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Employment Verifications: 20% of Your Revenue and 80% of Your Headaches

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Employment verification is for some consumer reporting agencies (CRAs) both a blessing and a curse. It’s clearly a service that clients want. Even when the economy suffers and hiring declines, the demand for employment verification never entirely evaporates.

In fact, when times are tough, every hire counts. Employers cannot afford anything but the best, most qualified people. And when you consider the cost of onboarding a new worker, turnover can be disastrous.

Employers are aware that job applicants habitually misrepresent their backgrounds. Three out of four human resources managers spot inaccuracies on resumes, one survey found. In another survey, 85% of job applicants admitted to lying on their resumes.

So, whether the economy is booming or collapsing, employers turn to CRAs to verify their job applicants’ employment claims. Employment verification represents a steady (if not entirely predictable) stream of revenue for background screening firms.

Unfortunately, employment verification is also one of the most headache-inducing aspects of the background screening business. Many CRAs find themselves dedicating a disproportionate amount of focus to employment verification than other, more profitable services.

Here’s why:

Employment Verification Is Labor Intensive and Complicated to Conduct

In our last article, we introduced the “35-65 rule.” This is just a back-of-the-envelope calculation on our part, but our experience working with countless CRAs leads us to estimate that about 35% of employment verifications can be conducted using automatic tools. The other 65% must be done manually.

As most CRAs know, automated employment verifications take almost no time at all. Manual ones, however, can drag on seemingly forever, as calls go unanswered and voicemails unreturned. In terms of labor, 35% of a typical CRA’s employment verifications use only one or two percent of their labor resources. The rest is consumed with manual verification.

If, as a CRA, you could somehow ease the burden on your team of manual employment verification researchers, you could free up significant resources for other work.

Employment Verification Is Difficult to Scale

For similar reasons, when the demand for employment verifications takes off, it can be challenging to scale up quickly. Learning to conduct employment research efficiently and correctly takes time.

A brand-new verification specialist can take months to reach full production levels. And in that time, the demand may change again. The economy can turn on a dime, but in-house employment verification teams are not always so quick to adapt.

Keeping Track of Client Needs Requires Massive Effort

Does any of this sound familiar?

“I want you to call twice the first day, wait two days, call another time, wait another day, then call twice again.”

Employment verification customers tend to have exacting and precise requirements for how they want CRAs to handle the manual verification process. And no two clients give the same instructions.

“If you call twice and you haven’t spoken to a human, I want you to go ahead and call a third time. But can you email me to let me know you haven’t spoken to a human?”

It’s not uncommon for a verification specialist’s cubicle to be plastered in sticky notes, each representing procedures dictated by a different client. This is not a recipe for efficiency — and it’s one reason many CRAs have failure rates of 7% to 10%.

A more effective system would be customizable without relying on humans reading and executing confusing instructions.

The Margins for Employment Verifications Are Low

Given all the issues we’ve cited so far, there should be no mystery why the margins for employment verification are typically much lower than for other background check services. Employment verifications monopolize an inordinate amount of time and resources without a commensurate payoff.

Employment Verification Generates Friction

If most CRAs were to be entirely honest with you, they would probably say, all things considered, they would prefer not to perform employment verification at all. In addition to the workload and the low margins, employment verification tends to be the last element of a background check to cause friction.

Most parts of a pre-employment background check occur nearly instantaneously. Even criminal background checks are relatively speedy these days.

But when employment verification requires manual research, it can gum up the entire background check process for three, four, or even five days. In the meantime, your clients may get irritated, and your other work can get backed up.

Who Needs the Employment Verification Headache?

Employment verification can be frustrating for CRAs. But is the answer to drop the service entirely? We don’t think so.

As we pointed out in this article’s opening paragraphs, there will always be a demand for employment verification. Plus, employment verification can bring in customers who may become long-term customers for other, higher-paying services.

What we suggest instead is to consider outsourcing manual employment verifications. A good outsourced provider will have the resources, systems, and technology to help you scale up and down quickly, adapt to changes in the marketplace, and customize the process for different clients easily.

Learn more about the benefits of outsourcing employment verifications in our recent article, “Why Outsource Employment and Resume Verifications?” And when you’re ready to get started, you can get in touch with the verification experts at SJV Data Solutions here.