Human Resources Writer

Chief People Officer | Chief Human Resources Officer | VP of People

Human Resources

Employees


<p>If your business employs drivers to operate commercial vehicles, a U.S. Department of Transportation (DOT) background check is not something to gloss over. The DOT requires that you conduct a background check for commercial drivers.</p>
<p>A DOT background check is not the same as a standard background check. While DOT background screenings are not overly complicated or time-consuming to conduct, it is important to ensure that you have a comprehensive understanding of what these background checks entail, and what’s required of you, and your drivers, so that you are both well prepared.</p>
<h2 id="what-is-the-department-of-transportation-dot">What is the Department of Transportation (DOT)?</h2>
<p>The U.S. Department of Transportation is responsible for planning and coordinating federal transportation projects and ensuring that only commercial drivers with proper training and safe driving records operate commercial vehicles on the road.</p>
<p>The DOT also sets safety regulations for all major modes of transportation throughout the U.S. The agencies that fall under the DOT includes but is not limited to the following:</p>
<ul><li>The Federal Aviation Administration</li>
<li>The Federal Highway Administration</li>
<li>The Federal Motor Carrier Safety Administration</li>
<li>The Federal Railroad Administration</li>
<li>The Federal Transit Administration</li>
<li>The Maritime Administration</li>
<li>The National Highway Traffic Safety Administration</li>
</ul><p><strong>Editor’s note: Looking for the right background check service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs</strong><strong>.</strong></p>

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<h2 id="what-is-a-dot-background-check">What is a DOT background check?</h2>
<p><a href="https://www.transportation.gov/" target="_blank" rel="noopener">DOT</a> background checks are designed to assess the fitness and driving record of operators of commercial vehicles (large trucks, buses, etc.). DOT background checks are mandatory for all commercial drivers within the U.S. Conducting DOT background checks benefits employers, too, as it reduces the possibility of driver-related accidents, injuries, and legal issues. <strong>[Learn how </strong><a href="/insurance/coverage-amounts/"><strong>workers’ compensation insurance</strong></a><strong> could protect you in the event of a work-related accident.]</strong></p>

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<h2 id="what-types-of-businesses-conduct-dot-background-checks">What types of businesses conduct DOT background checks?</h2>
<p>The <a href="https://www.fmcsa.dot.gov/" target="_blank" rel="noopener">Federal Motor Carrier Safety Administration </a>(FMCSA), which regulates the safety of  commercial-grade motor vehicles, has a specific focus within the DOT, namely to reduce crashes, injuries, and fatalities involving commercial vehicles and buses. </p>
<p>A company is required to follow all <a href="https://www.fmcsa.dot.gov/regulations" target="_blank" rel="noopener">FMCSA regulations</a> if it operates any, or all, of the following categories of commercial motor vehicles that conduct interstate commerce:</p>
<ul><li><strong>Gross vehicle weight:</strong> A vehicle with a gross vehicle weight rating (GVWR) or gross combination weight rating (whichever is greater) of 4,537 kg (10,001 lbs.) or more.<br><br><br><br></li>
<li><strong>Passenger vehicle:</strong> A vehicle designed or used to transport between nine and 15 passengers (including the driver) for compensation, or a vehicle designed or used to transport 15 or more passengers (including the driver) not for compensation.<br><br><br><br></li>
<li><strong>Hazardous material transport:</strong> Any size vehicle used to transport hazardous materials as defined by the <a href="https://www.fmcsa.dot.gov/regulations/hazardous-materials/how-comply-federal-hazardous-materials-regulations" target="_blank" rel="noopener">Hazardous Materials Transportation Act</a>.</li>
</ul><p>In addition to different types of vehicles, there are multiple classes of driver’s licenses. Depending on the types of vehicles your company uses, your drivers may be required to maintain a specific class of driver’s license. There are <a href="https://driving-tests.org/cdl-classification-licenses/" target="_blank" rel="noopener">three classes of commercial driver’s licenses</a>, including:</p>
<ul><li><strong>Class A</strong> <strong>CDL:</strong> This permits drivers to operate any combination of vehicles with a GVWR of 26,001 or more pounds, provided the towed vehicle is heavier than 10,000 pounds.</li>
</ul><ul><li><strong>Class B CDL:</strong> Drivers can operate straight trucks, large buses (city buses, tourist buses, and school buses), segmented buses, box trucks, and dump trucks with small trailers. In addition, holders of a Class B CDL license can drive some Class C vehicles, with the correct endorsements.</li>
</ul><ul><li><strong>Class C CDL:</strong> This license certifies that drivers can operate double/triple trailers, buses, tank trucks and hazmat vehicles.</li>
</ul><h2 id="standard-dot-background-check-requirements">Standard DOT background check requirements</h2>
<p>A DOT background check is designed to reveal certain data points, or aspects of a driver’s health, fitness, skills, and past history, that the DOT wants a record of before a driver can be cleared to share the roadway with other drivers while operating large, heavy, and potentially dangerous vehicles. These data points include the following:</p>
<ul><li><strong>Drug and alcohol testing: </strong>A DOT drug panel tests for cocaine, amphetamines, opioids, marijuana and PCP. If a job applicant fails the drug test, he or she cannot legally operate DOT-covered vehicles.</li>
</ul><ul><li><strong>Employment history: </strong>Employers are required under DOT regulations to provide a three-year <a href="https://www.business.com/articles/employment-verification/">employment history</a> of the candidate.</li>
</ul><ul><li><strong>Medical certification: </strong>Drivers need to have an up-to-date medical certification attesting, by a physician, that the candidate is physically and mentally fit to drive for extended periods of time.</li>
</ul><ul><li><strong>Motor vehicle record check: </strong>As part of a DOT background check, a candidate’s driving record is checked in all states the applicant has lived in. This information must date back at least three years.</li>
</ul><ul><li><strong>Road test: </strong>Some companies may have specialized commercial vehicles with special modifications or features. Thus, the DOT requires that all applicants take a road test to ensure their ability to operate a commercial vehicle successfully and safely. (This road skills test is in addition to maintaining an active CDL license.)</li>
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<h2 id="what-do-dot-background-checks-reveal">What do DOT background checks reveal?</h2>
<p>When a candidate undergoes a DOT background check, the results of each of the categories being examined, e.g., the drug and alcohol panel, employment history, medical certification, driving history, and confirmation of a successful road test, will be shared with you. The medical certification will reveal the results of each of the five parts of the exam: vision, hearing, blood pressure and pulse rate, urinalysis, and the findings from the physical exam. There are specific physical requirements a driver must meet to be medically certified. For example, drivers must have at least 20/40 vision, their blood pressure should be less than or equal to 140/90, and they should be able to detect a “forced whisper” from more than five feet away.</p>
<p>Additionally, the background check will confirm the driver’s employment history, driving history, and whether they passed the drug screening and road test. If there are failures on any aspect of the check, the results are shared with the employer, must then share the information in written form with the applicant.</p>
<h2 id="how-to-run-a-dot-background-check">How to run a DOT background check</h2>
<p>Here are some key steps to follow as you conduct a DOT background check on your employees:</p>
<ol><li>You are best served hiring a <a href="https://www.business.com/categories/background-check-companies/">top background check service</a> to conduct the screenings for you. There are a lot of moving parts to these checks. Since the results of the check must be approved by the federal government, making sure the work is done properly is critical.</li>
</ol><ol start="2"><li>Once you find a background check service to partner with, verify that it will cover all aspects of the screening that need to be completed. As the employer, study what the DOT is asking of you so you don’t waste time and money on an incomplete background check.</li>
</ol><ol start="3"><li>Make sure the background check service you partner has a <i>certified</i> medical review officer verify the results of the drug and alcohol test. It is also important that they take steps to ensure the medical information of those being screened remains private.</li>
</ol><ol start="4"><li>After the screening is complete, share the results with the candidate. Be sure to include a copy of “A Summary of Your Rights Under the FCRA.” This document outlines their rights and how they can dispute incomplete or inaccurate information as part of their background check.</li>
</ol>


DOT background checks are required for all commercial drivers before they can work for your company. Find out what these checks reveal and how to conduct one for your drivers.

What Is a Department of Transportation (DOT) Background Check?

<p>A lot more goes into compensation management than just giving your employees some money and hoping they will stay. A well-thought-out strategy can be the difference between a mass exodus and long-term employee retention.</p>
<p>The concept of “total compensation” matters. It is where the real battle is fought for top talent. Your compensation management program will partially determine the strategic goals and objectives your company meets annually. Well-run compensation programs ensure pay equity and equality in benefits throughout the organization. It is important for business owners and HR leaders to know how compensation management works and what employees’ expectations are so companies can hit the bull’s-eye with their compensation programs.</p>
<h2 id="what-is-compensation-management">What is compensation management?</h2>
<p>Compensation management is the practice of planning and distributing the overall pay and <a href="https://www.business.com/hr-software/employee-benefits/">benefits package</a> to a company’s employees. This program ensures that a company’s salaries and bonuses remain competitive within the industry and equitable within the organization. It also involves managing company benefit programs and ensuring job classifications are up to date, risks are minimized, and the package meets the overall needs of employees and their families.</p>
<p>A company’s compensation program is one of the main reasons employees choose to either remain with an employer or look for a new one.</p>

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<p>Even when employees choose to stay, that does not mean they appreciate or fully understand their <a href="https://www.business.com/articles/types-of-employee-compensation/">compensation package</a>. Employers need to make the effort to help employees learn the true value of their <a href="https://www.business.com/articles/what-is-total-compensation/">overall compensation</a> package.</p>
<h2 id="what-are-the-main-types-of-compensation">What are the main types of compensation?</h2>
<p>There are four primary types of direct compensation:</p>
<ul>
<li>Hourly pay</li>
<li>Salary</li>
<li>Commission</li>
<li>Bonuses</li>
</ul>
<p>There is also indirect compensation, which includes retirement benefits, health insurance and paid time off. Factoring direct and indirect compensation together helps determine total compensation – the full remuneration a company pays to its employees.</p>
<p>In addition to salaries, hourly pay, bonuses and commissions, total compensation includes the value of any benefits employees receive. These are some of the most common attributes within the total compensation spectrum:</p>
<ul>
<li>Paid time off (vacation days, sick days and holidays)</li>
<li>Profit-sharing distributions</li>
<li>Insurance (medical, dental, disability and life)</li>
<li>Tuition assistance</li>
<li>Child care assistance</li>
<li>Retirement plans</li>
<li><a href="https://www.business.com/hr-software/eap-benefits/">Employee assistance programs</a></li>
<li>Gym memberships</li>
<li>Relocation expenses</li>
<li>Learning and development offerings</li>
<li>Career advancement opportunities</li>
<li>Stock options</li>
<li>Other non-cash benefits</li>
</ul>
<p>While these aren’t all the options that can be included in a compensation package, you will likely need to offer at least some of the above perks to keep employees engaged and remain competitive within your industry.</p>
<picture class="aligncenter med"><img decoding="async" loading="lazy" src="https://images.business.com/app/uploads/2022/03/23021510/comp-mgmt-software-3.png" alt="" width="613" height="565" data-content-img-id="60e861409c658a52238b4567"></picture>
<p>According to a recent study from Jobvite, the <a href="https://www.jobvite.com/wp-content/uploads/2019/04/2019_Job_Seeker_Nation.pdf" target="_blank" rel="noopener">most-wanted employee benefits</a> include flextime and remote work opportunities, free food or catered meals, mentoring and development programs, and casual dress codes.</p>
<p>Some employers provide employees with a total compensation report that details all of the compensation they receive. Here’s an example of a total compensation statement from Genesis HR Solutions:</p>
<figure class="aligncenter med"><img decoding="async" loading="lazy" src="https://images.business.com/app/uploads/2022/03/23021510/Picture1-15.png" alt="" width="696" height="835" data-content-img-id="5fa9aca97b437407308b456f"><p></p>
<div class="attributionLink">Source: <a class="img_credit mceNonEditable" href="https://genesishrsolutions.com/peo-blog/show-employees-the-true-value-of-their-employment-with-a-personalized-total-compensation-statement/total-compensation-statement-template/" target="_blank" rel="external nofollow noopener">Genesis HR Solutions</a></div>
</figure>
<h2 id="how-is-compensation-determined">How is compensation determined?</h2>
<p>HR managers typically use a two-part process to assess employee compensation. The first part is done internally. It includes determining not only what the company should pay, but what it can afford to pay.</p>
<p><iframe loading="lazy" title="The Importance of Salary Benchmarking" width="500" height="281" src="https://www.youtube.com/embed/hga7mYvjknM?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe></p>
<p>The second aspect of this process involves external factors. For example, what do market surveys tell you? What are your competitors paying? How do regional differences in the cost of living impact total compensation? Are there hiring challenges in certain markets?</p>
<p>These are some of the factors in compensation rates:</p>
<ul>
<li><strong>Research: </strong>Conduct market research inside and outside your industry to gauge what’s normal and on trend.</li>
<li><strong>Competitive strategy: </strong>You should offer enough to not just stay on par, but attract top talent away from your competitors.</li>
<li><strong>Collective company salaries: </strong>You’ll want to consider your company (and each job level within it) as a whole in your salary strategy. As a general philosophy, you may want to target the 25th percentile within each job category.</li>
<li><strong>Marketplace drivers: </strong>If you’re recruiting for employees with hard-to-hire skills, you might need to pay more to get them on your team.</li>
</ul>

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<h2 id="why-is-compensation-important-to-hr">Why is compensation important to HR?</h2>
<p>Compensation management plays a significant role in HR, as it directly ties in with employee retention, the hiring and onboarding processes, employee performance, and team engagement throughout the company. Many larger companies have not only HR managers, but also compensation managers to lead this process.</p>
<p>At its heart, compensation is the foundation of employee motivation. So, while HR assists supervisors with behavioral and performance matters, they can also factor employee performance into compensatory decisions.</p>
<picture class="aligncenter med"><img decoding="async" loading="lazy" src="https://images.business.com/app/uploads/2022/03/23021511/what-is-comp-mgmt-3.png" alt="" width="617" height="564" data-content-img-id="60e8616d9c658a53238b4567"></picture>
<h2 id="what-is-compensation-management-software">What is compensation management software?</h2>
<p>Compensation management software (whether a stand-alone solution or part of a larger <a href="https://www.business.com/hr-software/">HR software platform</a>) is enterprise software that helps HR curate, manage, calculate and budget for employee salaries. This type of software can benefit businesses of all sizes. The best, most comprehensive compensation software platforms are designed to bring teams closer together and to present information quickly, accurately and cleanly.</p>
<p><a href="https://www.ngahr.com/blog/compensation-management-is-important-in-every-company" target="_blank" rel="noopener">Alight</a> notes that compensation management systems tend to be handled by HR teams, but depending on your permissions and security settings, they can be accessible to managers, supervisors or lead workers whenever necessary. Much of the time, compensation management data are accompanied by <a href="https://www.business.com/hr-software/employee-performance-goals/">employee performance data</a>. These combined data sets can help determine promotions, bonuses and annual increases.</p>
<p>These are some of the more <a href="https://www.business.com/hr-software/best/">popular HR software platforms</a> with compensation management abilities:</p>
<table class="styled-table">
<tbody>
<tr>
<td><strong> Company </strong></td>
<td><strong> Best for </strong></td>
</tr>
<tr>
<td>Paychex Flex</td>
<td>Remote teams</td>
</tr>
<tr>
<td>Rippling</td>
<td>Easy implementation</td>
</tr>
<tr>
<td>Gusto</td>
<td>Payroll</td>
</tr>
<tr>
<td>GoCo</td>
<td>Custom workflows</td>
</tr>
<tr>
<td>BambooHR</td>
<td>Performance management</td>
</tr>
</tbody>
</table>
<ol>
<li><strong>Paychex Flex HR software:</strong> Paychex Flex, a full-service payroll and HR software platform that can support businesses of any size, is our best pick for remote teams. Its scalable features can help businesses manage their remote workers and maintain legal compliance. Learn more in our <a href="https://www.business.com/hr-software/paychex/review/">Paychex Flex review</a>.</li>
<li><strong>Rippling HR software: </strong>Rippling is customizable HR software that combines HR and IT automation into one platform. The intuitive software is easy to implement and accessible through a self-service dashboard. With more than 400 integration capabilities, Rippling is easy to incorporate with other business software as well. It helps with HR tasks like onboarding automation, benefits administration, talent management and legal compliance. Find out more in our <a href="https://www.business.com/hr-software/rippling/review/">Rippling HR software review</a>.</li>
<li><strong>Gusto HR software: </strong>Gusto is ideal for employers who want advanced payroll capabilities. Users can onboard new hires, administer employee benefits, track hours and paid time off, run payroll, and automatically file payroll taxes. Read our <a href="https://www.business.com/hr-software/gusto/review/">Gusto HR software review</a> to find out if these robust features are right for your business.</li>
<li><strong>GoCo HR software: </strong>GoCo is comprehensive HR software that allows small businesses to manage and streamline their HR processes. The flexible and user-friendly program is ideal for automating employee hiring and onboarding workflows. To manage employee payroll, businesses can either use GoCo’s embedded payroll option, Execupay, or integrate any cloud-based payroll software of their choice. GoCo users can access custom reporting, a self-service dashboard, and supportive customer service. You can learn more in our <a href="https://www.business.com/hr-software/goco/review/">full review of GoCo</a>.</li>
<li><strong>BambooHR software: </strong>BambooHR is ideal for small businesses wanting a flexible HR software option with great performance management features. You get traditional HR-management features to streamline your internal HR processes, and advanced capabilities like goal tracking and employee assessments can be added separately. Read our <a href="https://www.business.com/hr-software/bamboohr/review/">BambooHR software review</a> for more information on their features.</li>
</ol>
<h2 id="compensation-management-faqs">Compensation management FAQs</h2>
<h3>What is a deferred compensation plan?</h3>
<p>A deferred compensation plan is an agreement between an employee and employer in which the plan withholds a part of the employee’s income until a specific date. The lump sum is then paid out to the employee on that date – this typically falls around the time the employee retires. Some common examples of deferred compensation plans are retirement plans, pensions and stock options.</p>
<h3>What regulations affect compensation?</h3>
<p>Several regulations affect how you compensate your employees. For example, minimum wage requirements, overtime rates and bonus payments are all regulated. There are also regulations on how many hours certain employees can work, as well as equal pay for equal work. The Fair Labor Standards Act establishes many of these regulations, although there are other federal and state laws to consider as well.</p>
<h3>What can HR leaders do to ensure effective compensation management?</h3>
<p>Human resources leaders should regularly analyze employee compensation rates for current and future employees to ensure they are abiding by all current federal and state laws, and that the rates they offer are competitive with the industry standard. Performing competitive analyses and offering competitive rates will help attract and retain top talent. HR leaders should also ensure that employees are being paid the correct amount in a timely and reliable manner.</p>
<p><i>Skye Schooley contributed to the writing and research in this article. </i></p>

If you want to hold on to your top employees, a strong compensation management program is critical.

Guide to Compensation Management

<p>For many businesses, interviews are conducted during the <a href="/articles/hiring-process-timeline/">hiring process</a> or when someone leaves the company. However, there are also benefits to interviewing employees at various points in between. </p>
<p>Known as stay interviews, these conversations are a great tool managers can use to gauge employee satisfaction, company culture and shared thinking on how to improve and grow the organization. Businesses that conduct stay interviews can retain top talent, engage their employees better and lower employee attrition in ways others cannot.</p>
<p><strong>>> Read next: </strong><a href="/articles/automated-job-interviews/"><strong>Why You Should Stop Showing Up for Job Interviews</strong></a></p>
<h2 id="what-is-a-stay-interview">What is a stay interview?</h2>
<p>A stay interview is an interview or, more likely, a conversation, between a manager and an employee, with the purpose of learning what keeps that team member working for the company as well as any aspects of the organization that need improvement or change.</p>
<p>It could be argued that employee surveys essentially do the same thing as a stay interview. However, holding one-on-one conversations with as many team members as possible teases out much more information for leadership to work with. This is primarily because fixed survey questions don’t allow for follow-up questions or contextual details. The dialogue started in a stay interview can uncover more actionable insights than a static questionnaire.</p>
<h2 id="what-are-the-benefits-of-a-stay-interview">What are the benefits of a stay interview?</h2>
<p>There are countless benefits to developing and maintaining a stay interview program. Here are 10 reasons why you should consider incorporating this tool into your employee management plan:</p>
<ol>
<li><strong>It builds trust and employee loyalty:</strong> When employees see that their supervisor cares enough to check in and seek ideas from them, it promotes trust in management and fosters loyalty. Employees rarely leave bosses they like and respect. On the contrary, a <a href="https://www.goodhire.com/resources/articles/horrible-bosses-survey/" target="_blank" rel="noopener">GoodHire poll</a> found that more than 80 percent of workers would potentially quit their job because of a bad manager — time to <a href="/articles/how-to-improve-relations-between-your-managers-and-employees/">improve those manager-employee relationships</a>!</li>
<li><strong>It promotes an outlook of teamwork and togetherness:</strong> One of the big differences between “stay” and “exit” interviews is that stay interviews focus on idea-sharing between colleagues who both want the same thing — an awesome future and overall experience with the company. Exit interviews, conducted when a person leaves an organization, often zero in on the negative without a healthy balance of acknowledging the positive.</li>
<li><strong>It addresses problems in the early stages:</strong> With effective stay interviews, companies can head off problems before they get too large. Stay interviews are a preemptive opportunity for companies to change policies, practices or related aspects that aren’t serving team members well.</li>
<li><strong>It assesses the health of your company culture:</strong> A <a href="https://www.flexjobs.com/blog/post/survey-resignation-workers-considering-quitting-jobs/" target="_blank" rel="noopener">FlexJobs study</a> found that 62 percent of people quit their job because of a toxic company culture, making it the number one <a href="/articles/reasons-employees-quit/">reason why people quit</a>. Assessing the health of your organization is paramount, and stay interviews are a chance to <a href="/articles/company-culture-metrics-you-need-to-be-tracking/">gauge your company culture</a> as employees experience it. Is your workplace thriving, dynamic and engaging or dismissive and stagnant? Cultivating an engaging, inclusive, dynamic and <a href="/articles/creating-strong-culture-ad-marketing-agency/">strong culture</a> is an ongoing act, not a singular destination, and stay interviews can be used to assess your progress.</li>
<li><strong>It helps retain top talent and leaders:</strong> In addition to <a href="/articles/turnover-contagion/">preventing turnover contagion</a>, stay interviews offer an opportunity to gather as much information as possible from key team members about their employee experience. Are they happy? Do they feel engaged? What aspects of the company need to evolve or change for them to consider it an “employer of choice”?</li>
</ol>

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<ol start="6">
<li><strong>It lets you assess individual employees’ well-being:</strong> It’s possible to maintain a healthy company culture yet have individual employees who struggle within it. These staffers often go unnoticed, especially if most team members are giving high marks to the culture overall. Checking in and assessing the individual personally as well as the overall culture is equally important and a huge gain for leadership.</li>
<li><strong>It shows how you compare to your competition:</strong> Your employees probably know as much as you do (if not more) about what your competitors offer their workers. During stay interviews, don’t be afraid to ask what employees are seeing in the job market or the industry. A good question to ask employees is, “What are our competitors offering in this area?” You could also see what they think about <a href="/hr-software/employee-benefits/">employee benefits</a> or practices that other companies are experiencing success with. This is a great way to find out what aspects of competing workplaces are most intriguing to your team members.</li>
<li><strong>It helps you develop more effective training programs:</strong> Once you receive employee feedback through a stay interview, you can home in on requests, desires or hopes that involve employee or supervisor training. Stay interviews can highlight areas of strong interest so you don’t waste time training employees in areas they don’t value or need. In turn, these development programs can also help you retain employees. <a href="https://info.guildeducation.com/guilds-american-worker-survey-report/p/1" target="_blank" rel="noopener">Guild’s American Worker Survey Report</a> found that 74 percent of workers are “very likely” or “somewhat likely” to quit if offered additional educational or career opportunities somewhere else. <strong>[Find out <a href="/articles/next-hire-teacher/">why your next hire should be a teacher</a>.]</strong></li>
<li><strong>It energizes employees:</strong> The simple act of checking in and asking an employee’s opinion can go a long way. You won’t always be able to follow their suggestions, but when a manager takes time to focus on the individual thoughts and experiences of an employee, the team member often leaves the interaction energized and determined to do their part to make the company better.</li>
<li><strong>It’s an expense-free tactic:</strong> Last but not least, stay interviews don’t cost anything. All they require is for leaders to make the time for such conversations and take the feedback they receive seriously.</li>
</ol>

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<h2 id="how-do-you-conduct-a-stay-interview">How do you conduct a stay interview?</h2>
<p>An effective model for a stay interview is not difficult to create. Here are eight simple steps to get you started.</p>
<h3>1. Schedule it ahead of time.</h3>
<p>Planning the meeting with your employee in advance helps keep the interview organized and on point and shows the team member how important it is to you.</p>
<h3>2. Share the purpose and expectations of the meeting.</h3>
<p>Some employees feel anxiety when managers ask to meet with them. Make it clear from the start that no one is in trouble. Share the purpose of the meeting so the staffer can think ahead about the thoughts and ideas they want to share.</p>
<h3>3. Hold the interview in a comfortable, quiet and casual setting.</h3>
<p>This is not a conversation to have on the fly. Take time to relax the employee and ease into the discussion.</p>
<h3>4. Allow enough time for a meaningful conversation.</h3>
<p>Do not attempt to have this discussion in 15 minutes. Allot about 45 minutes for the meeting in the hopes that rich dialogue and an exchange of ideas will fill up the time.</p>
<h3>5. Show that you genuinely value employee feedback.</h3>
<p>Make sure the team member understands that this is not just an empty exercise as it has practical value. If employees believe you genuinely care about their feedback, they will invest more in their sharing.</p>
<h3>6. Plan your questions.</h3>
<p>You don’t need to ask 20-plus questions to have a successful stay interview but, if you don’t have any specific questions planned, it might turn into a simple conversation that leads nowhere. There are many good interview questions you can use for these conversations. The best questions to get employees to share rich and detailed ideas are open-ended.</p>
<p>Here are some questions you can use when conducting a stay interview:</p>
<ul>
<li>What energizes you the most about your current role?</li>
<li>What would make your job more satisfying?</li>
<li>Do you feel recognized and valued for the work you do?</li>
<li>In what ways do you like to be recognized?</li>
<li>What type of self-improvement or career development opportunities are you interested in?</li>
<li>How would you describe your current (and ideal) work-life balance?</li>
<li>What do you like most (and least) about the company culture?</li>
<li>What type of technology would make your day-to-day tasks easier?</li>
<li>As your manager, what can I do to better support you?</li>
<li>Would you recommend our company to someone else? Why or why not?</li>
<li>What might tempt you to leave?</li>
</ul>
<h3>7. Communicate the next steps.</h3>
<p>Once the interview is complete, share with the employee what the follow-up will look like. Tell them that leadership will share what ideas will and will not be acted upon and why.</p>
<h3>8. Share feedback with the entire company.</h3>
<p>Although managers can’t always meet with all employees, sharing the feedback from the stay interviews you do conduct helps everyone feel informed and in the know.</p>
<p>When you follow up with the team:</p>
<ul>
<li><strong>Make no promises:</strong> When managers conduct stay interviews, they should not promise any changes or timelines.</li>
<li><strong>Thank employees publicly for their feedback:</strong> One of the best ways to encourage ongoing <a href="/articles/deliver-informal-feedback/">informal feedback</a> is to thank workers for sharing their ideas and suggestions for improvement.</li>
<li><strong>Make it an ongoing process:</strong> One stay interview is good. Repeated (such as annual) stay interviews are much better. As the company changes, employees grow and change too and your industry evolves. Learning what is on your employees’ minds is essential to maintaining a desirable company culture and an engaged workforce that is prepared for the future.</li>
</ul>
<h2 id="what-are-the-dos-and-donts-of-stay-interviews">What are the do’s and don’ts of stay interviews?</h2>
<p>For stay interviews to be successful and for employees to get excited about them, employers and managers can follow the best practices below.</p>
<h3>Do’s</h3>
<ul>
<li>Create a setting of collegial conversations between team members and leadership that genuinely solicits ideas and feedback from employees.</li>
<li>Invite employees to share what is awesome and not so awesome about their employer.</li>
<li>Schedule and plan your meeting with the employee (one on one).</li>
<li>Foster an open, fun, creative, conversational, trust-based and strategic discussion.</li>
<li>Offer ongoing meetings with as many employees as possible.</li>
<li>Acknowledge that this is the first part of two; there will be follow-up on the shared ideas, information and proposed changes.</li>
</ul>
<h3>Don’ts</h3>
<ul>
<li>Don’t make this discussion any type of performance review or personal reflection of the employee sharing the feedback.</li>
<li>Don’t promise employees that their suggestions will be followed up on specifically as described or at all.</li>
<li>Don’t only meet with employees when things are going badly.</li>
<li>Don’t meet with employees in a group setting; these interviews should be conducted individually.</li>
<li>Don’t be judgmental, argumentative, hierarchical or combative.</li>
<li>Don’t make these conversations a one-time event with no follow-up discussion. The company at large should learn what ideas were shared during stay interviews and whether any changes or improvements are being planned based on employee feedback.</li>
</ul>
<p><em>Skye Schooley contributed to this article.</em></p>

It's vital to understand the strategic role stay interviews can play in retaining top talent and bolstering company culture.

The Benefits Stay Interviews Can Bring Your Company

HR Solutions

<p>Handling the responsibilities that come with having employees work for you can be a huge burden for some businesses. In order to take advantage of the benefits of having employees and eliminate some of the responsibilities associated with hiring them, some businesses partner with an employer of record (EOR). These companies <a href="/articles/hiring-process-timeline/">manage the process of hiring</a> and paying employees, as well as ensuring compliance with and the completion of all employee contracts and related employment paperwork on behalf of another business. Before partnering with an EOR, it is important to understand what one is, how it operates and how it differs from other staffing models.</p>


<h2 class="wp-block-heading" id="what-is-an-eor">What is an EOR?</h2>



<p>An EOR is a third-party organization that hires employees and fully compensates them for performing a job for another business. Businesses of all sizes can utilize an EOR. Companies that need employees but do not necessarily want the accompanying burden of having multiple personnel on the company’s payroll can turn to an EOR for partnership. </p>



<p>Often, businesses have both their own employees and EOR-hired workers. The EOR is directly responsible, as the primary partner to a business, for executing all regulatory requirements of employment and payroll for its employees. However, the EOR does not play a role in shaping how the business is run. </p>



<p>EORs can be a real enhancement as it relates to recruiting and managing employees. Using an EOR permits companies to legally and efficiently access and utilize workers without having to set up a full human resources and administrative entity within the business. <strong>[Related article: </strong><a href="https://www.business.com/hr-software/recruiting/"><strong>How to Recruit New Employees</strong></a><strong>]</strong></p>


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<h2 class="wp-block-heading" id="how-does-an-eor-work">How does an EOR work?</h2>



<p>An EOR is much more than an HR outsourcing tool. Rather, an EOR supplies employees for a business and charges a fee for that service. The business receiving employees from its EOR partner pays a service fee for access to the workers.</p>



<p>Here is an example of how an EOR operates. An EOR named ACME Staffing hires five employees for J&J Construction (the customer business). Even though these five employees are directly employed by ACME Staffing, they are managed and scheduled by J&J Construction. J&J Construction manages all day-to-day activities for the business as well as the employees’ duties. ACME Staffing is simply the entity that pays, hires and terminates workers within the employment partnership. ACME Staffing is an employment agency, while J&J Construction manages their business without the burden of employee administration.</p>


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<h2 class="wp-block-heading" id="peo-vs-eor-which-is-right-for-you">PEO vs. EOR: Which is right for you?</h2>



<p>A <a href="/articles/what-is-a-peo/">professional employer organization</a> (PEO) and an EOR are similar in many ways. However, there are important differences that companies need to know prior to making the commitment to work with one or the other, as not all<a href="/articles/how-to-staff-business/"> staffing strategies</a> are the same. </p>



<p>An EOR allows you to expand your business by adding personnel to your existing workforce. An EOR is typically better suited for smaller businesses. An EOR essentially hires a number of employees to work for your business and places them on their own payroll (while your business may still have employees directly on your payroll). An EOR assumes liability only for the employees that it provides.</p>



<p>A PEO operates under a co-employment model. In this model, a PEO manages the entirety of the employee administrative experience. It handles the payroll and many of the HR-related aspects of the employee engagement. A PEO assumes responsibility for all of the business’s employees and is able to provide all required HR and administrative services.</p>



<p>Generally, when partnering with a PEO, a business signs the <a href="/articles/employment-contracts/">employment contracts</a>, while with an EOR, it manages and retains the employment contracts of the workers they hire and pay. </p>



<p>Here is a breakdown of how PEOs and EORs stack up against one another.</p>



<figure class="wp-block-table"><table class="styled-table"><tbody><tr><td>EOR</td><td>PEO</td></tr><tr><td>Is recorded as legal employer</td><td>May serve as a co-employer (may have, at times, a shared liability)</td></tr><tr><td>Absorbs all legal liabilities and hires/terminates employees</td><td>Shared or joint liability for and administration of employees</td></tr><tr><td>Often manages a portion of HR-employee relations</td><td>Takes on all liability for and administration of employees</td></tr><tr><td>Does not manage all employees</td><td>Manages all employees</td></tr><tr><td>Assumes total tax liability for employees</td><td>Often assumes the full tax burden (although this may vary by state)</td></tr><tr><td>Records and manages all workers’ compensation claims</td><td>Is state-dependent; PEOs may record and manage <a href="/insurance/workers-comp/">workers’ compensation claims</a> or may share the burden with the business, or state requirements may have the business manage them</td></tr><tr><td>Offers services for as few as one employee</td><td>Is generally utilized by larger businesses</td></tr><tr><td>Allows businesses to expand into other states and countries without creating a new business of record</td><td>Allows expansion and use of workers in additional states and countries, but only if a business of record has been established</td></tr></tbody></table></figure>


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<h2 class="wp-block-heading" id="how-can-i-work-with-an-eor">How can I work with an EOR?</h2>



<p>Finding an EOR is easy to do, as there are many to choose from. If you have international needs, you may want to target certain EORs over others, as some are specifically designed to help manage employee administration overseas. </p>



<p>Here are the top four things to consider when selecting an EOR:</p>



<h3 class="wp-block-heading">Reputation</h3>



<p>Search the web for “best employers of record” or something similar. Some of the biggest EOR services include TriNet (learn more about this company in our full <a href="/reviews/trinet/">review of TriNet</a>), Innovative Employee Solutions and ShieldGeo. There are many more EORs to choose from, and each has a specialty that may be right for your business. </p>



<h3 class="wp-block-heading">Cost</h3>



<p>There are few parameters to the pricing of EORs. Some charge per employee, while others package their fees differently. Just be clear on the cost structure, and be sure to ask about volume pricing.</p>



<h3 class="wp-block-heading">Structure of partnership</h3>



<p>Not all EORs are created equal. Knowing exactly what is covered, or managed, under a provider’s EOR services is essential. Do not be afraid to ask questions about aspects of the service agreement you may not fully understand. Here are some questions to ask an EOR:</p>



<ul>
<li>Will your EOR legally employ our worker?</li>



<li>Do you include<a href="https://www.business.com/hr-software/onboarding-vs-orientation/"> new-hire onboarding</a>?</li>



<li>Are you the direct employer of record, or do you partner with other companies and/or EORs?</li>



<li>How do you remain current on all state and federal employment laws?</li>



<li>How do you <a href="/articles/diversity-and-inclusion-examples/">ensure a diverse workforce</a>?</li>



<li>What obligations will you be responsible for, and which ones will we have to manage ourselves regarding workers?</li>



<li>If I am unhappy with a worker, what is the process for replacement?</li>



<li>Do you have expertise in payroll and tax laws in all relevant states?</li>



<li>How is your data shared and protected?</li>



<li>What is your cost structure?</li>



<li>If I choose to end the service agreement, which steps must I take, and how much time is needed? Will there be any penalties for ending the agreement?</li>
</ul>



<p>As noted within the questions above, ensure that your team fully understands what is required to end the service agreement with the EOR. In case you must end the partnership, you should fully understand how to do so before you need to.</p>



<h3 class="wp-block-heading">Partnership post-services</h3>


Whether you partner with an employer of record to avoid regulatory hurdles, relieve cost burdens or simplify the employee-employer relationship, the right EOR can free up resources and time. 

How Your Business Could Benefit From Using an Employer of Record

<p>Monitoring essential attributes of your workforce is pivotal for leadership teams to make informed decisions about the business. By observing employee performance, attendance, turnover, and other crucial metrics, you can gauge how effectively your staff aligns with your organization’s objectives. <a href="/hr-software/best/">Leading HR software</a> facilitates this observation through HR reporting, which provides that data needed to ultimately save your business time, money and energy.</p>
<h2>What is HR reporting </h2>
<p>HR reporting is the process of tracking vital workforce metrics, typically facilitated by <a href="/hr-software/">Human Resources Information Systems</a> (HRIS). Beyond just data collection and measurement, these systems empower HR teams to handle daily tasks related to payroll, benefits, and other HR reporting-related transactions. </p>
<p style="text-align: center;"><img decoding="async" loading="lazy" class="aligncenter  wp-image-4632" src="https://images.business.com/app/uploads/2022/03/23021516/importance-of-hr-reporting-3.png" alt="graphic of a group of colleagues conversing around a conference table" width="572" height="525"></p>
<p>HR reports offer insights into various data points, such as the comparison between full-time and part-time employees, gender distribution in the workforce, <a href="/articles/employee-turnover-rate/">employee turnover rates</a>, job vacancies, and the time it takes to make new hire. For HR reporting, businesses can either utilize basic tools like Excel spreadsheets or work with a vendor that specializes in managing HR data.</p>
<p><strong>Editor’s note: Looking for the right HR Software for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.</strong></p>

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<h2>Types of HR reports and metrics to monitor </h2>
<p>Several HR metrics, when juxtaposed with other data points, provide comprehensive insights, aiding in the analysis of historical trends. For instance, consistent HR reporting on employee retention can spotlight areas that need improvement within the organization. </p>
<p>Here are four key types of HR reports you should track, and the key metrics they consist of.</p>
<h3>1. Recruiting Report </h3>
<p>When hiring, or planning to hire, new employees, HR reporting on the recruitment process is essential. Assessing the sucess of your recruitment strategies can expedite the process and ensure the best fit for each role. Key metrics for this report include:</p>
<ul>
<li><strong>Function type:</strong> This metric categorizes various roles within a company, considering departments and geographical regions.</li>
<li><strong>Open positions and new hires:</strong> These metrics show the number and/or percentage of open positions you currently have, as well as how many employees joined the organization within the past year.</li>
<li><strong>Time to fill vacancies:</strong> This metric, also known as “average time to hire”, evaluates the duration from job requisition approval to offer acceptance, reflecting the efficiency of the recruitment process.</li>
</ul>

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<ul>
<li><strong>Recruitment costs: </strong>This accounts for the costs incurred on external staffing agencies, job advertisements, and productivity losses. Analyzing cost per hire for different roles can pinpoint areas of efficiency and those needing improvement.</li>
<li><strong>Recruiting conversion rate:</strong> This metric evaluates the success rate of converting job applicants into employees. Analyzing this shows you how successful  your recruitment efforts are.</li>
</ul>
<h3>2. Performance Management Report </h3>
<p>Managing employee performance is critical to the success of your business. HR reporting can provide insights into how well your employees are performing and areas needing additional training. Key metrics include:</p>
<ul>
<li><strong>Productivity reports:</strong> These metrics evaluate individual employee productivity and can be extended to teams or departments.</li>
<li><strong>Engagement and satisfaction reports:</strong> These metrics gauge employee engagement levels. Having an engaged workforce is an indicator that you have a healthy work culture. It can also help increase employee retention.</li>
<li><strong>Absenteeism rate:</strong> This shows the average percentage of time, or number of days, that employees were absent in the previous period.</li>
</ul>

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<ul>
<li><strong>Training costs: </strong>This encompasses expenses related to training new and existing employees, including travel and material costs.</li>
</ul>
<h3>3. HR Administrative Report </h3>
<p>Administrative reports offer a holistic view of the company. Key metrics include:</p>
<ul>
<li><strong>Active employees: </strong>This metric reflects the current number of employees, both full-time and part-time. </li>
<li><strong>Full-time Equivalent (FTE):</strong> This metric converts part-time employee hours into full-time metrics. On an annual basis, an FTE is equivalent to 2,080 hours, which equates to eight hours per day for five workdays per week<strong>.</strong></li>
<li><strong>Male-to-female rate:</strong> Tracked for diversity and equality, this metric helps address pay disparities and potential healthcare cost issues.</li>
<li><strong>Education level: </strong>This evaluates employee qualifications and the percentage of the workforce with advanced degrees.</li>
<li><strong>Turnover rate: </strong>This HR reporting metric represents the percentage of employees leaving the company for various reasons, including voluntary exits, terminations, and retirements.</li>
</ul>

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<h3>4. Compensation report </h3>
<p>A compensation report is important for businesses to understand how much they are spending on their employees. When compiling compensation reports, look at the following metrics:</p>
<ul>
<li><strong>Employee pay: </strong>This encompasses various data points like base salary, overtime pay, <a href="/articles/reasonable-pto-policy/">paid leave</a>, payroll deductions, and additional incentives.</li>
<li><strong>Cost of absence: </strong>This metric primarily focuses on unscheduled absenteeism, which is essential to uncovering one of the most expensive unseen costs in the workplace.</li>
<li><strong>Cost of labor:</strong> This represents the <a href="/hr-software/compensation-management/">total compensation for employees</a>, including wages, benefits, and employer-paid payroll taxes.</li>
</ul>
<p>These are just some of the more common HR metrics that can provide you with a better understanding of how your organization is performing compared with the competition.</p>
<h2>Benefits of HR reporting </h2>
<p>HR reporting offers numerous benefits:</p>
<ul>
<li><strong>Strategy development:</strong> Each year, companies develop new strategies and projections, and businesses need to assess HR metrics as a part of that planning</li>
<li><strong>Data transparency:</strong> When your team members can view data about your organization, they are more informed and feel more connected to the company, which is crucial for building engagement and inclusivity.</li>
<li><strong>Accountability: </strong>As with all areas of the company, the HR department needs to share and explain costs and any needs for additional resources..</li>
</ul>
<h2>What is an HR dashboard? </h2>
<p>An HR dashboard allows HR managers to visualize vast amounts of data in an organized, useful interface. With an HR dashboard, you can see all of the important data at a glance. This is particularly useful for areas such as talent management, as you can see a clear breakdown organized by time or costs.<strong><em> </em></strong></p>
<p>Third-party vendors offering HR reporting services </p>
<p>For growing companies, putilizing highly-rated HR software can be advantageous. Many offer cloud-based platforms that organize data for more streamlined HR reporting. Some notable options include:</p>
<ul>
<li>BambooHR: BambooHR offers reporting, applicant tracking, a centralized employee database, metrics/KPI tracking and more. Read our full <a href="/hr-software/bamboohr/review/">review of BambooHR</a>.</li>
<li>Paychex: Paychex flex is our choice for the best HR software for supporting remote teams. Read our <a href="/hr-software/paychex/review/">full review of Paychex</a>.</li>
<li>Rippling: This HR software benefits small businesses, specifically because of its self-service portal. Read our full <a href="/hr-software/rippling/review/">review of Rippling</a>.</li>
<li>GoCo: This is our best pick for HR software for custom workflows. Read our <a href="/hr-software/goco/review/">complete review of GoCo</a>.</li>
<li>Gusto: Gusto’s services include payroll and HR servicing, and its versatility makes it great for companies in a variety of industries. Read our <a href="/hr-software/gusto/review/">full review of Gusto</a>.</li>
</ul>
<p>In conclusion, HR reporting is a powerful tool that provides businesses with insights into their workforce, aiding in informed decision-making and strategic planning.</p>
<p><em>Additional reporting by Skye Schooley</em></p>

HR reporting can provide your business with critical insight into your workforce and how it operates.

Understanding HR Reporting

Finance

Finances

<p>Total compensation is an incredibly effective tool to utilize when attracting top talent and informing team members about the value of their benefits from your company. Understanding what total compensation is and how it works is essential to winning and retaining top talent. Additionally, it helps companies more thoroughly assess the total cost of a hire so they can budget accordingly.</p>
<h2>What is total compensation?</h2>
<p>Total compensation is the collective compensation you provide to your employees in return for their services. It includes the employee’s base salary (how much you pay the employee as either the hourly rate or their annual salary), the total dollar amount of the fringe benefits you offer (health insurance, paid time off, retirement plan, profit sharing, gym membership, etc.), <a href="/articles/employee-bonuses/">bonuses and/or commissions</a>.</p>
<p>Employers can show employees (or potential employees) the total value of the compensation and benefits they receive by supplying them with a total compensation document.</p>

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<h2>What are the differences between salary and total compensation?</h2>
<p>Salary is the fixed sum employees are paid each pay period.</p>
<p>Total compensation encompasses the base salary the employee receives plus other money, such as paid time off and health insurance. In other words, salary is one element of an employee’s total compensation.</p>
<p>One reason a company may review one’s total compensation, as opposed to salary alone, is that any useful budget needs to reflect the <em>cumulative costs</em> of each employee.</p>
<h2>What is total compensation vs. total rewards?</h2>
<p>Total rewards address the policies, programs, and practices that provide employees with a valued and desired reward infrastructure. In addition to compensation, your <a href="/articles/how-to-create-a-productive-work-culture/">workplace culture</a>, quality of life, and work-life flexibility are all part of a total rewards program that’s essential to attracting and retaining top talent.</p>
<p>When it comes down to it, companies choose whether they want to reference “total compensation” or “total rewards” within their vocabulary. Although they do not have the same meaning, the overlap and similarities between the two commonly result in companies using one term or the other, but rarely both.<strong><em> </em></strong></p>
<h2>What is included in total compensation?</h2>
<p>The most common benefits employers include within their total compensation package, and statement, include, but are not limited to:</p>
<ul>
<li>Annual salary or hourly rate of pay</li>
<li>Medical and dental benefits coverage (including employer-paid portions)</li>
<li>Healthcare flexible spending accounts or health savings accounts</li>
<li><a href="/articles/paid-leave-is-good-for-business/">Paid leave</a> (vacation/sick/PTO, holiday, personal, bereavement, military pay, jury duty, etc.)</li>
<li>Short-term and/or long-term disability insurance</li>
<li>Life insurance</li>
<li>An <a href="/hr-software/eap-benefits/">employee assistance program</a></li>
<li><a href="/categories/best-employee-retirement-plans/">Top retirement plans</a></li>
<li><a href="/hr-software/eap-benefits/">Educational assistance programs</a></li>
<li>Relocation expenses</li>
<li>Learning and development offerings</li>
<li>Career advancement opportunities</li>
</ul>

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<h2>Why is total compensation important?</h2>
<p>Total compensation, and having an effective <a href="/hr-software/compensation-management/">compensation management program</a>, is important to winning and retaining talent within your industry. Employees are looking for, and expect to find, compensation packages that are comprehensive and meaningful to them.</p>
<p>If your company doesn’t offer a good benefits package, candidates may spurn your job offer for one from a company that is extending the benefits they want. And for your existing employees, they may leave for another job offering better benefits than what you offer.</p>
<p>Total compensation is discussed earlier in the recruiting process than it used to be. Applicants prefer to hear about compensation and benefits during the interview process now. One of the many reasons for this is the uniqueness of applicants’ needs. For example, student loan assistance, work flexibility, and career advancement are sought-after benefits, and if you’re willing to offer these perks to new hires, discussing these perks, along with the job duties, can ensure that you capture – and retain – candidates’ interest and enthusiasm throughout the <a href="/hr-software/recruiting/">recruiting</a> and <a href="/articles/onboarding-process-key-to-success/">onboarding process</a>.</p>
<h2>How do you determine total compensation?</h2>
<p>There are many formulas for determining total compensation. The truth is, many strategies can work, as long as the basic aspects are included. One way that organizations achieve this objective is with total compensation calculators.</p>
<p>In addition to the use of calculators, assess the value of each benefit you provide to your workers. Most of the common benefits have monetized values listed next to them. What portion do you pay for medical and/or dental insurance? How many <a href="/articles/reasonable-pto-policy/">paid time-off (PTO) days</a> do employees get? How much is the company match for your retirement account?</p>
<h2>How can payroll and HR software help you manage total compensation?</h2>
<p>Since total compensation comprises many aspects, it can be tough to manage manually. Instead, <a href="/categories/online-payroll-services/">robust payroll solutions</a> and <a href="/hr-software/best/">top-rated HR software</a> can help manage and administer total compensation. The right systems streamline processes, ensure accuracy and provide valuable insights on compensation-related data.</p>
<h3>Payroll processing automation</h3>
<p>Manually calculating payroll can take hours or even days. Payroll and HR software can automate this process for you, saving you a significant amount of time and effort. Automating the calculation of salaries, taxes and deductions can also help reduce the risk of errors and ensure accurate payouts. If you are looking for software with comprehensive payroll features, check out our <a href="/hr-software/gusto/review/">review of Gusto</a>.</p>
<h3>Bonus/commission calculation and distribution</h3>
<p>If you have a bonus or commission program, you already know that calculating and distributing funds can be a complex and time-consuming process. Many HR software providers, like BambooHR (<a href="/hr-software/bamboohr/review/">read our BambooHR review</a>), offer performance management features to help track employee performance. That data can then be tied to performance-based bonuses. Payroll software can automate these bonuses and commissions for you, ensuring your employees are compensated fairly and accurately.</p>
<h3>Employee benefits administration</h3>
<p>HR software helps administer and track all employees’ benefits, including health insurance, retirement savings plans and paid time off. This ensures your employees are receiving the benefits they are entitled to. Most systems also have a guided enrollment feature to help employees select benefits. If benefits administration is a top priority for you, read our <a href="/reviews/adp-hr-outsourcing/">review of ADP</a>. The HR solution has comprehensive offerings.</p>
<h3>Compensation benchmarking and reporting</h3>
<p>Payroll and HR software can be used to generate a variety of compensation reports, such as salary reports, bonus reports and benefits reports. These reports can help you to track your compensation trends, benchmark compensation against industry standards, identify potential areas of overpaying or underpaying, and make informed decisions about your compensation strategy. In our <a href="/reviews/paycor/">review of Paycor</a>, you can learn more about how the HR software can help with reporting and analytics.</p>
<h2>How do candidates assess total compensation?</h2>
<p>Candidates are savvy when assessing job offers. Some add the cumulative value of all the benefits presented within a total compensation plan and divide that by the number of hours typically worked within a year to get the total compensation hourly rate. That is how some candidates compare apples to apples (if there are multiple job offers).</p>
<p>Here is an example:</p>
<table class="styled-table">
<tbody>
<tr>
<th>
<p><strong>Benefit</strong></p>
</th>
<th>
<p><strong>Job offer No. 1</strong></p>
</th>
<th>
<p><strong>Job offer No. 1</strong></p>
</th>
</tr>
<tr>
<td>
<p>Salary</p>
</td>
<td>
<p>$75,000</p>
</td>
<td>
<p>$75,000</p>
</td>
</tr>
<tr>
<td>
<p>Paid time off</p>
</td>
<td>
<p>$4,000</p>
</td>
<td>
<p>$5,000</p>
</td>
</tr>
<tr>
<td>
<p>Retirement Matching</p>
</td>
<td>
<p>50% matching first 5% of contribution = $1,875</p>
</td>
<td>
<p>No match</p>
</td>
</tr>
<tr>
<td>
<p>Gym membership</p>
</td>
<td>
<p>$50 per month ($600 annually)</p>
</td>
<td>
<p>N/A</p>
</td>
</tr>
<tr>
<td>
<p>Commute cost savings</p>
</td>
<td>
<p>N/A</p>
</td>
<td>
<p>$100 per month ($1,200 annually)</p>
</td>
</tr>
<tr>
<td>
<p>Total</p>
</td>
<td>
<p>$81,475</p>
</td>
<td>
<p>$81,200</p>
</td>
</tr>
<tr>
<td>
<p>Hourly Rate Equivalent</p>
</td>
<td>
<p><strong>$39.17 </strong>(based on 2,080 hours annually)</p>
</td>
<td>
<p><strong>$39.04 </strong>(based on 2,080 hours annually)</p>
</td>
</tr>
</tbody>
</table>
<p>Some fringe benefits are difficult to place a numeric value on, such as the ability to work from home or a highly flexible schedule. Putting a value on those benefits is difficult. For some, it is worth more than health insurance, while others may prefer to work a predictable schedule that never fluctuates.</p>
<p>Adding a summary or narrative section to your total compensation (or total rewards) statement can help paint this picture for candidates and employees alike. Customizing total compensation documents when soliciting top talent or hard-to-find subject matter experts (SMEs) is also recommended. If you can tailor your narrative to attract a specific candidate, it may prove to be more persuasive.</p>
<h2>How do you market total compensation to employees?</h2>
<p>Total compensation plans are an opportunity to promote your company to candidates and current employees through tangible data that shows the value they get when working for your organization.</p>
<p>For your existing employees, creating and implementing a total compensation (even better, your total rewards) program helps keep team members engaged, lowers turnover and increases a company’s return on investment.</p>
<p>Total compensation statements are the best tool for achieving this objective. A total compensation statement should be one or two pages long, and it should show what benefits are being offered to candidates or are enjoyed by employees.</p>
<p>Although the appearance can vary, the content is essentially the same. The goal is to list the totality of your compensation program. If you can itemize the cost of a benefit or perk, include it in your statement.</p>
<p><em>Skye Schooley contributed to this article.</em></p>

Total compensation packages are important for employee recruitment and retention. Learn what total compensation is. 

Understanding and Utilizing Total Compensation Packages

Hiring

<p>Employment verifications serve an important role in the hiring process by confirming that candidates have the right work experience for the job. By conducting an employment verification, you can identify false employment claims, explain gaps in employment and even get insight into whether the applicant will be a good fit for your organization. In fact, it may be considered negligent not to perform these checks prior to hiring an employee.</p>
<p>Read on to learn why employment verification is important, how to conduct an employment verification and what questions to ask.</p>
<h2 id="what-is-an-employment-verification-background-check">What is an employment verification background check?</h2>
<p>An employment verification is a common part of a pre-employment background check. This step of the hiring process focuses on determining if there are any inconsistencies between the information a candidate provides and their actual employment history.</p>
<p>During this process, either a member of your human resources team or a <a href="https://www.business.com/categories/background-check-companies/">third-party background check provider</a> will contact some of the most relevant employers the candidate lists on their resume to confirm their previous employment, titles and dates of employment.</p>

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<p><strong>Editor’s note: Looking for the right background check service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.</strong></p>

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<h2 id="employment-verification-vs-reference-checks">Employment verification vs. reference checks</h2>
<p>It is quite common to hear the terms “reference check” and “employment verification” used interchangeably. Although there may be some overlap, there are key differences.</p>
<p>Employment verification is the act of confirming the factual pieces of information on a candidate’s resume, such as employers, job titles and dates of employment.</p>
<p>A <a href="https://www.business.com/articles/importance-of-job-references/">reference check</a> is when prospective employers contact the references of candidates they are considering hiring. These can be both professional references (e.g., former employers, bosses or colleagues) and personal references (e.g., friends). Because candidates select their own references, a reference check serves only as a sniff test and should be only one piece of a comprehensive assessment of the candidate.</p>
<p>Unlike employment verification, which confirms objective information, reference checks may be subjective. For example, you may ask the following questions: What was it like to work with the candidate? What are their strengths? Why do you think the candidate would be a good fit for this position?</p>
<p>Both employment verifications and reference checks are effective tools. However, if you perform only one type of background check, choose employment verification, as it is essential for an employer to corroborate the information that a candidate has shared in their resume, cover letter and interviews.</p>
<p>If you conduct employment verifications as a part of a criminal background check, you must abide by the <a href="https://www.eeoc.gov/laws/guidance/background-checks-what-employers-need-know" target="_blank" rel="noopener">Fair Credit Reporting Act</a>. Essentially, this means that if your organization utilizes a third-party background check company for pre-employment screenings, you must receive written consent from candidates before running a background check. The notification provided to the applicant, which they should sign, must include the contact information of the company that will be conducting the background screening.</p>

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<h2 id="what-is-the-importance-of-verifying-employment-history-in-the-hiring-process">What is the importance of verifying employment history in the hiring process?</h2>
<p>When you think you’ve found a stellar candidate, it can be tempting to offer the job as soon as possible, without confirming the details of their employment history. However, employment verification checks are an essential component of the candidate vetting process and should not be skipped. An employment verification ensures that the person you are hiring is not only right for the job but also a good cultural fit.</p>
<p>Here are some of the key reasons you should conduct employment verifications:</p>
<h3>1. It verifies important facts.</h3>
<p>You need to make sure that candidates are being truthful about where they worked and what positions they had so you know they have the necessary experience for the role.</p>
<h3>2. It confirms salary.</h3>
<p>Confirming salary, when possible, can be helpful because it ensures that you’re not under- or overcompensating someone. Titles do not necessarily convey how much a person makes, but if you are hiring someone for a $100,000-a-year management-level position and the candidate says they have management experience from a job that paid $40,000 a year, there may be more digging to do. However, it’s important to note that in some states, it’s illegal to ask for someone’s salary history.</p>
<h3>3. It checks culture alignment.</h3>
<p>Part of hiring the right candidates is checking whether they are a good fit for not only the role but also the organization. Employment verifications can provide a peek into another company’s culture as you learn about the candidate from their former supervisor or HR representative.</p>
<h3>4. It explains short employment stints.</h3>
<p>An employment verification can confirm why a candidate was at their previous employer for a brief period. Sure, you can ask the candidate in the interview, but it’s important to confirm that the company indeed cut positions, relocated or eliminated the role.</p>
<h3>5. It ensures workplace safety.</h3>
<p>It’s paramount to ensure you do not negligently hire someone with previous safety-related issues. If for no other reason, employment verification checks are worth the time spent to confirm you’re not exposing your company and existing employees to risks and liability.</p>

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<h2 id="what-information-should-be-sought-during-employment-verifications">What information should be sought during employment verifications?</h2>
<p>You should seek to obtain as much information as possible during an employment verification. However, sometimes you will receive private information, such as medical history, that could introduce legal risks. To prevent lawsuits, it’s helpful for a human resources professional or third-party provider to perform this step. Here are some of the types of information you should seek during an employment verification:</p>
<ul>
<li>Dates/length of employment</li>
<li>Job title(s) and time spent at each position within the company</li>
<li>Pay/wage history</li>
<li>Overall job performance</li>
<li>Reason for termination or separation</li>
<li>Job-related knowledge, qualifications and skills</li>
<li>Safety or behavioral violations, if any</li>
<li>Other work-related information</li>
<li>Eligibility for rehire</li>
</ul>
<h2 id="how-to-conduct-an-employment-verification-background-check">How to conduct an employment verification background check</h2>
<p>To conduct an employment verification background check, start by preparing a few targeted questions, and plan to be brief and respectful to get the most information. Before you call, refer to a candidate’s resume and any notes you took during the interview process.</p>
<p>When you contact a candidate’s former employer, follow these steps:</p>
<ul>
<li><strong>Refer to your list of questions.</strong> Ask your questions in a professional yet conversational manner that makes it somewhat pleasant for the person you are speaking with.
</li>
<li><strong>Ask if the candidate is eligible for rehire.</strong> The answer to this question can provide a lot of insight, but many employers will not be willing to tell you. However, you should always ask anyway.
</li>
<li><strong>Say “thank you.”</strong> Always be professional and thank the person for the time and effort. After all, you may need to call the same reference in the future regarding other applicants. Additionally, this may be the first time other professionals hear about your company and its brand, and you always want to make a good impression.</li>
</ul>
<h3>Reference checks</h3>
<p>Here are some additional tips for conducting reference checks:</p>
<ul>
<li><strong>Request references from your candidate.</strong> Call a minimum of three professional references, which should always include their most recent direct supervisor and supervisors/managers from other former employers. If you cannot reach all three references, ask the applicant for another professional reference. Even if you know the candidate or you have interviewed the candidate previously (perhaps for another job), call only the references the candidate provides. Do not sleuth on LinkedIn and track down other references you want to talk with, as you may enter  some legal gray areas.
</li>
<li><strong>Confirm phone numbers and email addresses.</strong> Applicants can be quite clever. Some employers later discover that the “professional” reference an applicant provided was actually their personal friend. To ensure you’re speaking with the right person, confirm phone numbers and email addresses on company websites whenever possible.</li>
</ul>
<p>Once you connect with the reference, follow the same steps as you used during the employment verification.</p>
<h2 id="background-check-services">Background check services</h2>
<p>Another option is to hire background check services to conduct the verifications for you. Typically, this is an added step that takes place during a complete background screening, which also includes a criminal history check, identity check and, oftentimes, education verification. Background check providers can also conduct reference checks for you.</p>
<p>These services typically cost $30 to $100 per candidate. If you plan to include employment verifications in your screening package, you should expect to pay on the higher side of that range.</p>
<p>These services usually return results within a few days. All of the results are usually available in an online portal, which makes for easy reference.</p>

Confirming a job candidate's previous employment is a critical step of the hiring process.

What Is Employment Verification?

<p>If you’ve ever worked at a job where a double standard was clear — that is, some people got opportunities that weren’t available to you — you know how frustrating and demoralizing it can be. After all, if you do a great job and work hard, you should be able to get ahead. </p>
<p>However, some companies harbor inner corruption that makes the playing field uneven and the promotion process unfair. It’s called nepotism, and if your company suffers from it, your business will end up losing <a href="/articles/the-benefits-of-highly-motivated-employees/">highly motivated employees</a> and having lower workplace morale and productivity. </p>


<h2 class="wp-block-heading" id="what-is-nepotism">What is nepotism?</h2>


<p>Nepotism in the workplace means favoring family and friends over others for opportunities, including hiring, promotions, desirable project assignments, preferred shifts, <a href="/articles/merit-pay-increase/">merit pay increases</a> or any openly available opportunity. While not illegal, nepotism is one of the more destructive practices managers can introduce in a workplace.</p>
<p>Nepotism is harmful for many reasons, including the following; </p>
<ul>
<li><strong>Nepotism limits an employer’s opportunities. </strong>It cuts off a company’s ability to build teams authentically, promote top talent, develop <a href="/articles/collaboration-workplace-performance/">workplace collaboration</a>, expand shared knowledge, and retain employees overall.</li>
<li><strong>Nepotism destroys organizational leadership.</strong> The corrosive act of nepotism often places the wrong people in leadership or subject-matter-expert positions. Poor leadership can hurt your company’s reputation, lead to destructive decision-making, and spark <a href="/articles/turnover-contagion/">turnover contagion</a>. </li>
<li><strong>Nepotism hurts excellent employees.</strong> Nepotism prevents qualified employees or candidates from <a href="/articles/professional-growth/">pursuing professional growth</a> and mapping their career paths properly. They can’t collaborate to produce the best services, products and policies for their organization. </li>
</ul>

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<h2 id="how-can-you-prevent-nepotism-in-the-workplace">How can you prevent nepotism in the workplace?</h2>
<p>Setting clear expectations through policy, practice and a <a href="/articles/creating-strong-culture-ad-marketing-agency/">strong company culture</a> is the only way to show all your employees that nepotism is not part of your company or its identity. Here are some recommendations to help you identify nepotism and avoid the practice within your business.</p>
<h3>1. Develop an active anti-nepotism policy.</h3>
<p>Create an anti-nepotism policy, add it to the employee handbook, and make it part of your leadership training. Strong anti-nepotism policies prohibit related individuals from working in the same department or company — or, more specifically, one family member reporting to another.</p>
<h3>2. Maintain detailed job descriptions to guard against nepotism.</h3>
<p>A job description, including the <a href="/articles/how-to-pick-startup-job-title/">job title</a>, can support anti-nepotism policies and practices. Maintaining an accurate and detailed job description for each role is one of the best ways to keep team expectations grounded, leadership in check, and an open and communicative platform for all to see. Job descriptions should detail the hard and soft skills, experience and attributes employees need to qualify for any given position within the company.</p>
<h3>3. Conduct manager (or leadership) training to avoid nepotism.</h3>
<p>Leadership training addresses the concerns of nepotism more than any other step. A direct callout of the practice should include a clear definition of favoritism, a description of what it looks like in the workplace, and a statement that all managers are responsible for avoiding the practice and speaking up when they notice it.</p>

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<h3>4. Create a transparent, communicative hiring and promotional culture.</h3>
<p>If the <a href="/articles/hiring-process-timeline/">hiring process</a> and promotional selection system are openly visible to all, it improves the chance of unity and trust-building within the organization. It’s essential that the company’s hiring and promotional processes are not mysterious. Murky practices will increase the questioning and anxiety around actual or perceived favoritism.</p>
<h3>5. Develop an HR or senior management approval process for hires and promotions.</h3>
<p>To fortify the phalanx against nepotism, your HR department should be involved before you or any managers make final hiring or promotion-related decisions. Hopefully, your HR staff has the neutrality and authority to help govern these employment actions. Senior managerial approval is another good step in the hiring process for specific positions and promotions.</p>

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<h2 id="what-are-the-types-of-nepotism">What are the types of nepotism?</h2>
<p>Generally speaking, there are two types of nepotism: reciprocal nepotism and entitlement nepotism. Although they are both unjust, they serve different purposes, and the motives behind them are slightly different.</p>
<ul>
<li><strong>Reciprocal nepotism. </strong>Reciprocal nepotism is when a family member accepts a position because of financial considerations, loyalty issues, a desire for a better family relationship or cultural norms (i.e., nepotism has been allowed previously).</li>
<li><strong>Entitlement nepotism.</strong> Entitlement nepotism is when someone feels a sense of entitlement for a certain job or promotion because their family member works at a company. This occurs most often within family-owned businesses.</li>
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<h2 id="what-are-examples-of-nepotism-or-favoritism-in-the-workplace">What are examples of nepotism (or favoritism) in the workplace?</h2>
<p>There are many subtle acts of nepotism in the workplace that some would see as blatant favoritism. These scenarios can also occur when family-related nepotism is not present. Poor <a href="/articles/the-influence-of-leadership-styles-how-givers-and-takers-match-up/">leadership styles</a> and destructive practices by anyone in the company can lead to the same undesirable outcomes. </p>
<p>Here are some examples of nepotism in the workplace:</p>
<ul>
<li><strong>Nepotism and workload distribution.</strong> The employer or manager does not distribute the workload equally; some employees have heavier or less desirable workloads than others.</li>
<li><strong>Nepotism and critical feedback channels. </strong>Important work-related information is only shared with particular employees.</li>
<li><strong>Nepotism and rapid upward mobility.</strong> Nepotism may involve moving an undeserving employee through each level of the organization. This makes it appear they have worked their way up fairly, but in reality they’re on a fast track to their desired role in the company.</li>
<li><strong>Nepotism and manager-employee closeness. </strong>The boss hangs out with the same people or person day after day and does not spend time with others. Though this is not technically against the rules in most cases, team members often get the message that they’re not equally valued.</li>
<li><strong>Nepotism and bad habits overlooked.</strong> A particular employee arrives late to work each day, has a high rate of <a href="/articles/employee-absenteeism/">workplace absenteeism</a>, or repeatedly makes mistakes without correction. However, others are reprimanded when they exhibit the same behavior.</li>
<li><strong>Nepotism and project selection. </strong>Specific employees have input on their projects or work selection when others do not. This is common with desirable work shifts or hours.</li>
</ul>

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<h2 id="how-nepotism-affects-the-workplace">How nepotism affects the workplace</h2>
<p>Nepotism — or even perceived favoritism of a family member or other employee — can cause anger, frustration and dissatisfaction among other team members. It will eventually lower employee morale. Employees will have less incentive to reach <a href="/hr-software/employee-performance-goals/">performance goals</a> and diligently handle their responsibilities if they feel the path to promotion — or any future opportunity — is undermined by nepotism.=</p>
<p>Although nepotism can have countless adverse effects on the workplace, these are some of the most severe consequences:</p>
<ul>
<li><strong>Nepotism reduces diversity. </strong>While nepotism is not technically illegal, the practice can result in illegal behavior or outcomes. The beneficiaries of nepotism tend to come from the same background as the offending manager. This undermines your team’s <a href="/strategy/diversity-inclusion-research/">diversity, equity and inclusion</a> efforts and causes your business to miss out on varying perspectives. You may also run afoul of <a href="/articles/workplace-anti-discrimination-laws/">anti-discrimination laws</a> and leave your company vulnerable to lawsuits.</li>
<li><strong>Nepotism reduces the internal talent pool. </strong>When a conscious or <a href="/hr/discrimination/">unconscious bias</a> leads you to hire only people who fit within a favored class, you shrink your resource pool (i.e., genuinely qualified candidates or employees). In doing so, you weaken your organization’s future by losing out on top talent, damaging the culture, and eroding employees’ trust in company leadership.</li>
<li><strong>Nepotism impedes talent retention.</strong> Good employees want to develop their careers and advance in the workplace. For this reason, even occasional nepotism can cost you top talent. If your best employees don’t get the recognition they deserve, they will eventually leave your organization in favor of companies that can offer them advancement and skill development.</li>
<li><strong>Nepotism corrodes company culture. </strong>Companies that dabble in nepotism won’t develop an <a href="/articles/justin-o-walker-ethical-business-culture/">ethical business culture</a>. You can’t build trust in your company when management unfairly advances specific employees and ignores more qualified ones.</li>
<li><strong>Nepotism lowers productivity, creativity and work quality. </strong>Ultimately, nepotism or unjust favoritism will corrode <a href="/articles/small-business-productivity-guide/">business productivity</a>, creativity and quality output. When leadership and other key positions are filled with anyone other than your top talent, the results will eventually show.</li>
<li><strong>Nepotism creates discord among employees. </strong>When a particular employee is treated differently, other team members notice and feel angry. They may take this anger out on the individual verbally, refuse to collaborate with them, or even try to sabotage their work.</li>
<li><strong>Nepotism erodes trust in management. </strong>When managers act unfairly, they lose credibility with their team. They’re more likely to get pushback or lackluster performances when trying to delegate responsibilities.</li>
</ul>
<p><em>Jennifer Dublino contributed to this article.</em></p>

Create a joint leadership approach to ensure employee hires, promotions,and favorable projects are fairly distributed.

How to Prevent Nepotism in the Workplace

<p>The practice of job rotations in the workplace is a popular way to allocate staffing where it is needed most. It also cycles employees through different roles throughout a team, department or organization with the principal objective of cross-training. When you’re considering instituting job rotations within your business, it is essential to understand the pros and cons of this type of program.</p>
<h2>What is a job rotation?</h2>
<p>Workplace job rotations have been around for a long time and are most commonly utilized within small companies, where employees are asked to “wear multiple hats.” A job rotation is the practice of exposing some or all employees to multiple roles within the organization. That is, in addition to owning and mastering their own role, employees get to experience (and often train in) other positions within the company.</p>
<p>Job rotations are typically lateral, though there may be little to no likeness to the employee’s original role in some cases. These rotations are also temporary, with various lengths of time allocated. Eventually, the employees transition back to their original jobs.</p>

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<h2>What are examples of job rotations?</h2>
<p>Generally speaking, job rotation practices have two different purposes: job shadowing and cross-training.</p>
<h3>Job shadowing</h3>
<p>The first kind of job rotation allows employees to shadow another team member in a completely different area of the business (typically one with little to no direct relation to the employee’s original job). This job rotation may last for a day or a week.</p>
<p><strong>Example:</strong> An employee on the marketing team shadows someone in distribution, the warehouse or research and development. The primary purpose of this job shadowing or job rotation, is for employees to develop a stronger, more informed appreciation for others’ roles in the company. In turn, this <a href="/articles/5-reasons-why-teamwork-is-crucial-to-workplace-success/">fuels an ongoing team-building environment</a> directly and helps colleagues get acquainted with each other. It also provides insights into the challenges and unique perspectives that others have about the rotating employee’s role and how the company’s processes operate from multiple departments’ perspectives.</p>
<p>The purpose of job shadowing is not necessarily training as there is not always a logical fit for this type of cross-training. It is designed to expose the rotating employee to other parts of the business to increase their knowledge and understanding.</p>
<h3>Cross-training</h3>
<p>The second kind of job rotation is the more widely used one as it carries practical application and functional support for certain positions. Job rotations focusing on cross-pollination of job knowledge tend to be more detailed and time-consuming. Cross-training aims to allow substitutes to step into essential roles when needed. This also fills the need for succession planning in technical or hard-to-fill roles, which must be well-positioned for future personnel changes. Like the first kind, this type of job rotation helps enrich and expand the employee experience while also strengthening the company’s business continuity plans.</p>
<p><strong>Example:</strong> An accounting manager cross-trains with the payroll administrator. In this job rotation scenario, there is a much closer affiliation between the two roles. That is, they both may reside within the same department (in this case, accounting). Another example would be for a controller to cross-train in <a href="/articles/accounts-payable-vs-receivable/">accounts receivable or accounts payable</a>.</p>

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<h2>What are the benefits of employee job rotations?</h2>
<p>There are many benefits of job rotations for both employees and their employers. Rarely does a company not find value in the practice. However, the challenge is developing meaningful opportunities with value-added benefits that company leadership can see and plan around.</p>
<p>As you develop a job rotation program, remember that you can’t just do it once or twice with no additional focus on its complexity and importance. Job rotations must be an ongoing, consistent and purposeful training program (or program for employee exposure) that folds into a company’s larger <a href="/articles/offer-professional-development-to-employees/">training and development programs</a>.</p>
<table>
<tbody>
<tr>
<th>
<p><strong>Benefits for employees</strong></p>
</th>
<th>
<p><strong>Benefits for employers</strong></p>
</th>
</tr>
<tr>
<td>
<p>It enriches the employee experience.</p>
</td>
<td>
<p>It develops stronger business continuity (or a backup plan).</p>
</td>
</tr>
<tr>
<td>
<p>It encourages professional development.</p>
</td>
<td>
<p>It makes for more dynamic personnel management, such as you can move employees around to match needs or workflow, which <a href="/articles/6-ways-to-prevent-employee-burnout/">reduces burnout</a>, overload and <a href="/articles/employee-turnover-rate/">turnover</a>.</p>
</td>
</tr>
<tr>
<td>
<p>It strengthens employee networking.</p>
</td>
<td>
<p>Skills learned in other areas almost always increases an employee’s usable skill sets.</p>
</td>
</tr>
<tr>
<td>
<p>It gives them a break from their daily duties.</p>
</td>
<td>
<p>You might uncover hidden or unknown employee skill sets and unthought-of team dynamics that could benefit the company.</p>
</td>
</tr>
<tr>
<td>
<p>It shows them what other roles are like (perhaps for future career planning).</p>
</td>
<td>
<p>Multiple employees will be ready for various critical functions.</p>
</td>
</tr>
<tr>
<td>
<p>It prevents boredom.</p>
</td>
<td>
<p>Essential roles of the organization are always filled (if only temporarily).</p>
</td>
</tr>
</tbody>
</table>
<h2>What are the potential drawbacks of job rotations?</h2>
<p>You’ll need to be mindful of a few drawbacks or obstacles when creating your company’s job rotation program. Many drawbacks are tied directly to inconsistent or short-term job rotation planning.</p>
<table>
<tbody>
<tr>
<td>
<p><strong>Potential drawbacks for employees</strong></p>
</td>
<td>
<p><strong>Potential drawbacks for employers</strong></p>
</td>
</tr>
<tr>
<td>
<p>It may frustrate employees when they learn they cannot immediately change jobs or train full-time for a desired job.</p>
</td>
<td>
<p>It takes time and effort to implement these practices.</p>
</td>
</tr>
<tr>
<td>
<p>Job shadows or training might not be available for all desired roles within the organization.</p>
</td>
<td>
<p>It seldom works to move a troubled employee from one department or team to another.</p>
</td>
</tr>
<tr>
<td>
<p>Opportunities may not be equally available to all team members, such as training on essential roles may only be open to select employees.</p>
</td>
<td>
<p>Cross-training must be done consistently for it to be of any value at all; there are no shortcuts.</p>
</td>
</tr>
<tr>
<td>
<p>Cross-trained employees may not feel confident in their backup roles if job rotations are not frequent or effective enough.</p>
</td>
<td>
<p>Error rates could increase since the cross-trained employees are not as familiar with their backup duties.</p>
</td>
</tr>
<tr>
<td>
<p>If employees leave their job for another company because they want a different supervisor, larger cultural problems might go unaddressed.</p>
</td>
<td>
<p>Depending on how it is designed and carried out, you could incur additional expenses from the program.</p>
</td>
</tr>
</tbody>
</table>

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<h2>How do you develop a job rotation program?</h2>
<p>There is more than one way to develop and maintain a successful job rotation program. Depending on your company’s size, resources and unique needs, you might take various approaches to create your own program. Here are some tried-and-true methods to incorporate into your planning process, regardless of the direction it takes down the road:</p>
<ol start="2">
<li><strong>Get signoff and backing from all company leaders:</strong> Job rotation programs only last long with solid leadership support and joint investment. Every member of your company leadership must genuinely believe in its value and relevance.</li>
<li><strong>Communicate with the whole company about the job cross-training program:</strong> For there to be less mystery about what the organization is doing, it is wise to share a detailed explanation, complete with Q&A sessions, with everyone in the company. Explain the what, how, when and why of it all.</li>
<li><strong>Develop a (flexible) company policy: </strong>We recommend maintaining a company policy in your employee handbook about job rotation. It can be vague, allowing the organization to flex one way or another, but the overall practice of job rotation must be as equitable and fair as possible.</li>
<li><strong>Identify all essential roles and each role’s critical needs:</strong> One of the most common early steps in this process is identifying which roles are the most important ones to get backup alignment for ASAP. A <a href="/articles/what-is-a-peo/">professional employer organization can help</a> you identify these gaps in staffing.</li>
<li><strong>Conduct a job analysis for similar positions within the company:</strong> When cross-training employees to be backups, it is a good idea to seek out people closest to or with some technical overlap with the role that needs the backup.</li>
<li><strong>Create (or update) job descriptions:</strong> If your organization has not yet done so, you need to create job descriptions that the cross-trained employee can reference. Keep these descriptions current as job roles evolve as they will be the employees’ compass in the cross-training and backup experience.</li>
<li><strong>Determine the ideal “bench strength” for each role:</strong> Knowing which roles to attack first and the critical duties within those jobs is essential, but you must also determine when a cross-trained employee is ready to step into the role if necessary. The finish line for the training is different for each role.</li>
<li><strong>Develop a training or shadowing schedule:</strong> It’s important to create a <a href="/articles/why-businesses-should-invest-in-employee-training/">program for training</a>. Do not wing it. With each position your organization wants to cross-train team members for, develop a written program (or plan) to ensure that all critical aspects of the job are adequately covered.</li>
<li><strong>Agree on the program’s selection process (related to the highest level of need):</strong> Once you’ve created the bones of the program, you will inevitably identify the most qualified or desired candidates to cross-train. This is important, but you should still create and follow a formal selection process.</li>
<li><strong>Before cross-training, orient and prepare to receive employees and/or teams:</strong> Give setup and prep time to each employee you ask to cross-train another. For some people, having another employee peeking over their shoulder, asking questions all day and impeding their space is extremely taxing. Make sure you have laid the groundwork, so the process is smooth and enjoyable for all.</li>
<li><strong>Evaluate the process, particularly with each cross-training event:</strong> Always evaluate your methods and practices in real time. Make improvements and capitalize on what is working well.</li>
<li><strong>Assess annually:</strong> Your team should review the program on an annual basis. Are the company’s needs being met? Is the desired concept and purpose of cross-training being fulfilled?</li>
<li><strong>Reward, acknowledge and measure progress and success: </strong>Encourage all who participate in the program by measuring progress ― this is the fun part of job rotation programs. If you make it a desirable practice or opportunity, the job rotation program will draw attention from employees eager to cross-train in other roles within your organization.</li>
</ol>
<p><em>Skye Schooley contributed to this article.</em></p>

Learning what job rotation is can help you properly identify if it is an intelligent training method for your employees.

The Benefits of Employee Job Rotations

<p>If you are an employer and have ever found yourself in need of temporary staffing, then you have experienced a need that staffing agencies can help with. Staffing agencies match willing candidates with employers in need of staffing assistance. </p>
<h2 id="what-do-staffing-agencies-do">What do staffing agencies do?</h2>
<p>Staffing agencies, also known as recruitment agencies or temp agencies, match companies that have short-term staffing needs with candidates who are looking to work for short periods or want to try out a new job. They usually specialize in a particular industry or type of work, but they tend to work similarly, regardless of the type of position or industry. </p>
<p>Most staffing agencies provide employers with prequalified candidates who will work on a temporary basis for any open positions. This allows the temporary employees, or “temps,” to gain work experience and try out a job before committing to it.</p>

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<h2 id="how-do-staffing-agencies-work">How do staffing agencies work?</h2>
<h3>1. The employer makes initial contact. </h3>
<p>Most of the time, an employer will contact a staffing agency that they feel would be a good match. The employer shares the job description, what they are willing to pay for the role, how long the assignment is expected to last, and any particular concerns or details about the role, which may spill into physical, safety, and/or travel requirements.</p>
<p>Once the details of the role are established, the staffing agency shares a service agreement (or contract) with the employer that outlines the nature of the relationship, such as how billing and invoicing works, the service charge, and what to do if the employer wants to hire the worker.</p>
<h3>2. The staffing agency assesses its portfolio. </h3>
<p>Sometimes the staffing agency has personnel ready to start working immediately. However, it often needs to tap into its network of temporary workers or <a href="https://www.business.com/hr-software/recruiting/">recruit new candidates</a> to locate the right person for the job. </p>
<h3>3. Candidates apply for work through the staffing agency. </h3>
<p>Since many staffing agencies focus on specific areas of the labor market, they often run ongoing recruitment ads with the knowledge that candidates will sign up to work and employers will seek their services. Through general recruitment strategies, candidates commonly sign up for work, and the staffing agency processes them as soon as they do. When employers call, agencies hope to have candidates prequalified and ready for interviews or work immediately.</p>
<h3>4. The agency and employer interview candidates.</h3>
<p>Once candidates have applied to a staffing agency, the agency will interview them, even if there is no immediate work available. This process often involves a <a href="https://www.business.com/articles/what-is-criminal-background-check/">background check</a>, drug screen, credit check, <a href="https://www.business.com/articles/employment-verification/">employment verification</a> and reference checks. Some agencies help candidates develop professional resumes, which are shared with employers.</p>
<p>If candidates make it past the agency’s vetting process, employers can then interview them. This process typically includes thorough job identification and information about the company, why the position is needed, and how the candidate’s background matches the employer’s needs. </p>
<h3>5. The chosen candidate begins work. </h3>
<p>Although the staffing agency will be the temporary employee’s official employer, the company that hired them for the temp position manages them and shows them what to do to fulfill their duties.</p>

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<h2 id="how-much-do-staffing-agencies-charge">How much do staffing agencies charge?</h2>
<p>The convenience of having prequalified candidates at the ready comes with a cost. Staffing agencies charge a markup, which covers their costs and profit margin, in addition to the hourly rate of pay the temporary employee receives. Candidates typically do not pay fees to the staffing agencies.</p>
<p>Staffing agencies may charge several different rates and fees, depending on the role the temporary employee is performing, the employee’s experience, and how in-demand the employee’s skill set is in the marketplace. </p>
<ul>
<li><strong>Standard markup:</strong> The markup can range from 25% to 75% of the temporary employee’s wages, depending on the role, hourly rate or salary, and location. For example, suppose your temporary employee’s rate is $20 per hour and the markup is 25%. In that case, you’d pay $25 per hour to the staffing agency ($20 for the employee and $5 for the agency).</li>
<li><strong>Finder’s fee:</strong> Staffing agencies may also charge this fee that is not included in the markup. Depending on the circumstance, the added cost for locating the talent and filling the role could be set at a premium. Although finder’s fees are less common, they can be part of a staffing agency’s commission structure.</li>
<li><strong>Temp-to-hire fee:</strong> With temp-to-hire arrangements, which allow you to eventually hire the temporary worker as a full-time employee, you pay a percentage of the total compensation over a given waiting period, generally six to 12 months. So, if you bring on a temp for six months but decide after one month to hire them full time, you would still pay the staffing agency for the other five months. Of course, there is no guarantee that the employee will work out for the long term. If <a href="https://www.business.com/articles/cost-of-a-bad-hire/">an employee does not work out</a> within the first few months, the staffing agency may offer a partial credit or refund.</li>
</ul>
<ul>
<li><strong>Headhunter fee:</strong> With some agencies, the goal is not to locate temporary employees at all, but rather full-time employees who are either hard to find or have unique skill sets and experience. In these cases, fees range from 25% to 40% of the employee’s first-year salary. </li>
</ul>
<h2 id="how-do-you-find-a-staffing-agency">How do you find a staffing agency?</h2>
<p>Partnering with a staffing agency can benefit both the employer and the employee. Employees are mainly looking for readily available work, and having fully vetted candidates at the ready is valuable to employers. Time is money, and during busy or peak seasons, you’ll want immediate solutions to your staffing needs. This speed of service during busy seasons is one of the aspects you should ask your prospective agencies about. Here are some other things to consider when you’re looking for a staffing agency.</p>
<ul>
<li><strong>Specialization:</strong> Does the agency specialize in your particular area of business? It may be fine if not, but its candidates must meet your needs.</li>
<li><strong>Cost matrix:</strong> Due to their specialties or the industries they serve, some staffing agencies have a higher markup than others. Ask agencies you’re considering what their markups are and if there are penalties for hiring employees out of their agreement with the staffing agency.</li>
<li><strong>Availability:</strong> Some staffing agencies don’t operate nationwide. Ask agencies if they offer 24/7 support or have offices near your business locations.</li>
</ul>

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<h2 id="what-are-the-pros-and-cons-of-partnering-with-a-staffing-agency">What are the pros and cons of partnering with a staffing agency? </h2>
<p>Selecting a staffing agency partner should be a careful process to ensure it will meet your needs. Understanding the limitations of a staffing agency will help you set your expectations so that disappointment or surprises will be minimal.</p>
<table class="styled-table">
<tbody>
<tr>
<td><strong>Pros</strong></td>
<td><strong>Cons</strong></td>
</tr>
<tr>
<td>Staffing agencies can be an excellent solution for immediate temporary staffing assistance.</td>
<td>Hiring a staffing agency temp as a full-time employee can cost additional money if done within a contract or service agreement.</td>
</tr>
<tr>
<td>Staffing agencies can reduce the time it takes to fill a position, saving money and preventing lost sales.</td>
<td>Staffing agencies do not necessarily specialize in your type of company and ensure a good cultural fit; they primarily focus on candidates’ skill sets and work experience.</td>
</tr>
<tr>
<td>Utilizing temporary staffing can help you vet and assess candidates before bringing them on permanently.</td>
<td>Not all staffing agencies operate nationwide. If you have facilities around the country, for example, you may not be able to use your first choice for temporary staffing help.</td>
</tr>
</tbody>
</table>
<h2 id="what-are-other-types-of-staffing-agencies">What are other types of staffing agencies?</h2>
<p>In addition to temporary staffing agencies, there are many other types of agencies that fill needs for employers across many industries. Here are some different kinds of staffing agencies.</p>
<ul>
<li><strong>Full-service staffing agencies:</strong> Full-service staffing agencies are versatile and offer more complete services, including staffing for longer-term assignments. These agencies may deliver temporary, temp-to-hire, or full-time staffing, even for highly specialized roles.</li>
</ul>
<ul>
<li><strong>Retained search or executive search agencies:</strong> Retained search and executive search firms specialize in staffing for higher-level or executive roles. Passive talent looking for better opportunities will often partner with search firms, as they often focus on specific industries and are well networked.</li>
</ul>
<ul>
<li><strong>Boutique staffing agencies: </strong>Some types of talent are hard to find, or a particular industry is so niche that highly skilled workers in that field, who do not often change jobs, need to be sought out by professional recruiters. Boutique agencies specialize in locating candidates who are not actively looking to change jobs.</li>
</ul>

Employers in need of temporary workers can partner with staffing agencies to find qualified candidates quickly.

Understanding How Staffing Agencies Work

<p>Conducting background checks helps companies avoid dangerous, fraudulent and reckless behavior from job candidates and employees. Background checks are a common part of the <a href="/hr-software/recruiting/">recruitment process</a>, verifying a job candidate’s identity and credentials, and flagging any concerning or criminal history. If you are a small business owner hiring new employees, you should run background checks on candidates to ensure you are bringing on qualified professionals.</p>
<h2>What is a criminal background check?</h2>
<p>Criminal background checks are primarily completed after a preliminary job offer has been extended, but before the candidate begins work. Employers run background checks on job candidates to ensure that there are no red flags and to determine the validity of the information the candidate provided in their application and throughout the interviewing process.</p>
<p>Although employers conduct background checks for many reasons, the data shows that an overwhelming percentage of employers conduct them. The <a href="https://pubs.thepbsa.org/pub.cfm?id=459B8AB7-0CEA-625E-0911-A4A089DE5118" target="_blank" rel="noopener">Professional Background Screening Association</a> (PBSA) found that 94 percent of surveyed employers used one or more types of employment background screenings. The same report shows that a growing number of employers conduct checks periodically throughout the employee’s time at the company.</p>
<h2>What do background checks cover?</h2>
<p>There are many types of data that make up most background checks. Typically, the same information is present on most background checks. For example, here are the most common data points in preemployment and/or general employment background checks:</p>
<ul>
<li>Full legal name (and previous aliases or last names)</li>
<li>Social Security number</li>
<li>Date of birth</li>
<li>Criminal conviction record</li>
<li>Previous addresses</li>
</ul>
<p>Note that if you run a background check on a subject who has lived in other countries or is working in another country, additional rules, regulations and stipulations apply. Most significantly, the U.K. and parts of Europe are now strictly governed by a privacy data law known as the General Data Protection Regulation (GDPR) guidelines, which apply to all background checks affecting European Union citizens.</p>
<p><strong>Editor’s note: Looking for the right background check service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.</strong></p>

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<h2>Why are criminal background checks important?</h2>
<p>Background checks aren’t just a pointless step to add to your <a href="/articles/hiring-process-timeline/">hiring process</a>. They are valuable to organizations of all sizes. Here are some of the most important reasons why you should conduct background checks on future and current employees:</p>
<h3>To improve or ensure quality of hire</h3>
<p>Although you might like to think applicants are telling you the truth about their history and qualifications, 78 percent lie during the hiring process, according to <a href="https://www.prnewswire.com/news-releases/new-checkster-research-shows-78-of-job-applicants-lie-and-66-of-hiring-managers-dont-care-301004406.html" target="_blank" rel="noopener">Checkster</a>. Preemployment screening can help verify that potential new hires have provided accurate information throughout the hiring process.</p>
<h3>To protect employees, customers and the company</h3>
<p><a href="/articles/osha-compliance-employer-requirements/">Employers have a legal responsibility</a> to keep their employees and customers safe. As a result, you need to make sure you don’t let people with a violent history into your business. Maintaining workplace safety and reducing possibilities for injury or property damage is critical. Failure to do your due diligence can bite you in the back in the form of lawsuits and court cases.</p>
<h3>To maintain your company reputation</h3>
<p>Even though it can take years to <a href="/articles/how-to-strengthen-your-companys-reputation/#how-can-you-build-and-maintain-a-strong-company-reputation">build a great company reputation</a>, that reputation is easy to lose overnight if organizational leaders are not doing their jobs. Background checks help ensure that anyone who joins your company will represent it well.</p>
<h3>To reduce costs related to employee management</h3>
<p>Although some employers might be concerned about <a href="/articles/stop-employee-theft-restaurants/">employee theft</a>, hiring the <a href="/articles/cost-of-a-bad-hire/">wrong person can cost your business</a> in other ways. Bringing in someone with a criminal history could increase your insurance premiums, <a href="/articles/employee-absenteeism/">employee absenteeism</a> and <a href="/articles/employee-turnover-rate/">turnover</a>, employee compensation, <a href="/insurance/cyber-risk/">cybersecurity risks</a>, and other work-related claims.</p>
<h3>To comply with employment laws and regulations</h3>
<p>In some cases, employers are required by law or industry stipulations to conduct a background check on a candidate prior to employment. This may apply to jobs in healthcare, education, law, financial services and other jobs that involve privileged access to sensitive information, money or children. <strong>[Read related article: </strong><a href="/articles/dot-background-check/">What Is a Department of Transportation (DOT) Background Check?</a><strong>]</strong></p>

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<h2>How far back do most background checks go?</h2>
<p>How far back background checks go depends on the type of background check and the state where it is conducted. We have outlined the primary types of checks in the table below to lay out the timeframe and related exceptions.</p>
<table class="styled-table">
<tbody>
<tr>
<th>
<p><strong>Type of background check</strong></p>
</th>
<th>
<p><strong>Length of time covered</strong></p>
</th>
</tr>
<tr>
<td>
<p>Preemployment background check</p>
</td>
<td>
<p>Preemployment background checks usually span seven years of criminal and court records, but they can cover a longer time span depending on compliance and industry laws, what is being searched for, and which state the search is conducted in.</p>
</td>
</tr>
<tr>
<td>
<p>Professional license verification</p>
</td>
<td>
<p>Generally, this check does not have a limit on time span, as verifications may need to be made throughout the subject’s lifetime.</p>
</td>
</tr>
<tr>
<td>
<p>Employment history and education</p>
</td>
<td>
<p>Generally, this check does not have a limit on time span.</p>
</td>
</tr>
<tr>
<td>
<p>Credit history check</p>
</td>
<td>
<p>Employment credit checks go back seven or 10 years, depending on the laws of the state where the candidate lives. Note that more states are beginning to restrict or narrow the scope of information related to credit data that can be reported on and for how long.</p>
</td>
</tr>
<tr>
<td>
<p>Driving history</p>
</td>
<td>
<p>Driving history checks may go back three to 10 years, depending on the state.</p>
</td>
</tr>
<tr>
<td>
<p>Social Security verification</p>
</td>
<td>
<p>Some background checks are designed simply to verify the SSN of the candidate to ensure that the person is who they say they are. These generally do not have a limit on time span.</p>
</td>
</tr>
<tr>
<td>
<p>Drug testing</p>
</td>
<td>
<p>Although drug tests do not check a person’s history, they are common in preemployment and current employment relationships.</p>
</td>
</tr>
</tbody>
</table>

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<p>There is a school of thought referred to as the seven-year lookback rule. Some states have taken a hard stance on limiting employers’ views of criminal convictions. Although credit checks, governed under the Fair Credit Reporting Act (FCRA), allow creditors to look further back in some cases, there is a growing push to limit the criminal records employers can check to the past seven years. Though the exact laws on this vary from state to state, they fall under the umbrella of the Ban the Box movement, which seeks to end the stigma of conviction or arrest records for job candidates.</p>
<h2>How long do criminal background checks take?</h2>
<p>Although many background checks can be processed and return results in three to five days, some can take longer. For example, FBI background checks usually take around 30 days to complete. Although some federal background checks can be processed more quickly, it is best to plan for the comprehensive review that requires a 30-day wait.</p>
<p>Another delay in processing background checks, either for pre-employment purposes or for current employees, has to do with the number of states where the subject has lived. The more states they have lived in, the more databases there are to query, and the longer it can take to compile the necessary data. This is the most common delay in background checks.</p>
<p>Also, some background checks require several different data points (e.g., criminal background and credit checks). The more requests you place within a single background check, the longer the process might take.</p>
<h2>How do you conduct a criminal background check?</h2>
<p>First, you need to establish the steps that your company should follow for background checks on job candidates or current employees. We highly recommend you create and maintain a criminal background check policy that lives in your employee handbook. You can find extensive templates online, but your company policy for criminal background checks should at least include these steps:</p>
<ol>
<li><strong>Get the subject’s acknowledgement.</strong> Inform the subject that you intend to process a background check and have them sign a release. Never move forward with the background check before you have the subject’s signature. Spoken approval is not adequate acknowledgment; you need it in writing. This federal law is governed by the FCRA.</li>
</ol>
<ol start="2">
<li><strong>Stick to the agreed-on scope.</strong> Ensure that the background check matches the details and description of the background on the release that the subject signed. Do not extend beyond this established scope.</li>
<li><strong>Contact your third-party partner.</strong> Third-party background check companies are the way to go, and the internet is replete with good options. We recommend <a href="/categories/background-check-companies/">partnering with a reliable background check company</a> that has solid ratings and has been in business for a long time. We do not recommend visiting all the federal, state and industry-specific websites required to run a thorough check; let an expert third party manage this action for you.</li>
<li><strong>Review the record.</strong> Once the check is complete, the background check company will either email the results to you or share them with you on a secure server. Review the content for any surprises or concerns.</li>
<li><strong>Inform the subject of the findings (with a copy of the report, if necessary).</strong> If you have no concerns and nothing to discuss, you are free to proceed with the hiring process. However, if there are items of concern on the report, especially ones that would warrant either a candidate’s elimination from an employment opportunity or a current employee’s dismissal, the law entitles the subject to receive a paper or electronic copy of the entire background check.</li>
<li><strong>Include all related data in your recruitment file.</strong> Regardless of the background check’s findings or whether or not you hire the candidate in question, keep a record of it or the review itself in their recruitment and/or <a href="/articles/employee-personnel-file/">personnel file</a>. If your company maintains a supervisor employee filing system, then this record should be retained in the HR-only file.</li>
</ol>

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<h2>What are red flags on a background check?</h2>
<p>When conducting a criminal background check, employers typically want to consider convictions, not arrests or other charges. An arrest does not mean someone was convicted of a crime. Convictions, or cases in which the accused was found guilty, are the primary concern of a criminal background check.</p>
<p>Here some common red flags that warrant, at a minimum, discussion with the subject and, at worst, removal from consideration for the job:</p>
<ul>
<li><strong>Convictions that the subject did not share previously.</strong> If convictions that the subject did not previously disclose show up on the review, then removing the subject from all employment opportunities at your company is the right move. </li>
<li><strong>Lack of evidence relating to certification, license or any other education.</strong> If you are unable to confirm any certification, license or degree that the candidate claimed to have on their resume, in their cover letter, or during their interview (whether the job requires that credential or not), discuss the discrepancy with them to find out why.</li>
<li><strong>General discrepancies.</strong> If a subject leaves out states they’ve lived in or misrepresents durations of time, employers they’ve worked for, or certain other details, follow up with them about it. If a candidate is vague on facts and details during the application and interview process, you may wonder what they’ll be like to work with.</li>
<li><strong>Multiple bankruptcies or other financial concerns.</strong> Low credit scores do not automatically reflect a poor job candidate, nor do other aspects of a credit report’s findings. As the employer, you won’t see the subject’s credit score anyway, but you might see other signs of financial distress (e.g., making late payments or using credit heavily). We recommend two things here: First, never pass on a great candidate if all you have against them is a record of late payments on a credit report. Second, we only recommend conducting financial background checks (e.g., credit checks) for finance-related positions, such as CFOs, accountants and bookkeepers. Credit reviews are not necessary for many other roles. </li>
</ul>
<p>Background checks help business owners and hiring managers confirm that their selected candidates are trustworthy and high-quality choices for the job. Nowadays, there is little reason not to complete preemployment background checks on promising candidates. This extra step in your hiring process is likely to prove valuable as you build your team for the future.</p>
<p><em>Skye Schooley contributed to the reporting and writing of this article.</em></p>

Background checks should remain an integral part of your hiring process. Learn why background checks are important and what type of information you can gain from them.

Patrick Proctor