Every year in the United States, businesses employ new executives as a way to expand and enhance leadership from the top down. However, how well do companies screen executives before they are hired? According to one study, at least 45 precent of businesses fail to screen executives before they are hired. In addition, 31 precent of these businesses lack due diligence or don’t perform any kind of screening before hiring an executive.
The Importance of Executive Background Checks
The job market is competitive, which causes many individuals to lie about their degrees, fabricate employment history, and even try to hide past crimes to gain employment. If a business owner or hiring manager only assumes an executive candidate is truthful, they are putting their company at risk. When an individual is hired for an executive position and isn’t truthful about his or her skills, education, and employment history, the lack of skills and experience could cost a company thousands of dollars, and it could also hurt the company’s potential to do business with other companies and vendors.
High-up executives have been known to lie on their resumes. For instance, David Edmondson, former CEO of RadioShack, was untruthful on his resume and stated that he had a four-year college degree. In addition, Kenneth Lonchar, a former executive with Veritas Software Corp., lied about having his MBA from Stanford University in 1997, and Scott Thompson of Yahoo lied about going to school at Stonehill College. Kenneth Lonchar caused Veritas Software Corp. to lose an estimated 15 percent of its stock because of his lies.
Although the scandals with the aforementioned individuals occurred many years ago, there are many instances of this taking place in today’s workforce. Moreover, the influence of social media often leads to public relations catastrophes for companies that have hired deceptive executives.
What is Involved in an Executive Background Check?
When you administer an executive background check for a potential executive, it will involve a different process for screening other employees. As written on the Corporate Resolutions website, executive employees have a significant amount of power, which means their executive background check should be more in-depth and robust. This may include using every legal option offered to protect the reputation and success of the business.
Most experts that offer background checks, such as the team at Corporate Resolutions, will begin the process by verifying basic information. After his or her basic information has been verified, employment verification is the next step in an executive background check. Not only will an executive background check involve validity, it will also ensure the dates of employment are accurate. In addition, it is also important to verify advanced degrees, certifications, transcriptions, or educational awards that are on an executive candidate’s resume. Even if is seems unnecessary to delve into this information, any red flags could let an employer know there may be serious problems deeper into the screening process.
The next step in an executive background check is screening for criminal records. Executives have a position of authority, which means it is vital that they are trustworthy. Many executive background checks will begin this step with civil checks, county court checks, as well as state criminal record checks. In addition, potential executives will also be screened for federal and national criminal records.
After this step is complete, an executive will have his or her credit checked to meet FCRA requirements. Although minor issues in credit are not usually a problem when hiring executives, any notifications of bank fraud, unpaid taxes, liens, or cashing bad checks is another red flag the that candidate may not be trustworthy. In addition, an executive background check will also screen potential executives for money theft from past employers or evidence of mishandling money.
Top-level executives may also be subject to reference verification. This is to ensure that reference letters haven’t been falsely enhanced or made up by a friend or college as a favor. A reference verification can ensure that the candidate is truthful, and it is also a way to verify the candidate’s past executive performance.
Business owners and hiring managers should always enlist the help of a business that offers executive background checks, such as Corporate Resolutions, to make certain that the right candidate is selected for the position.