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2021 Employment Background Screening Analysis

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If you’re still waiting for the employment landscape to go “back to normal” at the tail-end of the COVID-19 pandemic, you better make yourself comfortable. It’s going to be a while.

As we pass the midpoint of 2021, it’s becoming increasingly apparent that even as in-person work becomes safe again, attitudes and expectations toward work will never be the same.

For CRAs, this new reality brings unprecedented opportunities for growth — along with challenges that must be addressed to make the most of these opportunities.

In this article, we’ll:

  • Take the pulse of the labor market as it stands in mid-2021.
  • Explore what it means for CRAs and employment background screening companies.
  • Discuss how to position your firm for success in this equally exciting and disconcerting new world.

What’s Happening in the Jobs Marketplace?

It may be too soon to call the current economic situation “post-COVID.” The pandemic is still raging in some regions, and pandemic-control measures such as mask orders and social distancing guidelines continue or are being brought back in certain places.

Nevertheless, the hiring freezes and layoffs that accompanied the pandemic seem to be well in the rearview mirror. As of this writing (mid-July), labor market data company Emsi reports that job postings nationwide are 33% higher than they were at this time last year. We’re seeing new employment patterns such as “gig” employment and “The Great Resignation” that are increasing employment churn in every sector.

New jobs are being created at an astonishing rate. In April, job openings set a record at 9.3 million and maintained that level through at least May (according to the most recent numbers from the U.S. Bureau of Labor Statistics).

Service job openings, in particular, have seen huge jumps as restaurants, bars, hotels, and movie theaters return to full capacity. Leisure and hospitality jobs accounted for 40% of total job gains in June 2021.

Meanwhile, remote work arrangements that seemed temporary at the beginning of the pandemic have become standard in the white-collar world. Big-name employers such as Amazon, Facebook, and Ford are offering permanent work-from-home options.

Companies are making remote work permanent because employees insist on it. (One survey found that while 83% of CEOs want their employees back in the office full-time, only 10% of employees feel the same way.) And job seekers are in the driver’s seat right now. 

Last month, we reported on the “Great Resignation,” a massive economy-wide surge in job churn brought on by several converging factors. People who had postponed job changes during the pandemic are now pulling the trigger. On top of that, having had time to reflect during the pandemic, many employees are reconsidering their career choices and work-life balance.

The stratospheric growth of remote work has contributed to churn, as increased worker mobility has put more emphasis on the at-will employment concept. 

The pandemic did nothing to slow a job-hopping trend that began long before anyone had heard of COVID.

According to a global IBM study, 20% of workers changed employers in 2020, and 28% expect to make a change in 2021. More than two-thirds of millennials have a side hustle, according to a pre-pandemic survey.

How the 2021 Job Market Impacts the Demand for Employment Background Screening

More people being hired and more people changing jobs have always been tied to increased demand for background screening services. This may be especially true for service fields, where employees interact directly with the public.

In addition, employers have less or no personal contact with job candidates these days. The remote work boom means employers are hiring from areas they would have previously avoided. Employers may turn to background screening for assurance that they can trust their remote hires.

With more jobs to fill than people looking to fill them, many employers, by necessity, are looking past work experience and, instead, seeking candidates with skills, ambition, and the ability to learn. But this means many new hires are unknown quantities to their employers, and reliance on background screening only increases.

The View from SJV

Our work at SJV Data Solutions puts us in regular contact with hundreds of CRAs across the nation and around the globe. We are in a unique position to assess the current job market and the demand for background screening.

What we’re seeing and hearing lately is:

  • Internal human resources departments cut back during the early days of the pandemic. Many HR departments are now struggling to keep up with the demand for employment background screening. They’re relying on CRAs to pick up the slack.
  • The current increase in demand for employment and education verification is unmatched. Meanwhile, drug testing requirements have decreased in non-regulated industries. This trend could signify that employment verification is more important to employers as a measure of trustworthiness.
  • Criminal background checks are taking longer to complete — primarily in jurisdictions that can’t be automated. Many courts still have social distancing rules that limit the number of public terminals available, require appointments for research, and set time limits on each researcher.

Each of these factors increases demand for screening services while, at the same time, putting extra pressure on CRAs to creatively scale their operations to maintain turnaround times, quality, and comprehensiveness of their services.

Challenges for CRAs

Unfortunately, as employers themselves, CRAs are not immune to cataclysmic shifts in the labor market.

Along with nearly every business, most CRAs were forced to cut back on staffing during the worst of the pandemic. And even as the demand for background screening takes off, some CRAs are finding it difficult to grow their teams accordingly.

The war for talent (again, employees have the upper hand in the current job market), rising wages in other industries, and unemployment subsidies are all making background screening researchers reluctant to return to their former employers.

As you probably know, brand-new hires are rarely the ideal replacement for veteran researchers. It can take months of training and on-the-job experience to get a first-time researcher up to full productivity.

Plus, some CRAs are wondering if hiring is the right solution right now. Staffing is risky. What if background screening demand levels off or drops again?

Transforming Challenges Into Opportunity

As a CRA, you might be looking at the current market trends as too much of a good thing. How can you take advantage of mounting demand while working with a reduced or inexperienced staff — and while maintaining your flexibility to handle whatever lies ahead in the uncertain future?

The employment landscape may never return to its pre-pandemic shape. Perhaps it’s time to let go of your own pre-pandemic ways of thinking, as well.

Thinking differently about your own CRA starts with an openness to doing things differently. For example, if you’ve never considered outsourcing some or all of your overflow verifications to a trusted data provider, now might be a good time to look into it.

Be honest about what your firm does well and what needs improvement relative to your customers and prospective customers’ needs. If there’s an area where you excel, consider focussing your staff there and seeking third-party assistance for the areas where you fall short.

Succeeding in the 2021 economy means finding ways to be nimble and responsive in the short term while building out essential infrastructure to support long-term growth and efficiency. The solutions to both are found in your people, processes, and technology, either via organic internal improvements or external partnerships or acquisitions.

Position Your CRA for Post-Pandemic Success

The COVID-19 pandemic will soon be gone for good, leaving a radically altered labor market in its wake.

An explosive hiring surge and extraordinary job churn have taxed CRAs and HR departments to their limits in the first half of 2021. Many CRAs can no longer keep up with the verification demand.

Some of these changes in the market may be transitory; others, like remote work, are here to stay. The employer-employee relationship may never be the same again.

Your CRA has never faced challenges like this. At the same time, you’ve never had a better opportunity to grow.

Surmounting your challenges and maximizing the growth opportunity will take being open to change and reevaluating your organization’s people, processes, and technology. As you do, you may start to consider supplementing your organization’s strengths with a third-party data partner.

But who can you count on? Learn more in our free online guide, “3 Defining Characteristics of a Best-in-Class Outsourced Verifications Partner.”

 

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