Vetting is the process of thoroughly investigating an individual, company, or other entity before deciding to proceed with a specific action or joint project. It’s a fundamental practice used by managers, investors, and analysts to ensure well-informed decisions. For instance, vetting a potential employee can include a full background review, allowing a confident hiring choice to be made upon conclusion.
Key Takeaways
- Vetting involves applying specific criteria to distinguish stronger options from weaker ones.
- A background review entails investigating an entity thoroughly before proceeding with collaboration.
- The vetting process can start with verifying facts, like ensuring a resume accurately reflects all claimed skills and experiences.
- In finance, due diligence is the cornerstone of vetting a potential investment.
Understanding Vetting
The term “to vet” originated from 19th-century British slang, where horses had to be vetted by veterinarians before races. Today, it connotes a thorough examination for integrity and soundness in modern business.
Despite being time and cost-intensive, the expense of skipping vetting could lead to far more costly mistakes down the road.
Examples of Vetting
Vetting is pervasive in both business and investing contexts. For example, a board of directors may rigorously vet candidates for a CEO position before hiring. Similarly, thorough vetting of significant suppliers ensures past efficient and honest operations.
Investment advisers also practice due diligence, examining a prospective investment’s track record, management, and growth potential before making recommendations to clients.
The vetting concept extends beyond finance. Refugees seeking asylum undergo vetting processes, just as candidates for government security clearance are scrutinized to ensure reputability. Lawyers vet contracts to identify potential pitfalls in the terms—all demonstrating the versatile necessity of vetting.
The Vetting Process
- Fact Confirmation: Vetting typically begins with verifying accuracy. Does a job candidate’s resume authentically present their skills and experience? Does a company specialty align with its claimed expertise?
- Information Verification: Degrees, awards, and certifications claimed by any entity are checked for validity.
- Deeper Investigation: At this stage, vetting includes credit history checks, criminal background reviews, and interviews with past and current associates. It’s crucial from personal to organizational levels.
The High Cost of Vetting
Though crucial, vetting can be burdened by higher costs and prolonged timelines. The average US firm expends approximately $4,700 and 36-42 days to hire a fully vetted and qualified candidate. Governments bearing similar vetting costs have initiated reforms like
Related Terms: background check, due diligence, credit check, investment evaluation.
References
- Zippia. [“25+ Crucial Average Cost Per Hire Facts [“2023"]: All Cost of Hiring Statistics”](https://www.zippia.com/advice/cost-of-hiring-statistics-average-cost-per-hire/).
- Performance.gov. “Trusted Workforce 2.0”.
