EXECUTIVE HIRES

News

EXECUTIVE HIRES

To Screen or Not To Screen. Do we really need to ask that Question?

By Sandy Downes, sfo – President, CartwrightDownes, Inc.

It seems that even large corporations vacillate when it comes to screening high-ranking positions within their company. It is critical that a company, large or small, take steps to protect themselves from derisive front-page headlines for hiring grossly unqualified candidates and even criminals to lead their company. It is difficult to understand this lackadaisical corporate philosophy when the executive hire will have considerable control over the directions of their company, both strategically and financially. Not to mention the fact that the executive may also be the face their company presents to the outside world.

It is most prudent to re-evaluate the approach to the executive recruitment process and the internal screening strategies to better protect against not just legal liability, but also embarrassing press attention and damaged reputations. In recent years it has become very evident that the higher the profile of the company or candidate, the more intense the spotlight will be when a hiring mistake is exposed, and the more inclined the public will be to discredit the company and all involved. High-level positions should require comprehensive Due Diligence Investigations – especially for those subject to the Sarbanes-Oxley Act. After the infamous Eneron disaster, this act requires all publicly traded corporations to assume a much greater accountability for new hires.

Executives lying on their resumes is not a new development. It happens so often there are too many to list and run the gamut of industries.

Ronald Zarrella, CEO, Bausch & Lomb who falsely claimed an MBA from New York University’s Stern School of Business. He attended the program from 1972 to 1976, but he never earned his MBA. His claim was never checked by his prior employers. He was forced to forfeit $1.1 million dollars from a bonus that could have potentially reached $1.65 million. Zarrella remained employed with Bausch & Lomb, who said he brought too much value to the company and it’s shareholders to fire him completely,

George O’Leary, ex-Notre Dame Football Coach who in 2001 divulged his lies about his academic and athletic backgrounds. He claimed to have a master’s degree in education from New York University and to have played college football and earned three letters while doing so. Contrarily, O’Leary was a student at NYU but did not earn a degree, and while he played football, he never earned a letter, let alone played in a game. Five days after he was hired, O’Leary resigned.

Marilee Jones, Admissions Dean for the Massachusetts Institute of Technology (MIT) fudged her credentials claiming to be a “scientist with degrees in biology from Rennselaar Polytechnic Institute and the Albany Medical College,” and to have her doctorate. Jones resigned in April 2007 after officials learned of her fabrications. MIT’s dean for undergraduate education said MIT couldn’t “tolerate this kind of behavior.”

Kenneth Lonchar, CFO of Veritas software claimed he earned an accounting degree from Arizona State University and was a Stanford MBA graduate – in reality, all he had was an undergraduate degree from Idaho State University. Lonchar resigned and Veritas stock investors responded – the company’s stock price fell about 16 percent.

Marti Buscaglia, lied about her academic credentials. She had a 30-year career with the last five years as publisher of the Duluth News Tribune in Minnesota and about to take the position of publisher of the Orange County Register in southern California where she would have been responsible for business operations, overseeing the editorial and opinion pages and watching over the Spanish-language paper, Excelsior – positions that require trust and impeccable credibility. Register publisher N. Christian Anderson issued this memo before Buscaglia had left Duluth: “I regret that information came to light after we had announced Marti’s appointment that precluded our being able to move forward with the decision. She has come forward to inform us that she misrepresented her educational qualifications on her resume, and agrees that it could harm her credibility with the readers of the Register.”

Jeff Papows, CEO of Lotus Corporation: In 1999, The Wall Street Journal discovered Papows exaggerated his military record (he was a lieutenant not a captain), feigned his education (he doesn’t have a Ph.D from Pepperdine University) and claimed he was an orphan (his parents are alive and well). Papows resigned after his exaggerations were exposed at the same time as a sexual discrimination allegation from a former Lotus employee against him.

Dave Edmondson, CEO of RadioShack falsified his resume by claiming to have a degree in psychology from Pacific Coast Baptist College in California (though the school doesn’t offer a psychology program), along with a degree in theology from the same unaccredited college. Like the others, Edmondson admitted his false claims and resigned after 11 years at the helm. He walked away with a $1.5 million severance package.

Robert Irvine – Food Network, star of Dinner: Impossible was fired for embellishing his resume claiming he worked on the wedding cake for Prince Charles and Princess Diana and was employed as a chef at the White House.

Today a company’s exposure to criminal activity, past indiscretions, inflated or outright false education and academic credentials, career achievements and contacts, concealing gaps in employment, embellishing compensation with titles, claiming employment with non-existent organizations and lying about why they really left companies is alarming.

Because there are so many time constraints as well as, many times, pressure from the hierarchy to hire an executive quickly – a background investigation is best accomplished by a reputable background investigative firm with extensive experience in screening executive level candidates. Most of the information compiled from an investigative firm will be a compilation of public record searches – criminal, civil, lien and judgment filings, bankruptcy, SEC and other regulatory agency records, professional disciplinary records, driving records, military records, credit reports, sex offender repositories, media searches, etc. professional licenses, educational institutions, personal and professional reference checks and can even, with proper authorization, include interviews of spouses, neighbors, friends and former associates and colleagues.

The compilation of a good due diligence investigations will represent supervisors, peers, subordinates and personal contacts and will address the candidate’s fitness for employment with respect to moral character, integrity and reputation.

Any part of the background investigation performed in house should be thoroughly documented. This paper trail is imperative in protecting a company from liability if the decision is questioned down the road.

CartwrightDownes, Inc. has extensive experience in screening executive level employees. The scope of an executive hires investigation can be as simple as verifying whether or not they

are who they say they are
have been convicted of a serious crime, or one involving dishonesty
submitted an accurate employment history and
academic and professional qualifications submitted are true.

To a more extensive background investigative process designed to uncover offenses ranging from insurance fraud to SEC violations, from a history of substance abuse to litigious behavior.

Call Sandy Downes, sfo (800) 323.2049, ext 2702 for more information on this matter or to schedule a free risk assessment of your current process/strategy.