The trend has been building for some time now: C-suite executives are the face of today’s companies, and their activities, whether positive or negative, reflect on the entire business. As a result, companies are more sensitive than ever to the possible reputational and financial damage when executive misdeeds enter the spotlight.
Executive due diligence helps bring hidden issues to light before hiring. Past misconduct will either become public or manifest again within your company’s four walls. Possibly both. On the other hand, hiring the right executive can have tremendous benefits for your company and culture. Thus, conducting comprehensive executive background checks offers peace of mind before the “welcome aboard” handshake.
What to Look Out for in the Executive Hiring Process
In recent years, a steady stream of CEO resignations and scandals have shown just how important it is to have strong, honest, and ethical leadership at the top. Because executives hold great power, they can also do the most harm, or the most good.
C-suite executives must have leadership skills, experience, and business savvy. They also must understand how to speak to the interests of customers, employees, and shareholders. As companies go through the hiring and interview process, there are three key areas to evaluate:
- Reputation: How is the individual perceived by the public, employees, and colleagues?
- Cultural Fit: Does the individual support your company’s values and mission? Do they have the proper qualifications and background?
- Questionable Behaviors: Is there any indication of fraud, embezzlement, discrimination, or harassment in their past?
Key Areas of Executive Due Diligence
Executive due diligence provides the information companies need to make smart hiring decisions for top-level management positions. Executive background checks require screening beyond what is standard for an everyday hire; they should be undertaken with the knowledge and consent of the individual to be screened and should focus on the following:
A standard background check gathers general information on an individual, including licensing information and professional and educational credentials. It is important to verify all past employment and educational claims. Hiding or lying about basic background information can be an indicator of larger red flags down the road.
A complete review of public records should include full litigation checks at all relevant federal and local courts levels, including where employers have been located. A comprehensive regulatory review should also be included to determine if the individual has been sanctioned or fined by any government authority for misdeeds, or even named in investigations launched or penalties issued against past employers.
A thorough media and internet review, including social media checks, is critical in today’s environment. These reviews highlight potential red flags in past or current professional activities and decisions and also shed light on an individual’s public image. Questionable statements made in the media, along with controversial comments or activities posted on social channels, can provide indicators about an individual’s leadership style and how they may fit into — and capably represent — your company. Media research also reveals further insight into an individual’s professional history, as checks are conducted into past employers and all relevant corporate affiliations to determine their reputation and status. Issues with these organizations — even if the individual was not directly involved — may be a reflection of their executive leadership’s decisions.
Finally, for executives that will have access to corporate accounts, credit checks provide insight into an individual’s financial stability, which can help reveal stress points that may leave them vulnerable to fraud or bribery. Be sure to check if your state has restrictions on credit checks for employment and, if this will be required, a signed consent form must be obtained from the subject.
Hiring new C-suite executives is a lengthy process that should include comprehensive due diligence, as it can ultimately safeguard your company’s reputation. At IntegrityRisk, we leverage smart technology, experienced researchers, and a handpicked global network of over 250 on-the-ground experts spanning six continents to create an exhaustive view of a subject’s background and reputation.