Is Misconduct at Work the Missing Link Between Hiring Great Talent and Retaining Them?

It’s no secret that hiring is hard. Recruiters are expected to find quality candidates, screen them, interview them, guide the hiring team to make the best selection, go through the required regulatory and compliance paperwork, and so much more. Adding to this, employment is at a 54-year low. The competition is fierce. It’s no wonder recruiters are burned out.

Despite efforts, companies are still struggling to hire great-quality candidates. One of the issues is the ability to find candidates that are qualified. The second, however, is making sure the qualified candidates are quality humans – not driving away your best employees and customers with toxic misconduct and other inappropriate behaviors.

Most companies screen for these types of misconduct behaviors in background checks or reference checks. But, we are at the point where most misconduct isn’t found in criminal records and most candidates know to request references from people who will say good things, much of the traditional methods of screening for misconduct have fallen short.

New research from Fama.io breaks down what hiring teams need to know to improve their quality of hire and increase retention. Fama also provides data-backed no cost and low cost ways you can start using today to identify and impact misconduct to improve quality of hire.

Here are 7 important data points every recruiter should know from this research.

#1 Misconduct Is the Problem and Its Contagious

People want to work for organizations they are proud of, organizations doing good things. But, no matter what the company mission statement says on the website, ongoing misconduct doesn’t make anyone feel good about their team or workplace.

Research identifies common courses of action employees take when they experience or even witness ongoing misconduct at work. A recent study finds that 57% of employees cited harassment or misconduct as the reason they left, or a factor in their decision. This also impacts companies’ abilities to attract new talent, as people aren’t going to refer their friends and family to an organization that isn’t a good work environment.

Another response:  employees may choose to stay, and begin engaging in misconduct themselves. Research from Harvard Business Review reports that misconduct has a social multiplier, meaning each instance of misconduct generates another 0.59 cases of misconduct.

This might seem like a small number. However, the study reports that “financial advisors are 37% more likely to engage in misconduct if they encounter a new coworker engaging in misconduct.” Suddenly, the misconduct starts to add up.

This is why preventing, identifying, and appropriately handling misconduct at work is so important.

#2 It Only Takes 5% Of Workers Engaging in Misconduct To See Big Problems

What’s worse? It only takes a small number of workers engaging in misconduct to start seeing a big impact on the business. A study from Cornerstone OnDemand found that just 5% of workers engaging in misconduct has major impacts on employee morale, productivity, and turnover. This is known as the 5% Rule.

#3 11% Of Candidates Last Year Were Found Engaging in Misconduct

The cutoff for safer levels of misconduct is at 5%. However, Fama’s research uncovered misconduct in 11% of candidates screened last year. More than double the acceptable level. The types of misconduct found ranged from minor things like cannabis to significantly harmful violations and crimes like workplace violence and hate crimes. In fact, violence fell in the top 3 types of misconduct found in healthcare candidates.

#4 7 Out of 9 Industries Failed To Keep Misconduct to Safe Levels

Breaking down the levels of misconduct by industry, the data shows that as many as 7 of the 9 industries benchmarked in the report failed to keep misconduct under the 5% threshold. Even worse, half of the industries found misconduct in over 1 in 5 candidates. Media and Entertainment as well as Consumer Services saw misconduct levels in closer to 30% of their candidates. The research is clear that most companies aren’t doing a good enough job to protect their employees, customers, and profits.

#5 The Most Common Types of Misconduct

After screening hundreds of thousands of candidates and billions of  pieces of content – yes billions. The data showed the most common types of misconduct last year were harassment, sexual misconduct, and intolerance. 37% of all candidates with misconduct were found harassing others, nearly 1 in 4 were engaging in some type of sexual misconduct, and 19% were intolerant and discriminatory. Considering the cost, impact, and social multipliers of these types of misconduct – hiring people engaging in these harmful and illegal activities will only drive your best employees and customers away. See this HBR study on The Price of Incivility.

#6 Misconduct Is COSTLY

Companies spend trillions of dollars each year identifying, investigating, and handling these issues. Harassment, the most common form of misconduct, costs companies between $300 and $1000 per employee per year, and occupational fraud costs 5% of annual profits (totaling several trillion dollars globally).

The most common type of misconduct is harassment. The data showed that 37% of candidates who were engaging in misconduct last year were flagged for harassing others. Not only is harassment a crime, it also costs companies between $300 and $1,000 per employee per year.

Another top type of harassment is intolerance and discrimination. Between a loss of productivity, employee morale, turnover, the costs add up. In fact, SHRM finds that companies spent nearly $172 billion over the course of 5 years just in turnover because of intolerance and discrimination.

Raising the stakes, recent reports from CNBC show that companies are losing up to $50 billion each year because of employee theft.

Even more costly, the Association of Certified Fraud Examiners finds that occupational fraud costs 5% of annual profits for organizations around the world – equating to several trillion dollars globally.

#7 Misconduct Is Preventable – And TA Is the First Line of Defense

The good news is that workplace misconduct is preventable. The research identifies several things HR and Recruiting professionals can do to safeguard their organizations and employees from the damage of misconduct. It starts with reviewing your culture to see whether your internal processes, goals, and benefits are contributing to the problem of misconduct or the solution. Then, HR and Talent must enforce those policies. For example, did you know forcing workers to take PTO actually prevents embezzlement? Next, companies need to evaluate existing prevention tactics and take steps to close any gaps. As an example, the initial reaction to sexual harassment might be training – but data shows this only perpetuates the problem.

Once the structure of your organization is set up to properly mitigate misconduct, then it’s time to actually look for it. As a first line of defense, recruiting is in the perfect position to prevent misconduct before it begins through enhanced background screenings on candidates. Fama’s research showed that the only two industries that successfully mitigated misconduct to under the 5% threshold, government and non-profit as well as healthcare, are both highly regulated to conduct enhanced background screenings on candidates! Similarly, staying vigilant and monitoring employees is similarly important.

Finally, it’s important to communicate. Much of the issues in key industries like Consumer Services and Education – two industries with misconduct levels of over 20% – could be solved by enhancing communications with key stakeholders in a way that provides workers with the support they need and communicates safety protocols with clients, students, and parents.

For more information on how solving the issue of  workplace misconduct can actually solve both quality of hire and employee retention issues, learn more from the full report and check out your industry to see how it stacks up.

Authors

Micole Garatti, MBA

Micole Garatti is the Director of Product and Content Marketing at Fama.io, the online screening solution that makes hiring great people easy. She’s passionate about helping companies build safe and inclusive workplaces, and authored The Most Inclusive HR Influencer List™ and #HRforAll Influencer community to diversify the HR and Recruiting profession. She’s spent nearly a decade working in HR Tech, at companies including Aspect43, Fairygodboss, Talview, Ultimate Software (UKG), and more. Micole received her MBA from The College of William and Mary and has a BA in English from the University of Florida. Find her featured as an HR and marketing expert in Inc., Venture Beat, ERE, TLNT, Workology, and SHRM, or on social at @socialmicole.