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The High Cost of Careless Hiring
Hiring an applicant who turns out to have been lying can be an expensive mistake for a company -- and it can sting even more if the lying could have been detected ahead of time for the price of a simple background check.
Among the costliest consequences of substandard hiring is the negligent-hiring suit. Settling or losing such a suit can cost an employer $1 million or more, some experts warn.
Typically, a negligent-hiring suit stems from the actions of an employee whose background was checked inadequately if at all during the hiring process and whose villainous history was not discovered until the person had done further harm. Examples abound: The plumber with a record of violent felonies who murders a customer. The teacher forced out of two schools for sexual improprieties and later accused of molesting a student. The nursing home worker with numerous criminal convictions who assaults a visitor.
Those accounts and others are cited by HR consultant and author Wendy Bliss in her book
Legal, Effective References (Society for Human Resource Management, 2002) in explaining the risks of negligent hiring. While employers have the right to hire the best-qualified individuals, she writes, they also have a legal duty not to hire unfit individuals who pose a threat of harm to others.
You have a negligent-hiring problem on your hands, Bliss explains in her book, if the following conditions are met: An employer hires an unfit individual who injures others, and the employer did not make an adequate inquiry into the applicants background so it failed to discover facts that would have led to the applicants rejection because of the foreseeable risk of harm presented by having the applicant work in the particular position.
Inadequate checking can also give a company a big black eye if it turns out that high-profile employees have lied about their credentials. Last year, for example, two corporate executives paid hefty prices when it was disclosed that they didnt possess the MBAs they had said they earned. Ron Zarrella, CEO of Bausch & Lomb, the eye care company in Rochester, N.Y., forfeited a $1.1 million bonus. Kenneth Lonchar, then chief financial officer of Veritas Software Corp. in Mountain View, Calif., resigned.
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