For many years, employment verification has been almost a “necessary evil” for background screening businesses.
On the one hand, employers view resume verification as an absolute necessity in the hiring process. Nearly 80% of job seekers have or would exaggerate their professional and educational background (or manufacture it whole cloth) to get a job. Employers turn to background screening companies to mitigate the risk of hiring unqualified, under-experienced people, which takes on greater significance during the current period of economic recovery.
But while employment verifications are among the typical consumer reporting agency’s (CRA’s) most requested services, it is also among the most labor-intensive, inefficient and non-scalable services. Approximately two-thirds of verification orders must be carried out manually — a process that often involves placing multiple phone calls, leaving messages, waiting days for callbacks, and so on.
Employment verification is also difficult to scale. Entry-level verification specialists can require months of training and practice to get up to full production levels and when one walks out the door, the institutional knowledge and customer-specific rules leave with them.
Given the time and resources they consume, it should be no surprise that margins for employment verifications are typically lower than other background screening activities. If not for the consistent demand that helps justify the risk of maintaining verifications-specific staff, many CRAs would likely jettison their employment verification services altogether.
But the demand is there. In fact, as we write this in the fourth quarter of 2021, demand for employment verification services has never been higher.
In this ebook, we’ll explore the market forces that are driving employment verification orders to new heights, as well as how your background screening firm can make the most of this unprecedented opportunity. We’ll show you how to dig yourself out of the verification backlogs, transforming your business’s most resource-intensive offering into a growth engine.
How Did We Get Here? Taking the Pulse of the Labor Market
The answer to “How did the demand for pre-employment background screening get so high?” starts where so many other things do these days: with the COVID-19 pandemic.
During the first few months of the pandemic, organizations of all types were forced to scale back and shut down. Retail stores, restaurants, and hospitality establishments closed, some never to reopen. Travel slowed to a standstill, and healthcare providers stopped treating non-emergency cases.
The employment impact was profound. Businesses laid off and furloughed non-essential workers. Hiring dropped off dramatically, and unemployment increased sharply. The government attempted to mitigate these issues and stabilize the labor force with programs like the Payroll Protection Program that provided subsidies to small businesses to maintain payrolls they otherwise could not afford.
The V-shaped turnaround has been just as pronounced. It would be premature to proclaim the COVID crisis over, but the contrast between 2021 and 2020 is night and day from a hiring standpoint.
As businesses have reopened to full capacity and production levels, they have aimed to restore their workforces quickly. Job openings set record after record throughout 2021, exceeding 10 million for the first time in history.
But rapid rehiring and record job openings in the wake of the COVID pandemic only partially explain skyrocketing demand for employment verification services. To fully understand the situation, we must examine three additional labor market trends:
1. ‘The Great Resignation’ Is Driving Job Churn
“The Great Resignation” is a name some economists and media observers have bestowed upon an enormous economy-wide increase in job churn that began in the spring of 2021 as vaccinations against COVID-19 became widely available.
In April 2021, a record 4 million Americans voluntarily left their jobs for another. The mass exodus-new-job-cycle continued through the summer. In August 2021, 4.3 million people quit their jobs, setting yet another record.
Why are so many workers changing jobs right now? Experts such as Andrew Klotz of Texas A&M University point to four primary motivators:
People who had been planning on leaving their jobs instead held on throughout the COVID lockdowns. Once a vaccine became available, people in this group finally made the change they had been postponing.
The stress of the pandemic contributed to higher levels of employee burnout, which often correlates with increased turnover.
People used the time away from work during the pandemic to reconsider their priorities and goals. Many concluded their current working situation was not worth the stress and opted to focus on their families or personal interests.
At the height of the pandemic, millions of Americans experienced the flexibility and convenience of remote work for the first time. Many would rather quit than go back to the office.
Each of these job transitions generates an employment verification opportunity for CRAs.
2. Remote Work Is Here to Stay
The widespread adoption of remote work accelerated a trend already underway for years — and is unlikely to reverse itself.
While 83% of CEOs say they want their employees to return to the office full-time, only 10% of employees share that desire. Given that employees are in the driver’s seat right now, it’s likely that more and more employers will make the hybrid workplace model a permanent standard. Big-name employers such as Slack, Ford, and Salesforce have already made the switch.
3. The Gig Economy Continues
The COVID pandemic did not slow the gig economy. Some indicators show the pandemic may have accelerated the rise of independent employment workers.
In many ways, gig work aligns with the priorities of people who have quit their jobs during the Great Resignation. Gig work is flexible and doesn’t require going into an office. For these reasons, some experts predict that gig work will dominate the post-pandemic labor landscape.
Is This the Perfect Storm for Employment Verifications?
Experienced background screening professionals will tell you that what truly powers demand for employment verifications isn’t hiring alone, but churn. The more people changing jobs, the greater the need for employment verifications. And a lot of people are changing jobs right now.
Thanks to remote work and the gig economy, employers have never had less direct contact with job candidates and employees. Employers rely on employment verification and other background checks to help them gain confidence in employees they may never get the chance to size up in person.
In this chapter, we surveyed the labor market forces influencing demand for employment verifications. In the next chapter, we’ll explain why human resource departments need CRAs to perform this valuable work for them.
The employer perspective: CRAs to the rescue
Why can’t internal human resources departments perform all the necessary employment verification work on their own? Why do they need the help of CRAs?
One reason is that HR departments are as short-staffed, overworked, and as burnt out as everyone else these days — if not more so. HR professionals oversaw layoffs and furloughs during the worst of the pandemic and organized transitions to remote work. Now, they’re confronting a labor shortage, enforcing vaccine and testing mandates, and strategizing hybrid work arrangements.
According to one survey, 70% of HR leaders say this has been one of the most challenging years of their career. Many HR departments simply can’t squeeze employment verifications onto their overloaded plates.
This is not to say that hiring professionals are letting job candidates get away with misrepresenting their experience and education.
At InformData, we’ve observed that drug testing requirements have decreased in non-regulated industries while demand for employment verifications surges. This tells us that employment verification is more significant to employers as a measure of trustworthiness.
HR isn’t immune to the challenges of hiring. Faced with increasing pressure to fill vacant positions, HR staff that remain below pre-COVID capacity are caught between the proverbial rock and a hard place. As a result, the highly labor-intensive task of employment verification is increasingly outsourced to CRAs with HR taking on the role of outsourcing management rather than doer of the tasks it requires.
Answering the call: employment verification challenges for CRAs
There are two sides to every equation, and on the opposite side of the equation from the high demand for employment verifications is the ability of CRAs to fulfill that demand.Background screening companies have not been immune to the labor market forces that have shaped the past two years. Early on in the pandemic, most CRAs were forced to cut back on staffing. And like many other companies, CRAs are finding it difficult to regain their pre-pandemic staffing levels and productivity.
Amidst a labor shortage and war for talent, experienced background screening researchers have the upper hand in the hiring environment. The CRAs that can offer the highest salaries and most enticing benefits are attracting the most returning researchers. Other would-be background screening staffers are leaving the industry altogether, attracted by the high hourly wages offered by large firms such as Target, Costco, and Amazon.
Entry-level background screening researchers are not an equal substitute for industry veterans. The typical CRA relies heavily on institutional knowledge. When someone leaves, they take their hard-earned experience and knowledge with them. Training documentation is often ad-hoc and barebones; to compensate, information is shared verbally from employee to employee.
Our research and direct experience show that it has traditionally taken six weeks or more to get a new verifications researcher up to full production.
In the best of times, CRAs are slow to adapt to market fluctuations. In today’s tumultuous labor market, some CRAs are wondering if hiring is even worth the risk. What if background screening demand flattens or declines again?
Data Supply Chain Disruptions
Background screening firms are also struggling with issues on the other end of the phone. Some HR departments have been so inundated with verification requests that they’ve stopped returning calls.
Criminal background checks — another critical component of pre-employment background screening — are taking longer than usual, as well. Many courts have yet to relax social distancing rules that require appointments for research, limit the availability of public terminals, and set time limits for research.
Conventional supply chain deficiencies are also causing background screening delays. It’s not just qualified researchers that CRAs lack; computers, phone systems, and other critical IT infrastructure are in short supply, too.
Meanwhile, the backlogs are piling up, and end-users are growing impatient. Background screening companies are asking themselves, “Which client is going to fire us because we’re backlogged?”
The natural solution is to send some or all of your overflow verification work to a third-party background screening data provider. But can you trust such an important aspect of your CRA’s business with somebody else? And if so, who?
To find the answers to these questions, we’ll review the important factors influencing CRAs considering the decision to outsource employment verifications in the next chapter.
Outsourcing Employment Verification: A Winning Strategy
To some CRAs, the idea of outsourcing employment verification work may seem a little strange. If your business is like most CRAs, you’ve invested countless hours and spent considerable funds developing an in-house verifications team. And until recently, that in-house team has been sufficient.
Why would you turn an internal process over to an outside organization?
For one thing, outsourcing may be your only way out of the backlogs during this period of unprecedented demand. More importantly, it may be the only alternative to turning down work and leaving revenue on the table.
But putting aside the immediate benefits of outsourcing, consider the bigger picture. A fully internal verifications operation may have been presumed to be a core competency of a CRA but counter-intuitively, may never have been quite as valuable or irreplaceable as it seems.
Why Outsource Verifications? 3 Benefits
Regardless of the state of the labor market, there are three strong reasons to consider outsourcing some or all of your verification orders:
1. Outsourcing Verifications Increases Efficiency
Earlier in this ebook, we mentioned that about two-thirds of employment verification orders must be completed manually. The other third can be handled with automated tools. Unfortunately, manual verifications dominate the bulk of researchers’ time, while automated verifications can be completed in mere moments.
Consider the efficiency boost that would come from outsourcing your manual verifications while keeping your automated orders in-house.
Released from the endless cycle of phone calls, voicemails, and waiting for return calls, your verification team members could complete a much greater volume of work, or they could take on higher-margin work from your other departments, such as criminal background checks.
2. Faster and More Cost-Effective Onboarding and Scale
Onboarding is a time-consuming chore for most CRAs. While new hires take weeks to get up to speed, the entire team can fall behind, missing deadlines and aggravating end-users.
In contrast, the best third-party background screening data providers have onboarding down to a science — because they’ve gone through it so many times, worked out the kinks, and honed the process. This is only possible with the industry knowledge, technology, and sheer size of an organization whose business is verifications.
3. An Antidote for Unpredictability
The COVID-19 crisis is only the latest (and perhaps most extreme) reminder that projecting the future staffing needs of a CRA has always been difficult, if not impossible. As we noted above, many background screening companies cut back at the height of the crisis only to find themselves short-handed and unable to rehire when demand rebounded.
An ongoing relationship with a reliable outsourced verifications provider can insulate your company from an unpredictable economy. With a trusted team of experts standing by to work on your behalf, you can focus on running your business in the present rather than worrying about what the future holds.
It’s Time to Take a Hard Look in the Mirror
Outsourcing verifications is neither a failure nor a surrender. It’s simply an acknowledgment of the reality that a CRA can’t be best-in-class at every task asked of them and can only take on so much work without getting bogged down.
The economy is shifting rapidly. Your background screening business needs to remain agile and responsive to flourish. Outsourcing grants you the flexibility you need to compete and grow.
We encourage you to take an honest assessment of what your firm does well and the areas where you struggle to meet customer expectations. If verifications are holding you back, consider partnering with a data provider whose business is verifications and that has the people, processes, and technology to help you transform your verification challenges into opportunities.
We’ll introduce you to one such provider in the final chapter of this ebook.
InformData is prepared to help CRAs meet the challenges of the current economy
Over the past two decades, InformData has hired and trained the most skilled people in the background screening industry, perfected our processes, and developed cutting-edge data technology to serve as a seamless extension of your own people, processes, and technology.
We are ready to jump in at a moment’s notice to help you adapt quickly to whatever the market demands, converting your high fixed costs and constant maintenance into a variable cost in your operational model.
InformData was built for this moment
At InformData, we’ve been closely monitoring labor market fluctuations since the COVID pandemic began in 2020.
Months ago, we recognized that background screening companies would soon become overwhelmed with a flood of employment verifications. We wanted to ensure we would be there for our customers, so we began preparing for the storm early, hiring and training over 150 new verifications specialists over the summer to keep up with surging volumes.
But our readiness to help CRAs stay flexible and maintain growth amid an unpredictable market began with investments we made long before anyone ever heard of COVID-19. Our multi-million dollar state-of-the-art cloud-powered call center technology is based on the same scheduling, automation, and artificial intelligence capabilities used by world-renowned customer service organizations.
Years of experimentation and data analysis have resulted in advanced algorithms that place calls to the right people at the right time, removing guesswork and delays from the employment verification process.
Our scientific approach to employment verification allows us to modulate our operational footprint effortlessly, bringing on new team members in a matter of days to handle any level of volume and even the most complex custom requirements.
Employment verification call center features unique to InformData
You won’t find these capabilities anywhere else in the background screening industry:
- Seamless research through automated integrations with third-party data sources such as Google, The Work Number, and the National Student Clearinghouse.
- A customized client experience managed by an industry-leading call-flow engine.
- Customized documentation rules for each client.
- Custom call pattern recognition to align with your customers’ needs.
- Auto-dialer technology built to boost productivity and efficiency (a 120% improvement in call volume over our closest competitor).
- Optimized call acceptance rates via local caller identification.
- Optimized completion rates through targeted time-zone calling.
- The ability to complete verification via mobile and web — which further increases our successful completion rate.
- Interactive Voice Response (IVR) verifications.
To learn more about how InformData is uniquely suited to help CRAs meet the challenge of the moment, we spoke with Jamie Cover, InformData’s Manager of Verifications Operations.
Jamie is responsible for running InformData’s verification unit as a separate P&L, reflecting our philosophy that, rather than being a loss leader, the best company at employment verification work can and should provide the service at a profit (for you and us).
Read our interview with Jamie, InformData’s Manager of Verifications
In addition, all of our processes are built to align with Professional Background Screening Association (PBSA) standards. If you use us, it checks off all the boxes you need for that accreditation.
Finally, we never rest on our laurels. We’re constantly innovating and improving. Serving over 200 CRAs gives you quite the dataset to learn from!
For us, the question is always, ‘What can we do better?’ What changes can we make to get people the results faster?’
We understand the industry. We know that it’s all about turnaround time and the impact on someone’s life. The work you’re doing as a CRA — and therefore, InformData’s work — has a direct impact on someone getting a job. And so, quality, accuracy, and speed are paramount.”
InformData employment verification by the numbers
- 1.8 million verifications processed annually
- 89% successful completion rate on employment verification
- 65% verifications completed on the first two attempts
- 2 days average turnaround time
Is your background screening company fighting to keep ahead of the backlogs? Is your CRA drowning beneath a flood of employment verification orders? InformData’s industry-leading people, processes, and technology can help release the pressure.
Get in touch and let InformData help with your verification challenges.