In the Battle for Talent, Pre-Employment Verification Gives Retailers a Leg Up

Retailers today are locked in a battle for talent. With the U.S. unemployment rate at an all-time low, finding candidates from a smaller pool of applicants can be challenging. Savvy retailers are stepping up their game, with major players like Target announcing expanded benefits, while others explore new tools and data to help reduce turnover.

While adding benefits and engagement programs can help attract talent, there are other indicators that can be used to better identify candidates with staying power. Here’s why it’s important: The Society for Human Resources Management estimates that turnover for all industries in the U.S. is around 19 percent, while the 2018 average turnover rate in the retail industry is slightly above 60 percent, according to the National Retail Federation. That’s a lot of hiring activity, which incurs significant costs as well as disruption to day-to-day retail activities.

Finding and keeping the right employees is one of the more important ways retailers can win the battle for talent. It’s not just hard costs; turnover can be very distracting, keeping everyone from hourly employees to distribution staff and executives from focusing on growth. Forward-thinking retail hiring managers are evolving talent acquisition processes using data and tools in new ways to help find the best candidates to fill open positions, including the verification of work history.

Equifax analysis shows the benefits of this approach, with some retail industry clients seeing an average improvement of up to 18 percent in one-year retention rates when using employment verification pre-hire vs. employers that don’t. That improvement in employee retention can yield the kind of operational consistency that helps everyone in retail focus on organizational growth. An 18 percent improvement in retention, over a one-year period, can mean an employee stays on the job 65 days longer in any given year. That’s up to two months of extra stability and productivity.

That kind of tenure can be identified early by using comparative data to validate a candidate’s work history. Instead of relying on applicant-provided data, a verified work history can flag indicators for retention, including:

• Do not contact. It's common for candidates to ask a potential new employer not to contact an existing employer, but it leaves employers at the mercy of candidate-provided information. Using employment verification can quickly and discreetly validate current employment.
• Job title discrepancies. When trying to match candidates and job requirements, situations can arise where an applicant reports a different job title than that is reported by the employer. Employment verification can help talent teams quickly identify accurate titles when available, as well as tenure for prospects, helping to better align open job descriptions with candidate experience.

It also translates to notable bottom-line cost savings. A research study completed by Right Management reported that the cost of a regrettable hire ranged from one to five times that employee’s annual salary. By using pre-employment verification to validate work histories, one retailer has estimated potential annual savings of $2.1 million, based on a 3 percent improvement in retention rates for a base of about 33,000 employees.

Employment verification is also good news for the vast majority of job applicants, especially in the ever-changing retail industry. When pre-employment verification services help to confirm accurately reported experience and tenures, employers can often move forward in hiring more quickly, which is a situation that suits both the retailer and the new employee.

With increased competition for candidates in today’s job market, combined with the substantial costs associated with hires that don’t last, having validated work history provides a real opportunity for HR managers to more quickly identify the right candidates. It’s a new way to gain an advantage that can not only help lead to smoother operations, but can also help deliver real bottom-line savings, which contributes to healthier retail margins.

Jan Johnson is vice president of product management at Equifax Workforce Solutions, the trusted authority for meeting the evolving HR, payroll, tax management and compliance needs of employers.