mackenzie and our other panelists also warn about the impact immigration reform will have on the store-level retail labor pool. "Illegal immigrants are pervasive in the services industries, including those related to retail," he says. Capwell reminds us of the not-too-distant headline news about Wal-Mart's outsourced cleaning companies, somewhere near 20 of which employed illegal immigrants. "We're keeping an eye on how immigration reform will pan out and encouraging our customers to hire only those eligible to work in the United States," says Capwell. Chances of hiring an illegal immigrant are increasing though, with an estimated 11.5 million in the United States today. "Many states have provisions that protect minorities from discrimination, so the hiring process should include a thorough understanding of each state's rules and regulations on the matter," he says. All of our panelists agree that the adjudication process should be centralized within the HR or LP departments, not left in the hands of store managers who aren't familiar with state laws.  "We'll see heavy penalties for noncompliance in terms of immigration reform," adds Langford. "We're investing in solutions to prepare for this, and retailers should be as well."

Some of the executives interviewed for this article expressed concern over the perceived commoditization of background screening services. But they're quick to point out that quality is paramount, and that not all background screening providers are created equal. "Some providers are taking calculated risks about whether they need to provide solutions that enable FCRA [Fair Credit Reporting Act] or state compliance," Langford claims. "That's bad for retailers, and it's bad for this business. The laws exist and we have to adhere to them." Capwell advises those looking for a credible background screening partner to consult the NAPBS (National Association of Professional Background Screeners), of which all of this article's participants are members.