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What are the Risks of Open Hiring?

Posted by Ryan Howard on Fri, Mar 06, 2020

What are the Risks of Open Hiring?

Last month, retailer The Body Shop announced that they would take a different approach to their hiring process. Doing away with the typical application-interview-background-check, the cosmetic company has decided on a simple short interview to determine the employment status of applicants. The intention, much like "ban the box" or other fair chance laws, is to reduce hiring bias and discrimination. The available jobs are then up for grabs to the first applicants who can answer "yes" to the three interview questions. 

While reducing bias is the intention, what are the risks of an "open hiring®" policy?

Results of the New Hiring Policy

The open hiring® policy was initially piloted by Greyston Bakery, a New York-based company that has since trademarked the term. The company now offers education and consulting to other organizations who wish to switch to a more lax hiring policy. Not only does the business hire entry-level employees on faith, they also offer on-the-job training and life-skills courses. As reported by Fast Company,  Greyston says they're able to pay employees more because they save money during the hiring process. They also tout a lower turnover rate than others in the same industry. 

Greyston trained The Body Shop's HR team on implementing the new hiring policy and rolled out a program in its distribution center. The Body Shop saw also dramatic drops in its turnover rate. 

Risks of Open Hiring®

On the surface, hiring candidates on the spot, regardless of their backgrounds, sounds honorable. The policy does still come with risks.

  • Negligent Hiring If an employee does something harmful to another employee or a customer, the business will face punitive damages and legal liabilities. 
  • Not Properly Vetted The new policy doesn't take into account that supervisors or department managers may wish to properly vet employees before including them in their team.
  • Missing Out Hiring candidate on a first come, first serve basis may mean that more qualified, better suited employees are missed. 
  • Not Always Applicable The simple hiring policy set forth by the Greyston Bakery and The Body Shop may work for some businesses but not all.

Background Checks + Individual Assessment = Fair Hiring

Employers can still reduce bias and discrimination during hiring with background checks. The EEOC suggests that employers individually assess any criminal records that would appear for job candidates. Employers are also encouraged to keep a criminal background screening policy and a background check decision matrix to avoid a blanket no-hire policy for those with criminal records. 

EEOC Guide to a Background Check Decision Matrix

Background checks also don't need to take as much time and cost as hiring managers expect. In fact, the cost of a bad hire can be exponentially more than the cost of a background check. Negligent hiring claims and employee turnover are costly as well as loss of employee morale, customers or brand reputation. 

It is possible to be a socially-conscious employer and still minimize the risk to the business. Consider a smarter background check policy instead of dropping screens altogether. 

Learn How to Save Money on Background Checks

Topics: Human Resources, Employment Background Screening, Hiring and Recruiting