One of the most valuable assets of every business organization is its people. Business organizations spend a lot of money in their recruitment and onboarding processes so as to hire not just the best but also the right fits for the different roles in their organizations.
Know Your Employee (KYE) is a process which businesses undergo to verify potential employee identities and backgrounds employment history, certificate verification and more before hiring them.
At the stage of onboarding employees, verification exercises are conducted to prove their identities and show that they are who they say they are. Also, different background checks are carried out on them to ensure that they do not pose a threat, risk or competition to the business organization and its corporate existence at any point.
Why is Know Your Employee (KYE) Important for Businesses?
Since the goal of every business is profit, no business will like to incur any form of financial or reputational loss just by employing and onboarding the wrong persons. It is the processes involved in Know Your Employee (KYE) that will prevent such financial and/or reputational losses from occurring.
When employees are onboarded, they gain access to certain proprietary information of the business organization such as trade secrets, intellectual property, Personally Identifiable Information (PII) of customers and the organization’s financial data. If employees are not thoroughly screened before they are onboarded, proprietary information in the hands of a fraudulent employee will clearly spell doom for the business organization and its stakeholders.
More also, beyond fraud detection and probable history of financial crimes, it is highly expedient for business organizations to know the persons they are hiring, so as to prevent cases of being held vicariously liable for certain actions their employees would carry out in future if there are traces of such actions in their previous employments or work history.
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Understanding the Scope of Know Your Employee (KYE)
The Know Your Employee (KYE) process goes beyond the collation, verification and storage of employee data during the employee onboarding process. It can be said to cover the whole gamut of:
- Verifying the identities of prospective employees before they are hired;
- Knowing who they are and proving that they are who they say they are;
- The background checks conducted on prospective employees before or during the onboarding process;
- An assessment of the strengths and weaknesses of employees so as to determine what role best fits them;
- A continuous engagement and interaction with employees by management throughout the course of their employment so as to understand and meet their peculiar needs;
- The general relationship between management and the organization’s employees;
- Reassigning roles, duties and responsibilities to employees as they evolve within the business organization;
- Providing and sustaining a healthy work culture and a comfortable work environment for employees by management
What are the Benefits of Know Your Employee (KYE)?
Some of the benefits of know your employee solution for businesses include:
1. Secure Employee Onboarding
Know Your Employee (KYE) ensures a secure employee onboarding process. The verifications and background checks conducted on prospective employees make the recruitment and onboarding process safer and much more secure for business organizations.
It is in the course of these checks that businesses will find out if a prospective employee has a history of money laundering or has been involved in other fraudulent activities. Business organizations are also protected from employing persons with false identities and/or fake qualifications during the pre-employment verification exercises, which are part of Know Your Employee (KYE) processes.
2. Prevent Employment Fraud
When a prospective employee with a history of fraud or financial crimes is detected from the onset, it becomes easier for the business organization to keep him in close check if he is eventually employed. Where such an employee does not pass through a strong Know Your Employee (KYE) process, the business is unaware and highly vulnerable to being defrauded from the inside, especially when such an employee gets access to highly sensitive proprietary information or financial data of the organization.
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3. Helps Management Teams Understand and Meet the Needs of Employees
After the pre-employment verifications and background checks before employee onboarding, Management continues to communicate with employees in the course of their employment in order to understand their needs. Where Management continuously responds to the needs of employees positively, this will bring about great employee satisfaction and loyalty to the business and its goals/targets.
4. Helps Management to Build the Right Work Culture and Environment
After studying and understanding the needs of employees, businesses use the information acquired to build the right work culture and a healthy work environment for their valued employees. This will promote long-term job retention and a low employee turnover rate, which in turn will lead to the sustainability and growth of the business organization.
Businesses that have a strong Know Your Employee (KYE) process in place protect stakeholders such as other employees and their customers from financial and reputational losses that could occur from a wrong hire.
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