 Compelling Reasons To Perform Background Checks
Fraud
http://www.cfenet.com/media/statistics.asp
The Certified Fraud Examiners Association estimates that 6%
of revenues will be lost in 2002 as a result of occupational
fraud and abuse. Applied to the U.S. Gross Domestic Product,
this translates to losses of approximately $600 billion, or
about $4,500 per employee.
Cost of Turnover
Cost of turnover
estimates range from $8,839 for an $8/hour unionized employee
and $56,844 for a store manager in a retail grocery setting.
- "New Ideas for Retaining Store-Level
Employees" by Dr. Blake Frank, University of Dallas, Coca-Cola
Retailing Research Council
Employee Theft
- Employee theft accounts for 46% of shrinkage in North
American Industry. [ University of Florida. 2001 National
Retail Security Survey-Final Report]
- Employee theft costs nearly 1% of total annual sales in
North America. [ University of Florida. 2001 National Retail
Security Survey-Final Report]
- It is estimated that 33% to 75% of all employees have engaged
in such behaviors as theft, fraud, vandalism, sabotage, and
voluntary absenteeism. [Harper, D. (1990). Spotlight abuse,
save profits. Industrial Distribution, 79, 47-51.]
- Deviant and delinquent employee behaviors have been associated
with annual organizational loss estimates exceeding $6 billion.
[Murphy, K.R. (1993). Honesty in the workplace. Belmont,
CA: Brooks/Cole.]
- The U.S. Chamber of Commerce estimates that 75% of all employees
steal at least once, and that half of these steal again ...and
again. The Chamber also reports that one of every three business
failures are the direct result of employee theft.
Drug Abuse
http://www.samhsa.gov/oas/nhsda.jsp#NHSDAinfo
Current employment status is also highly correlated with rates
of illicit drug use. An estimated 17.1 percent of unemployed
adults aged 18 or older were current illicit drug users in
2001 compared with 6.9 percent of those employed full time
and 9.1 percent of those employed part time.
Although the rate of drug use was higher among unemployed
persons than other employment groups, most drug users were
employed. Of the 13.4 million illicit drug users aged 18 or
older in 2001, 10.2 million (76.4 percent) were employed either
full or part time. (SAMHSA's Substance Abuse National Household
Survey on Drug Abuse)
The US Chamber of Commerce says substance abuse saps productivity
by up to $640 per employee. http://www.uschamber.com/Press+Room/1999+Releases/September+1999/99-149.jsp
Workplace Violence
While working or on duty, U.S. residents experienced 1.7 million
violent victimizations annually from 1993 to 1999 including
1.3 million simple assaults, 325,000 aggravated assaults, 36,500
rapes and sexual assaults, 70,000 robberies, and 900 homicides.
Workplace violence accounted for 18% of all violent crime between
1993 to 1999.
http://www.ojp.usdoj.gov/bjs/cvict_c.jsp#vtrends
Homicide is now the #2 cause of death in the workplace (more
than 1,000 deaths last year)[Bureau of Justice Statistics].
Fraudulent Resumes
More than 95% of U.S. college students surveyed by Reid Psychological
Systems said they would make at least one false statement to
get a job. 41% said they had already done so. The Vancouver
Province, August 13, 1996, p. A25.
The average "bad hire" that leaves a company within
six months costs the company approximately $40,000 in severance
pay, training, wasted human resource time, possible search
firm fees, loss of productivity and impact on employee morale
- U.S. Department of Labor
Fraud Statistics
http://www.cfenet.com/media/statistics.asp
The following statistics regarding fraud and white-collar
crime are from the 2002 Report to the Nation. This report,
conducted by the Association, provides the most detailed view
yet of how occupational fraud affects organizations in the
U.S.
- Organizations with fraud hotlines cut their fraud losses
by approximately 50% per scheme. Internal audits, external
audits, and background checks also significantly reduce fraud
losses.
- Small businesses are the most vulnerable to occupational
fraud and abuse. The average scheme in a small business causes
$127,500 in losses. The average scheme in the largest companies
costs $97,000.
- The most common method for detecting occupational fraud
is through tips from employees, customers, vendors and anonymous
sources. The second most common method of discovery is by
accident.
- The typical occupational fraud perpetrator is a first-time
offender. Only 7% of occupational fraudsters in this study
were known to have prior convictions for fraud-related offenses.
- All occupational frauds fall into one of three categories:
asset misappropriations, corruption, or fraudulent statements.
- Over 80% of occupational frauds involve asset misappropriations.
Cash is the targeted asset 90% of the time.
- Corruption schemes account for 13% of all occupational
frauds and they cause over $500,000 in losses, on average.
- Fraudulent statements are the most costly form of occupational
fraud with median losses of $4.25 million per scheme.
- Frauds committed by employees cause median losses of $60,000,
while frauds committed by managers or executives cause median
losses of $250,000. When managers and employees conspire
in a fraud scheme, the median loss rises to $500,000.
- Losses caused by perpetrators older than 60 are 27 times
higher than losses caused by employees 25 and younger.
- The average fraud scheme lasted 18 months before it was
detected.
Retail Security
http://www.retailcouncil.org/rpn/asr/2003_Security_Report_ExecSum.pdf
The following statistics regarding retail loss prevention
are taken from the Retail Council of Canada's 2003 Canadian
Retail Security Report Executive Summary. U.S.
- Retailers lost over $3 billion in 2002, up from $2.3 billion
in 1999.
- Shop theft amounts to more than $8 million daily.
- The total annual inventory shrinkage averaged 1.75 per cent
of total sales.
- Employee theft accounts for 40 per cent of annual losses.
- Finding the right products, services and strategies to
help them reduce losses is a priority for Canadian retail
loss prevention professionals.
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