Ted L Moss, Security Expert

Human Resource Outsourcing (HRO) on the rise - but use caution

Human Resources Outsourcing (HRO) is the fastest growing subset of the wide-ranging Business Process Outsourcing (BPO) sector. Most companies consider the use of an HRO provider as a way to cut costs. The general thought is that any business function that does not focus on improving the bottom line, can be outsourced. Businesses today want their expenses to directly impact their core business processes.

Forrester Research, citing its released report “BPO’s Fragmented Future”, said, “Firms looking to outsource core business processes like human recourses to gain cost savings may not find one single vendor that can manage such complex offerings.”

Forrester surveyed 82 senior executives and held interviews with early BPO adopters, and reported inflexible contracts and difficulty managing vendors.

HRO Today just carried an article about outsourcing background checks with the title “Staffing Firm Finds a Better Option In Outsourcing Screening Services.” According to the story,

A privately held staffing company based in Seattle, Parker Staffing Service, LLC, provides temporary, contract, and full-time work in administrative, call center, IT, IS, development, QA, healthcare IT, and sales and marketing positions. Its staffing division focuses on the Pacific Northwest, while the technical and search divisions place candidates nationwide. Parker decided to outsource background checks on every candidate it placed.

If your HRO provider is in charge of selecting your pre-employment screening provider, that leaves your company twice removed from this important function.

The following incident may illustrate the fact that staffing firms and HROs are still not taking pre-employment screening seriously enough and are putting both their business and their client at risk.

A 30-year old woman, high on crack, drove her vehicle into a crowd enjoying the Unifest Food and Music Festival in D.C., causing injury to 40 people including 7 kids. At the time of the incident, Ms. Bell was employed by a DC temporary staffing company on a receptionist assignment for the office of former mayor and now D.C. council member Marion Berry. After hearing of the horrific event, Berry’s office terminated the woman’s assignment. They also terminated their contract with the staffing company because “they may not have properly investigated her background prior to placing her in office.”

Pre-employment screening may be the HR function you want to maintain control of… One aspect of HRO, pre-employment screening, may be the one sector of an HRO’s offerings that you may not want to utilize. The pre-employment screening industry is heavily regulated. A plethora of federal, state and local laws regulate the use of criminal records for pre-employment screening purposes, and your HRO most likely is not specialized enough to keep up with legislation.

Certain states require pre-adverse action and adverse action letters, some states limit the number of years criminal records can be searched, others specify that certain types of criminal records cannot be used at all. It is doubtful that any BPO or their low cost vendor, could maintain updated knowledge of every key bit of legislation, and implement accordingly by state.

The types of background checks that can be conducted vary enormously in quality and scope. The use of third party data brokers who sell database checks for criminal searches is an alarming trend. There is no national database search for criminal records, period. But this is just how these data brokers misleadingly name their products, as national database checks. Only by reading the fine print can one see that their definition of national means: criminal and sexual offender records from some states, and incarceration records from others. By partnering with a professional pre-employment screening vendor, your company can be sure of the quality of the background check your potential employees are receiving.

Professional pre-employment screening agencies such as those who are members of the National Association of Professional Background Screeners (NAPBS) maintain adherence to legal qualifications because they remain abreast of current legislation and FCRA (Fair Credit Reporting Act) requirements. This is one of the most complex service industries that cater to businesses today. A single FCRA violation fine can amount to as much as $50,000. Hiring a partner who is knowledgeable enough to help mitigate any potential risk from a negligent hiring lawsuit should be a main focus when outsourcing pre-employment screening.