TransUnion Study Shows Hong Kong Firms Grapple With Hiring Challenges, Seek Credit Checks for Risk Mitigation
- One-third (33%) of surveyed human resources professionals lack confidence in their organisations’ hiring processes to recruit the right talent
- Eighty percent of respondents believe an employee’s personal financial stability is important when hiring for finance, security, or management roles
- Almost one-fifth (18%) of respondents’ organisations have encountered cases where employees were involved in debt of other financial misconduct
- Over half of respondents (52%) agree that credit checks enhance hiring, but only five percent use it as part of their recruitment process
TransUnion (NYSE: TRU), global information and insights company and Hong Kong’s leading credit reference agency, released its inaugural Employment Risk Insight Report today. The study[1] reveals the perspectives of Hong Kong senior human resources (HR) professionals on recruitment and talent management, in particular the hiring challenges they face and the importance of effective screening tools during candidate evaluation.
This study comes at a critical time as Hong Kong’s local unemployment rate has fallen significantly since its peak in 2022[2]. Coupled with intense competition for talent in a shrinking post-pandemic labour pool2, this underscores the need for employers to optimise their recruitment processes and improve hiring decisions.
HR professionals seek more efficient hiring processes
TransUnion’s study reflects a glaring disparity between the demands of HR professionals seeking to refine their hiring processes and the current level of organisational support available. This disconnection hinders HR professionals from making precise and informed hiring selections.
Despite heightened competition to identify, assess and recruit the right talent, the study found that one third (33%) of the survey respondents lack confidence in their organisations’ hiring processes. It is also revealed that there is a significant dissatisfaction with the overall recruitment procedure. Seventy-three percent of respondents rated their own company’s process as average or below in terms of efficiency, and more than half pointed to a lack of thoroughness (64%) and effectiveness (54%).
While more than ninety percent (91%) of respondents agree that efficient screening tools will enhance recruitment, 70% often find their organisations’ reference checks for candidates’ evaluations inadequate. Other challenges revealed in the study surrounding hiring the right talent include talent shortage (88%), limited HR budget (85%) and difficulties in engaging passive candidates who might be a good fit for the team (78%).
Credit checks emerge as a vital tool for risk mitigation
As a well-established tool to evaluate individuals’ financial health and potential financial pressures, credit checks can play a crucial role in recruitment. The majority of respondents (80%) agree that financial stability is an important factor when considering candidates for finance, security and management roles, especially those from the sectors of business services (96%), financial services (80%) and insurance (78%), which represent the key pillars of the Hong Kong economy. While most respondents (89%) agree that hiring the wrong people can increase turnover rates, they also believe that employing talent with such stress factors could heighten reputational, legal, and financial risk (74%). The survey reveals that nearly one-fifth (18%) of respondents’ organisations have encountered cases where employees were involved in debt of other financial misconduct, underscoring the importance of implementing credit checks as part of the hiring and talent management process to identify employees who might be in a poor financial situation personally.
“Our report reflects how the inadequate use of screening tools can not only hinder the efficiency of a recruitment process but could also bring significant consequences to organisations in both talent recruitment and management, threatening organisations’ reputation and financial security,” said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion. “Financial misbehaviour and even crimes committed by employees can be extremely detrimental to organisations and in some cases result in millions of dollars in losses. This is why effective screening tools like credit checks are critical, and organisations should embed them in their recruitment processes to mitigate such risks.”
Challenges to implementing credit checks
Despite strong agreement among more than half of respondents (52%) that credit checks can enhance recruitment efficiency, only five percent of the respondents’ said their organisations currently deploy credit checks as part of their hiring process. While 71% of respondents indicated that they would recommend implementing credit checks within their organisation’s HR system, hurdles include data privacy concerns (34%) and limited resources or budget (30%).
“In today's competitive labour market, the negative sentiment HR professionals have around organisational hiring processes is a clear call to action to refine people management strategies and streamline operational efficiency,” said Sun. “Our findings highlight the critical need for advanced screening tools and thorough reference checks to enhance efficiency and proactively mitigate potential recruitment risks. To fully harness the benefits of credit checks, organisations must engage with trusted partners capable of generating valuable data-driven insights and offering robust tools and advisory services. The reliable consumer consent ecosystem they provide is also crucial to address data privacy concerns. These partnerships can effectively meet the diverse priorities of HR departments, reveal potential patterns of financial overextension, and ultimately help employers identify and recruit the talent they need to drive business growth.”
