The HR Compliance areas of major global firms that operate in Latin America – especially in sectors such as energy and gas, financial services, pharmaceutical and logistics – are supported by local partners to maintain high standards of compliance for contracting employees, partners or suppliers.
Take a closer look at the 5 reasons why having a Corporate Background Check Program can make you more competitive.
- Reduce the rate of employee turnover
According to the latest edition of the Contracting Risk Index, the first index on risk related to selection of applicants in Latin America published by MultiLatin, more than 10% lie about their academic background, and 22% about their professional experience. Accepting unqualified applicants can be costly for a company, as sooner or later unqualified employees need to be replaced.
When that moment arrives, the company will have already spent money on advertising, selection, integration, training, etc. And they will still have to face costs for the employee’s separation. It is estimated that costs would equal around 5 months of the applicant’s salary. For this reason, adequate screening of academic and employment histories means significant cost savings, in addition to a positive impact on both work environment and company operations.
- Avert or lower the high cost of reputational risk
According to Aon’s 2019 Global Risk Management Survey, damage to reputation/brand was rated as the number two concern, reflecting the potential of a corporate setback to set off a chain of major consequences.
Professional negligence, fraud, illegal operations, abuse of employee rights or decisions harmful to the workplace are major factors impacting a company’s reputation. It is important to trust but also verify and review the background of applicants who join the company in a position to wield some degree of responsibility.
- Increase employee security and effectiveness
According to the latest National Survey of Urban Public Security, conducted by Mexico’s National Institute of Statistics and Geography (INEGI, acronym in Spanish) in March 2019, the perception of insecurity in the workplace has grown. 40.3% of those surveyed said they felt unsafe at work. Undoubtedly this has a significant impact on employee performance at different levels and in different sectors. Greater prevention in the hiring process will help avoid introducing individuals with criminal records or inappropriate behavior into the company, generating a safe environment that will directly impact employee morale and performance.
- Build trust to develop new business relationships
Most international companies operate under a high standard of compliance that incorporates the review and screening of employees, partners and suppliers, just as they do for complex processes like mergers and acquisitions. At stake is the company’s reputation and business, and the potential impact of integrating someone unqualified or with a criminal background,
Most of these companies carry out in-depth reviews of their business partners in other countries and establish long and productive relationships with those companies with similar standards of compliance. For this reason, it is important for local firms to have background check programs. A corporate background check program is a very competitive factor that facilitates closing new business with international companies, especially local companies whose background check providers also guarantee high operating standards.
- Decrease internal theft
According to the most recent National Victimization Survey of Companies carried out in 2018 by the INEGI, 63% of companies consider insecurity and delinquency as the problem that most affects them. The 2017 figure for crimes committed against the private sector reached 86.6%. Employee theft is the most recurrent crime. A thorough review of an applicant’s litigation history and professional career, after verification of their identity, can greatly reduce exposure to this risk.
Keep in mind
- A company’s reputation is its most valuable asset.
- Advancing a safe work environment through appropriate hiring increases employee motivation and efficiency.
- Raising your compliance standards for contracting employees, partners and suppliers will increase your company attractiveness to international firms.
2019 Global Risk Management Survey
Source: National Survey of Urban Public Security (ENSU, acronym in Spanish)
Source: National Victimization Survey of Companies (ENVE, acronym in Spanish)