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Three Focus Areas to Get the Most from your Executive Background Check

July 12, 2018

In today’s world, the actions of a single person can tarnish the reputation of an entire business. News feeds are flooded with headlines linking the bad behavior of executives to the major brands they represent. This negative press can have lasting financial impacts.

According to a 2015 study by researchers at Drexel University, when the indiscretions of top executives are disclosed publicly (arrests, lies or extramarital affairs), their companies will experience an average shareholder loss of $226 million in the three days following the announcement. Further, the study found these same firms also tended to perform poorly during the year in which the executive’s behavior was revealed. That’s why it’s so important to thoroughly background check high-profile leadership and management candidates, including C-suite positions as a part of the hiring process.

For high-profile positions, First Advantage leverages an in-house team of due diligence specialists to perform investigative background screening reports which include the compilation of in-depth information to provide a complete overview of an individual’s past on behalf of our customers. Their research involves credentials verifications, litigation searches and retrievals, corporate and regulatory reviews, corporate and court records, news searches, and interviews with former colleagues and bosses.

These highly experienced researchers have seen it all. But when it comes to investigating high profile candidates, they recommend focusing on the following three areas:

Vet EVERYTHING in a candidate’s resume. The majority of candidates will not include blatantly false information related to their work history or educational background, but some may “embellish” or omit certain details. Our internal research revealed a 30% discrepancy rate in educational backgrounds and a 38% discrepancy rate in the employment dates of employees or prospective employees. On several occasions, our investigators uncovered multiple discrepancies in the background of the same person.

As an example, a candidate may say they graduated magna cum laude when they actually didn’t receive any honors, or they may say that they majored in a certain field like business or finance when they actually majored in art history. If they’re the right fit for the role, these specific details shouldn’t matter; but it does make you question how often they might bend or embellish the truth in other situations.

Do a legal DEEP DIVE. All databases have coverage gaps due to inadequate technology capabilities in some jurisdictions and state privacy laws which ban the electronic distribution of criminal data. To get a comprehensive view of your candidate’s background, you’ll want to investigate court records at the federal, state, and county level for every location your candidate has worked or owned property.

For example, does this candidate have a clean record at their primary residence but multiple violations at their vacation property in Aspen? Is this candidate particularly litigious, filing an excessive number of lawsuits or having an excessive number of lawsuits filed against him or her? Our internal research revealed that 20% of our sample subjects were named in civil lawsuits, and many of these were filed in jurisdictions where the subject DOES NOT currently live or work. For a high profile position, these lawsuits are likely something you want to be aware of.

Get a 360-degree VIEW of their public persona. When hiring for high-profile positions, we recommend learning more about a person outside of what is included on his or her resume. Particularly when hiring for roles with significant financial responsibility, employers may want to investigate what a candidate’s spending habits are like and the amount of debt they currently carry. For example, are they under significant financial pressure? In our internal research, we found that 10% of our sample subjects had credit histories showing credit issues. An additional 6% of our subjects were listed as debtors in tax liens in their name or for a company they owned.

You also will likely want to know whether they have external lines of business that may present a conflict of interest if hired – or whether they have open patents in competing industries. These are things some of our energy, pharmaceutical and manufacturing customers have focused on in the past.

Additionally, you’ll want to review how your candidate is portrayed in the media – both within traditional, reputable publications, as well as new media, including social media, blogs and other self-reported platforms. Internal research revealed significant media mentions of the individual in question in more than 85% of Executive Advantage reports. In some cases, we found nearly 3,000 news articles for each subject reviewed. And, not all information our researchers uncover is negative. Your research may indicate that this candidate has a positive civic or philanthropic reputation that will only benefit you as an employer. If they are a well-known activist or community leader, their positive accomplishments may shine a positive light onto your organization.

Giving responsibility to the right people is paramount to the success and health of your organization, making due diligence a crucial step of the recruiting and hiring process. Whether positive or negative, the information you uncover can help inform your decision-making process when extending an offer to a high-level candidate.

For more information regarding executive screening solutions, please contact IRSales@fadv.com.

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