Most employers conduct background screening for candidates applying for part-time and full-time positions. Employees are thoroughly vetted to ensure preparedness for a given role, accurate credentials, workplace health and safety, and compliance with applicable laws. Even so, some businesses fail to apply this same strategy to screen vendors and contractors who perform specialized, contract-based tasks or serve as an extension of their business as a vendor.
The issue with forgoing background screening for vendors and contractors is that they ultimately represent your business. Whether it’s important assignments they complete on your behalf, or interactions they have with your clients, the consequences of their actions will legally, financially, and reputationally impact your organization. To mitigate risks, prevent fraud, minimize financial losses and avoid legal or reputational damage, it’s essential to practice due diligence and conduct background checks on potential and current vendors and contractors.
In this article, we’ll explore the benefits of screening vendors and contractors, the types of screenings that can be most useful for your organization, and the potential legal or financial consequences of failing to conduct vendor and contractor screening.
Whether it’s an individual contractor or a major vendor for your business, background screening majorly increases the likelihood that your proprietary information and clientele remain safe, while your investments and company reputation stay protected. In a best-case scenario, a vendor is very transparent about providing information that creates peace of mind about a future or current business relationship. Unfortunately, without a background screening process that applies to all vendors, undisclosed financial, legal, and regulatory issues could go undetected.
Similarly, screening contractors allows your organization to confirm the details of a candidate’s work history and education, and verifies the efficacy (or legitimacy) of their past contributions, job references, and more. Although it seems like contractors and vendors might be hesitant to comply with these requests, the reality is that taking the step to conduct background screenings can create a greater and shared sense of trust in the business relationship while ensuring safety for your company, clients, and business information. This is especially true if the background screening process is instituted to apply to all vendors and contractors under consideration for a new partnership.
Screening builds trust and confidence in new business partnerships with vendors and contractors, but it also offers lasting reassurance to your clients. Especially for organizations that rely on vendors or third-party services, it’s essential to guarantee clients that your organization utilizes well-vetted, reliable contractors and vendors to provide necessary services or complete specialized tasks.
The approach to screening contractors versus vendors varies in some ways, but the same fundamental principles apply. As non-employees contributing meaningfully to business operations, you must ensure they are qualified, responsible individuals and entities whose actions will not negatively affect your day-to-day operations, company reputation, or the health and safety of your clients and customers.
Here are some of the most common screenings conducted for contractors and vendors:
Criminal Record Screening – For contractors, this is an obvious necessity, but it’s also essential to confirm that the employees working for each of your vendors have also been subject to background screening, which may include criminal recording screening, drug testing, and more.
Education, Employment, and License Verification – As with criminal record screening, both your contractors and the employees of any vendors you work with should have their past employment, educational credentials, and any job-related licensing verified.
Vendor-Specific Screening – It’s essential to determine the financial and legal “health” of any vendors you partner with. Whether it’s detecting issues with past or ongoing noncompliance, civil litigation, tax liens, bankruptcies, or other financial problems, gathering this information can prevent your business from dealing with issues like undelivered services or unexpected legal liability. Additionally, you should use screening to assess each vendor’s health, safety, environmental, and regulatory compliance. This is particularly true in industries that are heavily regulated and where noncompliance penalties are severe. Finally, before working with any vendor, it’s also critical to gauge their overall accessibility, quality of communication, and business experience. In each case, these questions can be answered through the screening of referrals, references, and testimonials that provide a mixture of qualitative and quantitative data about a potential third-party partner.
Choosing not to screen contractors or vendors that work with your organization can lead to a range of short- and long-term issues. On a smaller scale, it can lead to periods of poor communication, low productivity, or client dissatisfaction due to subpar performance that may have been predictable through the screening process. More significantly, failing to identify an area of concern during the screening process could lead to major accidents or acts of malpractice that attract fines, lawsuits and reputational damage. When background screening is conducted haphazardly or inconsistently, this can also lead to noncompliance issues and penalties. This is the major reason why developing consistency in your background screening program to include all employees, contractors, and vendors ensures that the same vetting process applies to everyone associated with your organization.
Screening vendors and contractors before doing business with them is a crucial step that every company should take to mitigate risks, prevent fraud, avoid financial penalties, and maintain a strong reputation. Using a reputable screening company like The Orsus Group can help your company conduct thorough backing screenings, avoid third-party liability, and increase trust and confidence across your entire organization and client base.
Contact us today to learn more about our screening services and how we can help you implement a lasting solution to working with qualified contractors and vendors.