Startups Becoming More Cautious About Hiring

Startups are doing more background checks than before on their potential employees, as they are faced with the pressure to hire right.

As much as 87 percent of discrepancies found during a recent survey by background screening solutions firm First Advantage were at the level of senior management. Of these candidates, 42.3 percent were in the 22-30 age groups, indicating that a significant chunk of them belonged to the startup ecosystem.

Purushotam Savlani, Managing Director, First Advantage told ET, “We see more startups seeking background checks. Wrong hiring can sully the image of the startups, and cash-strapped startups can’t afford to hire the wrong person.”

Most of the backgrounds check that the startups do are in skills, leadership styles, credentials and possible cases of sexual harassment against the potential employee.

Paytm has engaged a professional agency to validate the past employer credentials, educational qualification and criminal antecedents for all new employees.

For senior management, informal reference checks are conducted to see where the potential hire stands on issues such as integrity, taking ownership, overall attitude, etc. At online furniture and home decor brand Urban Ladder, the company religiously does three things when hiring employees and senior management: mandatory reference checks through internal or external networks, a legal verification for customer-facing employees and putting them through a thorough training and induction process.

One of the reasons startups are seeking more background checks is that in such early-stage companies, there are fewer people overseeing payroll, checks and vendor lists, making it easier for an insider to siphon off money and get away with it.

Savlani added, “Running thorough background checks and reference checks help startups protect them from these types of bottom feeders, and is one of the reasons you should expect a background check before being hired with a developing entrepreneurial firm.”