The ultimate guide to turning verification challenges into opportunities for CRAs.

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 least scalable services. Nearly two out of three verification orders must be carried out manually — a process that often involves placing multiple phone calls, leaving messages, and waiting days for callbacks.

Employment verification is also difficult to scale. Entry-level verification specialists can require months of training and practice to reach full production levels. When a team member walks out the door, 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 the demand did not justify the risk of maintaining verifications-specific staff, many CRAs would likely jettison their employment verification services altogether.

But the demand is there. While the “Great Resignation” era has passed, hiring trends remain strong, promising many more years of growth for the background screening industry.

In this guide, we’ll explore the market forces driving employment verification orders, as well as how your background screening firm can position itself for success in the current employment landscape. We’ll show you how to dig yourself out of the verification backlogs, transforming your business’s most resource-intensive offering into a profit-making growth engine.

We published the previous edition of this guide at the height of the “Great Resignation,” a period of extreme job churn that followed in the wake of the COVID-19 pandemic. Throughout 2021 and 2022, workers quit their jobs in record numbers in search of higher pay, more fulfilling work, and better work-life balance. Demand for pre-employment background screening skyrocketed.

Suffering from their own labor shortages and unable to scale up quickly after the pandemic, many CRAs struggled to keep up with the demand. Employment verification orders fell into ever-growing backlogs as end-users became increasingly irritated.

What a difference a couple of years can make.

By all indications, the Great Resignation is over. In its place, a “Big Stay” has descended upon the employment landscape, bringing with it new challenges — and opportunities — for the background screening industry.

The ‘Big Stay’ and What It Means for CRAs

Sometime around November 2023, the nationwide quit rate descended to pre-pandemic levels, according to U.S. Bureau of Labor Statistics data. During a three-month period in 2023, the percentage of employees who were new hires dropped below 4%. It had been at 9% during the same months of 2022.

These numbers indicate that the post-pandemic job-hopping era has drawn to a close. Employees are settling in for the long haul — at least, to the extent they were before the pandemic.

The Great Resignation was never going to last forever. Experts point to a few reasons why it ran out of steam towards the end of 2023:

• Fewer employers are hiring. Workers who want to leave their jobs have fewer options. While there are still plenty of vacancies, the hiring rate is far from where it was at its peak in 2021. 
• Fears of an impending economic downturn — perhaps a recession — and a wave of layoffs in certain industries have spooked workers.
• Wage growth has slowed. A new job no longer translates automatically into a pay bump.

To be sure, to say that job churn has normalized to pre-pandemic levels does not mean no one is hiring. Hiring continues at a robust, if not stratospheric, pace. Indeed, the U.S. economy kicked off 2024 by adding 353,000 jobs — far more than expected.

Nor does it mean that employment verification can no longer represent a significant source of revenue for background screening businesses. Employers still want to hire the most qualified employees, and they will rely on CRAs to help them do so.

Plus, while job churn is tailing off, two additional employment trends show no signs of slowing:

1. Remote work is here to stay

The widespread adoption of remote work during the pandemic period accelerated a trend already underway for years.

In June 2022, McKinsey concluded, “After more than two years of observing remote work and predicting that flexible working would endure after the acute phases of the COVID-19 pandemic, we view these data as a confirmation that there has been a major shift in the working world and in society itself.”

McKinsey found:

• 58% of American job holders can work remotely at least some of the time.
• 35% of workers can work remotely full-time.
• 23% are offered remote work part-time or on occasion.
• When workers are offered the opportunity to work flexibly, 87% of them take it.

For a time, it seemed as if the remote-work trend would die off and workers would be recalled, en masse, to the office. Several high-profile calls for RTO (return to office) received attention in 2023, but they did not prove popular with employees – to say the least. Meanwhile, researchers reported that RTO mandates do not improve company performance.

As the RTO movement fizzles, the working world will likely settle into a hybrid- or remote-dominant model in 2024, with the share of remote or hybrid employees growing throughout the decade.

2. The gig economy continues

The COVID pandemic did not slow the gig economy. In fact, 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 quit their jobs during the Great Resignation. Gig work is flexible and doesn’t require going into an office.

For these reasons, experts predicted that gig work would continue to dominate the post-pandemic labor landscape, and the experts were correct.

According to the Upwork Research Institute’s survey of 3,000 professionals, 38% of the U.S. workforce performed freelance work in 2023, contributing $1.27 trillion to the nation’s economy.

Challenges and Opportunities for Background Screening Businesses

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.

As the Great Resignation gives way to the Big Stay, the challenge for CRAs shifts from handling an unprecedented volume of verification orders to gaining a competitive edge in a crowded marketplace.

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.

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. 

According to the 2023-24 SHRM State of the Workplace Report, 57% of HR professionals say they are working beyond normal capacity. More than a quarter are actively looking for a new job.

This is not to say that hiring professionals are letting job candidates get away with misrepresenting their experience and education. Again, according to SHRM survey data:

• 58% of HR professionals say their organizations faced their greatest hiring challenge in 2023.
• 70% of HR pros rank “finding workers with the skills their organization needs” as a top priority.
• 56% say their team “lacks sufficient staff to cover the workload.”

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, understaffed HR teams 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; HR takes on the role of outsourcing management.

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 several 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 experienced 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?

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.

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. 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.

Many CRAs consider their verifications process to be an essential ingredient in their “secret sauce.” However, as we’ll demonstrate below, outsourcing verifications to the right provider may help your business differentiate itself from your competition with faster turnaround times, greater customization, and better completion rates.

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 guide, 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 was 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, and it’s tough to predict what lies ahead. To flourish, your background screening business needs to remain agile and responsive. 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 direct-source data provider whose business is verifications and who 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 guide.

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 for years. For example, as soon as the COVID pandemic began in 2020 we recognized that background screening companies would become overwhelmed with a flood of employment verifications. In order to ensure we would be there for our customers, we began preparing for the storm early, hiring and training over 150 new verifications specialists 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 Director 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 Director of Verifications

In addition, all of our processes are built to align with Professional Background Screening Association (PBSA) standards. Using our services 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 were completed on the first two attempts
• Two 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 relieve the pressure. 

Get in touch and let InformData help with your verifications challenges.