How to Create a Background Check Budget 

With so much financial uncertainty this year, many departments must reconsider their budgets. HR departments, in particular,h have to do more with less, but there are certain things companies should never cut from the HR budget—like background checks. 

That’s because background checks are part of a healthy, structured, evidence-based hiring program. They help employers make informed hiring decisions that push the business forward rather than making bad hires that have the power to hurt the business’s reputation, workplace safety, or bottom line. 

Bad hires are expensive and distracting. They take valuable time away from the employees who are forced to replace them, resulting in diminished productivity and morale. Plus, in some industries and roles, background checks are required, and companies must run them to maintain legal compliance. 

Thankfully, there are ways to formulate a budget for background checks that take some edge off the overall HR budget while still capturing all the data needed to screen candidates thoroughly. Here’s how to effectively plan and manage the background check spend to do just that. 

Get the Background Checks Scope Right

Background checks vary in price depending on the detail needed in the report. Every business is unique, meaning that each employer has different needs when screening candidates.

For example, healthcare or education employers might need to run professional license verifications, while other organizations might not. Every role is unique. For example, some employees might need to operate a vehicle in their role (requiring a driver’s license check), while others might not. 

The first step to figuring out the background check budget is laying out all the various screenings you think you’ll need while building your team. You can work from this checklist to figure out the scope and build your background screening arsenal: 

• Social security number trace to confirm past address history. 
• National criminal file search to parse through criminal data from local, state, and federal repositories–including the Sex Offender Registry and government watch lists.  
• Sex offender criminal search to get more detailed information from public and tribal registries not included in the national criminal file search. 
• County criminal/other public records search to get county-level access to information regarding felony and misdemeanor convictions, arrests, and/or pending cases. 
• Statewide criminal/public records search to get state-level access to conviction records.
• Federal criminal/public records search to get access to federal-level crimes, including kidnapping, drug trafficking, bank robbery, embezzlement, counterfeiting, and other “white collar” crimes. Crimes involving the crossing of state borders should also be included. 
• Driving and motor vehicle records search for applicants who will operate a motor vehicle, including a company car or forklift.
• Employment verification to confirm a candidate’s references and work history. 
• Education verification to validate a candidate’s degree or GED from an accredited institution. 
• Credit report to get insight for employment purposes.
• Professional license verification checks a candidate’s credentials for roles that require a license to practice the profession. 
• Drug screening services make it easy for candidates to schedule and complete a drug test at an official collection site. 
• International screening services and consultations to help you hire top talent from across the world and navigate variable international hiring/employment laws.

Figure Out Volume

The next step to further honing the budget is to estimate the number of background checks you think you’ll need annually based on your hiring projections. You can pull this data from your HR headcount planning, which is usually essential to building the HR budget. Volume estimation will result in a more accurate cost estimate and help you negotiate better rates with background check service providers upfront (since most offer a bulk rate for their services). 

Research Costs and Vendors

Costs for background checks can vary widely. Basic checks might cost as little as $20-$30 per candidate, while more extensive screenings can exceed $100. Prices depend on the thoroughness of the search and the service provider. 

If you already have a background check vendor, you can take your list of screenings needed and volume estimations for the year to negotiate a flat rate to build into the budget. If you’re searching for a new vendor, you can take that data to search for the cheapest vendor that still fulfills all your requirements. Be sure to find a service known for accuracy, turnaround times, customer service, and compliance.

Here’s the Ultimate Checklist to Evaluate Background Screening Vendors, which will guide your search and make your background check budgeting more accurate. 

Budget for Variability 

The key to building a good background screening budget is to work flexibility into the calculation to accommodate different levels of screening and variable data access costs based on location. 

For example, when searching for county records, you’ll often pay a data access fee that the courthouse charges for access to their records. Whether using a service or doing it alone, you incur this data access cost. These fees differ from county to county; they can be as low as $1 or as high as $65 for some counties in New York. With some background screening services, you can negotiate a flat rate price to include fees, should you desire to do so. 

Additionally, when several different names can identify an applicant, you will be charged for each alias–as if you are running a search on different people. If a candidate got married and took her husband’s last name, you’d likely need to order a search using her current last name and maiden name, and you will be charged accordingly for each search.

Again, you can negotiate a flat rate with certain services to include all AKAs.

Consider Convenience 

Best-in-class background check services provide easy integrations into your HR software (including ATS) and are backed by responsive, on-shore customer support so that the product never slows down. These efficiencies save HR departments time and money, and this efficiency and cost-effectiveness should also be baked into the budget.

Allocate Funds for Training 

Training team members on the new system can take time and resources if you switch to a new background check service provider. Moreover, the HR department’s annual responsibility is to ensure that the team is trained in up-to-date legal compliance (current FCRA guidelines, EEOC guidelines, jurisdictional requirements). Be sure to set aside money in the budget for these training programs—you will need it. 

Review Background Checks and Adjust Annually

At the end of the year, you can compare your budget to what you spent on background checks over twelve months. From there, you can adjust your budget to more accurately reflect your actuals and adjust your approach to cut costs in the new year.