The ROI of background screening

ROI of background screeningLet’s first consider the data we’d put into such an equation. These will vary from business to business, but there are a few core costs to consider:

Employee turnover/bad hires

The average cost of a second-level manager bad hire is a massive $840,000. In general, it will cost an employer 100%-250% per position (as a percentage of salary plus benefits). What’s your current rate of turnover, and how often do you consider the consequences of that number?

Workplace violence

According to the U.S. Department of Justice’s National Crime Victimization Survey (NCVS), one in five violent crimes in the workplace is committed by current or former employees. While harder to place a monetary value on holistically, workplace violence may be the harshest consequence of a bad hire and its cost reaches far beyond litigation and turnover.


The estimated annual cost of fraud, worldwide, is $3.5 trillion. Occupational fraud and theft is a problem that knows no borders, affecting employers around the world. In fact, in the US, the average total loss per fraud is $1,200,000.

Understanding your ROI

So, once we have this data, what do we do with it?
  1. Using the above costs, along with any others relevant to your business, identify the annual cost to your business. For example, if your turnover rate is 20% and your hire 100 employees per year, you can identify the cost per turnover (re-hiring/training costs etc.) and extrapolate your annual cost across all hiring.
  2. By identifying your costs, you’ve also identified potential savings. For example, if you can reduce your turnover rate by 20%, what would that mean in terms of reduced costs?
  3. Finally, add in the cost of a background screening company. Evaluating savings vs the cost of a screening company will display your potential ROI.
Let’s take an example…

Annual cost of turnover: $250,000

Targeted turnover reduction of 20% (potential savings): $50,000

Cost of screening company (100 hires x a $65 background check): $6,500

Value of screening program: $100,000 – $6,500 = $43,500

A return on investment of more than 500%!

Implementing a background screening program makes clear financial sense, which is why so many organizations have a program in place. What’s your current ROI? If you’re looking to create a program at your organization, or interested in understanding how you can get a better ROI on your background screening program that you currently earn, get in touch with the MYB team today.]]>

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