Tuesday, February 28, 2006

Protecting your company’s good name!

Recently, Radio Shack Corporation made the news when it was learned that CEO, David Edmondson, had falsified his resume. Edmondson had worked his way up within the organization and had been with the company several years before resigning late last week. Apparently, the CEO claimed a college degree he never earned. Could a simple background check have prevented the public embarrassment and organizational disruption that befell this local Fort Worth business icon? Probably.

Often we see a reluctance to conduct routine background checks for executive positions, especially at the senior executive and board levels. I know this first hand, after having spent over 30 years in the corporate world developing and implementing employment background screening programs. I have seen many corporate executives hired without so much as an employment application or a release authorizing an appropriate investigation. As one CEO explained to me, “you just don’t embarrass executives at these levels by asking them to submit to a background check”. Later, this same CEO had to fire her newly hired CFO for discrepancies that a routine background check would have revealed. The notion that higher level executive candidates have somehow been vetted as a result of their tenure within the industry is prevalent. Moreover, this attitude is not just present in the private sector. Witness the controversy over discrepancies in biographical claims made by former FEMA Director Michael Brown - discrepancies that ultimately resulted in his downfall and a certain amount of embarrassment for the Bush Administration.

For any successful company their good name is their leading asset. Risk of loosing your reputation in the industry is only one of the many reasons to conduct executive level background checks – but it is a darn good one! Executive and board level packages should include a credit report, degree verification, local and federal criminal record searches as well as civil record searches. An SEC search should always be conducted for finance or senior accounting executives. The SEC has records of literally thousands of senior executive types who have been sanctioned for cooking their employer’s books. Remember, once the cooking’s done these executives have to work somewhere. It doesn’t have to be for you!


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