Background verification (BGV) is an essential aspect of the Hiring process for companies worldwide. It involves verifying potential employees’ details, including their qualifications, employment history, criminal records, and any other relevant information. Recently, many employers have observed an increased failure rate in BGV, which has significantly impacted their businesses.
At SLK Software, we faced similar challenges during the FY 21-22 period, experiencing a rise in BGV failure rates, delayed BGV responses from employers, early attrition, and dual employment. The COVID-19 pandemic further resulted in decreased hiring rates. Despite reducing the overall time-to-hire (TAT) to 30 days and tracking the ‘Open BGV cases’ daily, weekly, and fortnightly, the BGV failure rate continued to rise.
Upon studying over 1000 BGV reports, we observed the following:
- The delayed responses to BGV vendors for ex-employee verification were due to employers working with fewer resources.
- More than 20% of BGV cases failed due to employees submitting fake employment documents from blacklisted companies.
- Working from home became the norm during the pandemic, leading to a rise in moonlighting/dual employment.
To address these issues, we introduced an “In-House Pre-Offer check” to prevent BGV issues before the offer letter is rolled out. As part of this process, we made the following changes:
- All aspiring candidates were required to pass the necessary checks immediately after their second round of interviews and before receiving the offer letter. This initiative successfully reduced the BGV failure rate from ~20% to 2%.
- A deviation approval matrix was created to handle various open BGV cases based on employment validation through EPF/Income Tax traces, reducing the overall BGV completion TAT to 15 days from 30 days.
- Candidate profile checks were standardized through Provident Fund traces and Form 16 validations before the offer rollout. This helped us understand patterns of leaving an organization, such as short-term employment, the likelihood of candidate absconding, and multiple employment, among other issues.
These initiatives enabled SLK to hold offers from candidates with negative records, control overall hiring costs, reduce attrition costs, and prevent early attrition. The introduction of the “In-House Pre-Offer check” significantly reduced the BGV failure rate and the overall TAT for BGV completion.
We now recognize the criticality of continuous study and reflection on the BGV process and trends to mitigate future BGV issues.
Authors: Kishore Bhagavath and Yarra Venkata Rao