The Importance of Background Screening In a Merger

Acquisitions and mergers are a common occurrence in today’s business world fueling growth and profitability, expanded market share and the introduction of new products and services. There are many items to be checked off on the “to do” list during the merger process from the organizational side, but what about the human factor?

Companies need to be aware of the risks that could exist in the staff of the business it just acquired. Organizations need to make sure that a background screening program is included in the procurement process and added to the total cost of ownership to mitigate the risks and protect the brand after the merger.

Why Rescreen Merger Employees

Background screening policies will depend on industries. Some industries such as financial, transportation and medical require screening, while others do not. There are a few reasons why it is important to re-screen employees after a merger:

  • A purchasing company might have a comprehensive background screening policy in place, but the newly acquired business has never conducted screening on their employees
  • The newly acquired business does perform background screening at the time of hire, but it does not follow the same screening procedures as the purchasing company
  • The acquired company performs background screening when it hires employees, but there is no way for the new owner to know what behaviors or actions might have occurred from that time to the merger date.

Why It’s Important

It is hard to overstate the importance for an owner during a merger of knowing their new employees and information relevant to their professional lives. The employees represent the company and brand to the clients, prospects and the public at large, while also handling important internal resources.

Trusting that the employees are honorable and honest is at the heart of this relationship and background screening helps achieve this peace of mind. A bad hire who is still employed at a company can lead to a loss of productivity, workplace safety issues and co-worker dissatisfaction. This, in turn, affects a company’s bottom line as the average cost of replacing an employee can exceed 30% of the employee’s annual salary.

What is Rescreening?

Resscreening is the process of performing background checks on current employees in any industry from large corporate firms to small businesses. There is a misconception that background screening is one-and-done for businesses. A current employee can engage in illegal behavior even if they don’t have a previous criminal record, which then would not only affect the individuals involved but the company brand as well.

Organizations large and small put a strong emphasis on keeping their workplaces safe through background screening potential hires. Sterling Talent Solutions surveyed 500+ HR professionals in the US, and of those surveyed, 89% confirmed that their business uses background screening as a preventative measure against workplace discrimination, harassment, fraud and violence. Approximately 80% of the respondents said that background checks uncover issues/information that wouldn’t have been found otherwise. For 45% of the respondents, the primary reason they believe employment background checks are important to their organization is to protect their clients or customers.

What Checks Should Be Rescreened?

Employees are technically “new” when their company has been acquired or merged with another company. In order to protect themselves from potential compliance issues, companies should apply a consistent employment background screening program throughout the acquired and current employee population. Employers need to decide what screening checks should be run on their employees. This will depend on the job position and on what the previous company already ran during the hiring process.

The most popular background checks to be re-conducted are criminal record checks and drug and health screening. Education and employment verification usually don’t have to be rescreened as the information has already been verified by the original hiring company.

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Compliant Employment Paperwork

During a merger process, important human resources paperwork might be missed or misfiled. Performing an audit on the employee paperwork is a good strategy to make sure everything is compliant with local, state and federal regulations. Form I-9 and E-Verify solutions are an essential part of any business’ onboarding process.  The I-9 shows a new hire’s eligibility to work in the US and is required by law. Verifying the acquired company has one on record for every employee ensures compliance.

Companies that have not implemented an employee rescreening program after a merger or acquisition should take an in-depth look at its potential risk exposure and the value it would receive by implementing such a program. From identifying the best candidates to maintaining compliance, it’s good to get a plan in place to understand the reasons screening matters to your organization.

This article was originally published on the Sterling Talent Solutions blog.