Google searches aren’t enough. Background checks keep your company out of hot water in the long run.
By Christine M. Cunneen
With the recent scandal in the news involving Yahoo CEO Scott Thompson’s incorrect academic degree, the issue of board liability has been brought to light. Is the board responsible for the alleged “falsified resume” of Thompson? Who is to blame here? What could the board have done to prevent this from happening in the first place?
To recap: Thompson claimed to have received a degree in accounting and computer science from Stonehill College, but the college did not offer a computer science program at the time he attended. Because Yahoo is a publicly held company, activist investors and shareholders are demanding an investigation of wrongdoing and possible mismanagement by the board over this issue, and they want the board to accept responsibility for this debacle.
In fact, it is very understandable as to why some investors might seek exactly this type of battle. Shaking up a board and distracting it from its operational focus can be just what an investor needs to win board seats in a proxy fight or bring forced change in management by devaluing the stock price.
This matter could have been prevented entirely had a proper background screening been conducted. A formal background screening should cost a pittance compared to the legal bills that Yahoo is facing—not to mention the PR damage now done to its reputation and credibility or the blow to its stock price affecting shareholders. To be thorough, a screening should not simply rely on a Google search or an online instant database check. It should include further due diligence, including employment verification and academic credentials, as well as a criminal check at multiple court levels.
And it should be left in the hands of a third party, professional background screening agency—not delegated to a human resources administrator on the executive’s payroll.
What can a board do to protect itself from liability and embarrassment before a CEO’s—or anyone’s—qualifications are brought into question? Here are four things to consider:
Conduct background checks on all applicants. It should be a matter of course or policy for all boards of directors—whether for nonprofit, academic, institutional, or for-profit organizations—to conduct such screenings of all applicants for any level job position.
Perform education and employment verifications. A simple call to Stonehill College to verify Thompson’s academic credentials would have revealed an error in his resume—intentional or not. And that would have happened before he became CEO, not after the fact, when shareholder and legal issues arise and have to be dealt with, such as what Yahoo is going through.
Review screening reports at board meetings. Don’t take management’s word for it. Boards should verify that proper background screenings are being conducted. It’s the directors who will be held liable or accountable for misconduct or who will have to answer for alleged ethical breaches—not your organization’s staff. Be sure that you have reviewed the reports with your own eyes.
Use a professional background screening agency. Working with a professional agency will help your organization be in compliance with Equal Employment Opportunity Commission guidelines, Fair Credit Reporting Act regulations, and other rules that can help limit your liability exposure. Good screeners work with employment attorneys and law enforcement officials on a regular basis, and the screenings include not only the usual database searches, but access to other sources, including “in the field” investigative services.
An ounce of prevention can go a long way in avoiding trouble at your organization and costly lawsuits. Don’t skimp when it comes to background screenings, and make sure that they apply to the C-suite level. Otherwise, it could be the most costly mistake you could make.
Christine M. Cunneen is CEO of Hire Image LLC