In today's retail world, hiring the right people is key to running a successful business. However, there's an important step that many retailers often skip: background checks. 

It might seem quicker and easier to hire without proper background screening, but ignoring this step can lead to costly mistakes down the line. This blog explains why checking backgrounds is important when hiring in retail, the risks of not screening well, and tips for easy and effective screenings.

Understanding Background Checks in Retail

What Are Background Checks

Background checks are a thorough examination of someone's past, including their criminal records, job history, educational qualification check and sometimes even credit scores.

In the retail industry, these checks play a vital role in ensuring that new hires won't be a risk to the workplace or customers.

Challenges Faced by Retailers

Retailers encounter a variety of challenges, including:

High Turnover Rates: One big challenge in retail is that employees frequently leave their jobs, especially seasonal ones. This high turnover happens because the work can be tough and doesn't pay as well as other industries.

Increased Competition: In the competitive world of retail, companies often feel rushed to hire quickly due to intense competition for talent. This urgency can sometimes lead them to prioritize speed over comprehensive candidate evaluation.

Consequences of overlooking retail background checks

Retail Crime and Theft

The retail world is currently dealing with some big problems like high crime rates, rising violence, and an increase in theft. These issues are partly due to bad hiring choices leading to unreliable employees. As a result, these challenges are causing disruptions for businesses across the sector.

In the National Retail Security Survey 2023, it was reported that retail shrinkage increased to an average of 1.6% in FY 2022, up from 1.4% in the previous year (FY 2021).

This rise translated into a staggering $112.1 billion loss for retailers when compared to total sales last year. 

Impact on Workplace Culture

Bringing new team members on board without proper checks can hurt the workplace atmosphere. When employees don't feel they can trust their coworkers, it often leads to low morale and reduced productivity. This unease may cause team members to leave for friendlier and more supportive workplaces.

Employee Turnover

Making bad hiring choices can result in higher employee turnover, which is costly. Replacing a worker involves significant expenses—from recruitment to training—requiring considerable time and money.

According to the Center for American Progress, replacing someone earning less than $50,000 annually typically costs about 20% of their salary. So, if an employee earns $45,000 per year, expect around $9,000 in replacement costs alone.

This burden is even heavier on smaller businesses due to limited resources.

Customer Trust and Brand Reputation

When unvetted employees act out, it can really harm customer trust. A 2023 TCN Consumer Survey showed that 73% of Americans might drop a brand after just one bad experience with service. This is a big jump from past years and shows people are becoming less tolerant of poor service.

Legal Risks

Conducting background checks is crucial for businesses to avoid legal troubles. If an employee with a past criminal record harms customers or colleagues, the business could end up facing lawsuits and claims.

This issue is especially important in retail settings where employees frequently engage with the public directly. 

Key Retail Background Checks

Retailers often carry out different kinds of background checks to ensure they hire the right people. Some of the most important checks are:

Criminal History Checks: This check plays a crucial role in keeping the workplace safe by spotting any past criminal actions that might be risky. This process builds trust and promotes a culture of safety among staff members. Ultimately, it's about ensuring everyone can work without worry.

Employment Verification:  Verifying a candidate's employment history is crucial in gaining insight into their career journey. This process sheds light on their reliability and commitment during previous positions. By taking this straightforward step, you ensure an accurate understanding of each applicant’s professional path.

Credit Checks: Particularly crucial for roles that handle money or deal with confidential data, ensuring trust and security in financial operations. It helps maintain trust and security in financial activities while evaluating the employee financial responsibility and honesty.

The Benefits of Conducting Background Checks

Enhanced Safety and Security

Ensuring a safe work environment often starts with solid background checks. By carefully reviewing potential hires, businesses can minimize the chance of onboarding someone who might put fellow workers or shoppers at risk.

Improved Employee Quality                                                

Doing background checks helps companies find employees who match their values and expectations. This leads to better work performance and a more united team, as staff are likelier to connect with the company’s goals and culture. In turn, this creates a productive workplace environment.

Long-term Cost Savings

Conducting background checks can save retailers money over time by lowering employee turnover and minimizing the expenses related to unsuitable hires, ultimately boosting profits. This hands-on approach not only makes things run smoother but also leads to a more reliable and dedicated team, boosting long lasting financial success.

Best Practices for Implementing Background Checks

Creating a Background Check Policy

Having a solid policy for background checks is key. Make sure it outlines what will be checked, how you’ll get permission from candidates, and the impact of results on hiring choices. Also, include clear criteria to evaluate this information while ensuring everything complies with legal standards.

Choosing the Right Background Check Services

Selecting a reliable background check firm is crucial. Select one that complies with the Fair Credit Reporting Act (FCRA) and boasts a track record of accuracy and dependability. It's wise to choose services offering customizable options tailored to your organization's specific needs, ensuring you have all bases covered efficiently.

Balancing Speed and Thoroughness

Retailers need to hire quickly yet carefully, using efficient systems for swift background checks to maintain safety. By adopting new technologies and refining procedures, they can speed up the hiring process without missing important details.

Conclusion

In the world of retail, skipping background checks during hiring might seem like a shortcut, but it can actually harm both the company and its staff.

By ensuring comprehensive background screenings for new hires, retailers not only boost safety at work but also improve the quality of their workforce and safeguard their brand's image. With changes constantly happening in retail today, smart hiring practices have become more crucial than ever before.

To safeguard your business's integrity and foster a secure work environment, partner with DE RISC Group for comprehensive background screening solutions today.