Regardless of the size of the company or the industry they operate in, almost every business has to follow compliance regulations in several related spheres. Whether it is HIPAA privacy regulations, legal confidentiality rules, or OSHA workplace safety regulations, compliance factors may seem to affect businesses from different sides. Although business compliance to certain industry standards is for their own good, violation of these regulations can lead to severe consequences, ranging from hefty fines to complete operational shutdown until the required changes are made.
While most organizations are aware of some common compliance requirements, other compliance regulations are lesser known to businesses, such as recruitment compliance. Even in the field of recruiting, businesses must follow certain regulations that make them compliant with various federal employment rules.
As per stats, businesses in the U.S. spend an average of $10,000 on every employee in relation to regulatory costs. If you are wondering how it can impact your business, it’s time to go deep and understand various facets of recruitment compliance.
What is Recruitment Compliance?
By definition, recruitment compliance refers to the standards/regulations to be followed by employers to attract, select, and appoint competent applicants for different occupations while adhering to the internal policies, state, and universal hiring laws.
In other words, hiring compliance is one of the most critical aspects related to hiring that requires attention at every stage of the recruitment process. There are various components that fall under the scope of recruitment compliance, including:
- Integration security
- Data security
- GDPR (General Data Protection Regulation) laws
- Scoring and weighting
- Background assessment of candidates, and more
Adhering to recruitment compliance means creating a balance between the following two aspects of hiring:
- Recruitment of talented employees for your business in any open role
- Ensuring that you are not searching for and hiring candidates based on protected information
Hiring process compliance is not just about making sure you avoid federal lawsuits and penalties. Rather, it is more about creating a diverse work environment, ensuring workplace safety, or bringing in international work standards.
Why is Hiring Compliance Important?
As you proceed with developing and executing business processes, ensuring that your business adheres to recruitment compliance and labor laws is a must. Failing to do so can result in financial sanctions and other fines. It can also cause severe damage to your company’s brand and reputation within the industry.
In other words, the more compliant your hiring process is, the more the quality of your hires and your reputation as an employer will benefit.
Wondering why it matters for your particular business in the long run? The following statistics will help you understand the importance of recruitment compliance:
- 86% of job seekers and employees consider company reviews and ratings while deciding where to apply for a job.
- 75% of job seekers who are actively looking for a suitable job position are more likely to apply for a job if the organization focuses on managing its employer brand.
- 68% of millennials indicate visiting the social media profiles of a potential employer to evaluate the brand value.
The above-mentioned data points further highlight the importance of staying compliant with various recruitment-related practices and laws.
How Does Compliance Impact Your Hiring Process?
Irrespective of the country where your organization is based, a major part of recruitment compliance refers to staying within the anti-discriminatory measures defined by the law. These measures are targeted toward preventing discrimination based on race, religion, ethnicity, gender, or age.
Besides this, these compliance regulations also have an impact on the hiring process as there are so many opportunities for employers to discriminate against candidates based on or via:
- Job advertisements and specifications
- Communications shared with the candidates during skill assessment or hiring
- Questions asked during the interview
- Reporting of explicit information about certain employees to authorities
- In-house recruitment procedures
Basically when hiring a skillful candidate, you need to make a choice amongst the applicants based on their skills, abilities, experience, and qualifications. Taking into consideration any other factors or personal characteristics may make you fall under the purview of hiring compliance violation.
Checklist to Stay Compliant with Recruitment Laws and Regulations
Given below is a list of different types of hiring process compliance you should know:
Types of recruitment compliance
|Protected category compliance||Related to protected categories, such as race, religion, sexual orientation, age, etc.|
|Interview topic compliance||Related to avoiding discrimination during recruitment based on protected categories of information given above|
|Background check compliance||Related to verifying an applicant’s history of experience and behavior (academic, employment, driving, etc.)|
|Consent form compliance||Related to asking for a candidate’s consent before performing background screening|
|Adverse action compliance||Related to following a protocol to alter your hiring decision based on the results of background checks|
|Drug screening compliance||Related to screening candidates based on drug usage (medical or recreational)|
|Credit history compliance||Related to checking credit reports of candidates to make employment decisions|
Key Recruitment Compliance Metrics You Should Know
Now that you know why recruitment compliance is crucial, it is equally important to understand and analyze various metrics to make your hiring process compliance-friendly. These are quantifiable factors that you need to oversee to ensure your recruitment strategy adheres to various compliance regulations.
Given below are four key metrics of recruitment compliance you need to be aware of:
1. New hire attrition rate
In general, no employer can exercise full control over the period for which an employee is likely to continue working for the same organization. However, in some cases, newly hired employees leave for another job opportunity earlier than expected. This is quantified in terms of the new hire attrition rate.
This refers to the rate at which new employees leave an organization within 12 twelve months of their joining date. It is also considered a good way to measure the candidate attraction quotient and the success of the onboarding process for a company.
A low new hire attrition rate highlights the efficiency of the hiring process to select potential candidates that will stay for a long period while being compliant with various checks in place.
If your organization is too strict in adhering to the workplace regulations, it’s time to take action toward employee life cycle and sustainability.
2. Time to achieve full productivity
It is fair to assume any new hire takes time to understand the company’s processes and start working at his/her full potential. While this may seem like a part of the qualitative analysis of the recruitment strategy, it can be calculated in terms of a parameter, named time for full productivity.
At its core, it refers to the time it takes for a new hire to start serving different tasks up to the benchmark set for employees in similar positions. This hiring metric also brings up the quality of hire and employee satisfaction. For example, skillful, experienced employees who feel happy at the workplace are more likely to reach their productivity benchmarks faster. However, if your hiring team places more emphasis on hiring compliance standards than employee satisfaction, this may impact the productivity of new hires and ultimately, the attrition rate.
As a whole, it is important to create a balance between work culture and recruitment compliance regulations to keep the employees motivated and focused at work.
3. Application-to-Interview ratio
If you have experience in running recruitment campaigns through several mediums, you might have realized that the number of candidates reaching the lower end of the hiring funnel is much less than those applying for a role. The application to interview ratio is the metric that defines this hiring flow. It counts the number of candidates passing the pre-screening test to reach the interview stage.
This ratio is meant to help businesses identify and set the right level for the candidate screening process. If very few candidates pass the screening test to reach the interview process, then it might be too tight in relation to the job specification and related recruitment compliance. On the other hand, if too many candidates pass the screening test while the final selection count is still low, then the initial screening process needs to be upgraded for quality hires.
You can simply calculate this ratio by dividing the total number of interviews performed by the number of job applications received for a job position.
4. Financial consequence of every bad hire
Every organization spends significant capital on getting the hiring system up and running. If you hire a candidate that is totally unfit and unqualified for a position just from a compliance point of view, the chances are that he/she will leave the organization too soon, thus constituting the base of bad hires. Consequently, you need to set the hiring wheel in motion again with the same or even higher hiring budget.
Moreover, the financial implications of bad hires can be huge and diversified, leading to several recruitment compliance issues.
How to Remain Compliant When You Recruit New Employees?
If you are worried about failing to adhere to various hiring compliance rules, you can benefit from using technology for such needs. Various HRMS bundles are now available with recruitment software that is designed to assist your hiring methodology, compliant format conversions, and more.
Besides this, you need to involve the hiring team in a final check of a candidate’s suitability for your organization. There are guidelines regulated by the Office of Federal Contract Compliance Programs (OFCCP) and Equal Employment Opportunity Commission (EEOC) to ensure that companies avoid differentiating candidates against the predetermined rules.
As a whole, you need an educated, trained hiring team equipped with the right tools to ensure the compliance angle is handled in the right way.
The bottom line
In a nutshell, recruitment compliance is about ensuring fair treatment of candidates and selection of employees based on their capabilities to do the job. You can automate the compliance side of recruiting with the help of the right software and tools to avoid being fined or sanctioned after a government audit.
Get Experts’ Guidance About Recruitment Compliance with Connect Tech & Talent
Asking for external help to streamline your hiring process to compliance rules can benefit you in the long run. Join hands with Connect Tech & Talent – a renowned staffing agency in Austin with experience in hiring top tech professionals for leading organizations. To know more about Connect Tech & Talent, click here.