In July 2018, Uber announced that it would begin conducting continuous background checks on their drivers. Although the company has had a difficult history when it comes to culture issues and passenger safety, this particular decision moved Uber ahead of the curve. It showed they understood that whether caused by executives, employees, or contractors, enterprise risk stems from individuals whose behaviors can change over time—and that after years of negative press and internal shocks, they are finally doing something about it.
Like Uber, many companies today are starting to recognize the limits of traditional background checks and looking to recurring, real-time screening solutions to improve their employer brand. However, while nearly half of employers are looking for ways to identify high risk employee behaviors, only 11 percent of companies formally screen past the initial hire. This means that nearly 9 in 10 companies are depending on pre-hire background checks to stay out of the headlines and protect their employer brand.
There are many considerations that any employer should make before pursuing continuous background checks. However, there's no question that the causes of risk have changed for any company that is working to build a winning employer brand. Here's how enterprise risk has changed in the last decade and why a growing number of companies today taking their screening beyond the initial hire.
Why continuous screening? Because employer branding has changed
At the dawn of the 21st century, companies had a relatively manageable landscape of risk. With fewer products to choose from and fewer channels of communication, customers stayed happy so long as a company’s product or service did what it was supposed to do. As a result, pre-hire screening allowed companies to filter out the majority of risk to their employer brand. When an issue did occur, it often had more to do with product or service deliverability—meaning that an employee could potentially act out of line without creating huge problems for the business. In other words, the chances that an individual would trigger a lasting issue or scandal was relatively small.
Today, every person in the organization can become a source of risk. As consumers think beyond deliverability and start to look for brand authenticity, they are now considering what businesses represent as a whole when making a purchase. With this shift in mindset, enterprise risk is no longer just a PR, customer success, or executive issue. Rather, every person in the corporation now has the potential to turn away customers and negatively impact the employer brand. Consumers today expect more, and companies who ignore them are risking a lot more than simply their reputation.
Over the last few years, negligent approaches to risk management have led companies to lose market cap, market share, and even market entry. In the last 18 months alone, we saw four companies in various industries lose a collective $7 billion in market cap over news about alleged executive misconduct. This was not only damaging for each company internally, but sent shockwaves on the consumer side as well. Increasingly, brands are having their lowest sales in decades, losing their ability to attract top talent, and forced to leave entire markets, all because their culture and background checks were deemed unsafe.
Why is pre-hire still the status quo? Times have changed, and companies who ignore the growing power of consumers are missing the reality that all it takes is one major event for the rockstars you hired to become a liability to your employer brand. As enterprise risk becomes more complex, an ounce of preventative intelligence beyond the initial check is worth far more than your best new PR campaign.