Employers Beware Potential Skeletons in Executives’ Closets

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By Genevieve Douglas

Executives may not be as thoroughly vetted in the hiring process as other employees, potentially leading to bad hires at the top of the company, lawsuits and scandal.

“A lot of companies rely too much on the background checks that have been performed” at previous employers because they assume that the job candidate couldn’t have reached the executive level without thorough screening, Andrew Challenger, vice president of consulting firm Challenger, Gray & Christmas, told Bloomberg BNA May 2.

He cautioned that this is a bad practice because different employers have different screening criteria and a previous employer may also have relied on a past company’s employment screening.

The potential risk of hiring an executive who misrepresents himself or herself is much greater than for rank-and-file employees because executives have the most access to sensitive company information and the greatest ability to commit fraud, Challenger said.

Companies continue to not screen executives as closely as other employees, Mary O’Loughlin, vice president of global customer experience and product management at screening company HireRight, told Bloomberg BNA April 26. In 2017, 16 percent of 4,000 HR professionals surveyed by HireRight either agreed or strongly agreed they had a less-rigorous process for screening executives than other hires. This is probably because these high-profile positions are often decided on “gut instinct,” O’Loughlin said.

Consistency, Due Diligence Key

First and foremost, it’s important that HR has a consistent set of background checks and due diligence in place for all employees, Challenger said. From there, HR may want specific types of screening measures in place for different positions in the organizations, such as a credit check for employees who work in finance or accounting, he said.

Additionally, “it would open up a company to discrimination lawsuits if they’re not applying due diligence and background checks consistently across their entire workforce,” according to Challenger. Once the hiring is complete, the mistake may have already been made, so protective barriers need to be in place before people come into the organization, he added.

HR should also assess its background screening processes and think about the candidate experience for the entire onboarding process, O’Loughlin said.

Where to Go the Extra Mile?

Many HR professionals are performing pre-employment screening for all levels in the organization, and they have to accomplish this with little time and few resources, Ken Springer, a former FBI agent and president of background check and investigative firm Corporate Resolutions, told Bloomberg BNA May 2.

A reference check, for example, could have potentially avoided Uber’s recent scandal when it missed a senior vice president’s history of sexual harassment allegations, Springer said. Unfortunately, the reality at many companies is that HR professionals are trying to check all the boxes in the hiring process, but they aren’t actually figuring out if executives are cleared to be hired, he said.

One potential strategy for HR is to look for the information that is left off a resume, Springer said. Chief executive officers tend to include all the good things on their resumes, but there may be problems in the information they leave off, such as terminated partnerships or settled lawsuits. This withholding of information can point HR in the right direction to figure out where the problems in an individual’s history may lie, Springer said.

Springer also recommended HR go the extra mile when hiring executives from outside the U.S. It may take more time to thoroughly check international education history, work history or even criminal history, but it will pay off if it turns up an issue, he said.

To contact the reporter on this story: Genevieve Douglas in Washington at gdouglas@bna.com

To contact the editor responsible for this story: Tony Harris at tharris@bna.com

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