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Are you conducting appropriate background checks on new hires?

May 30, 2012

By Frances Chapman  

What do RadioShack, Bausch & Lomb, Massachusetts Institute of Technology, and now Yahoo have in common?  If you answer that all four companies have suffered the public embarrassment of having top officials who falsified their credentials, you win the kewpie doll.

Once again the public was shocked last week to hear the reports that the newly hired CEO of Yahoo! resigned under pressure from his Board of Directors for allegedly claiming to hold a Computer Science degree that he did not have. According to reports, the degree he did have was in Accounting.

Yahoo! and its case with now-former CEO Scott Thompson serve as a reminder to all employers that verifying credentials is a critical part of background screening.

How did it happen this time?  Some fingers point to the search firm that had placed Mr. Thompson when he joined PayPal earlier in his career. Mr. Thompson neither confirmed nor denied that specific accusation.  The result at Yahoo! is a management muddle and a public relations black eye that the company, already struggling in the marketplace, does not need at this time. Inevitably the details that have come to light as part of the overall story have done nothing to help the company’s image. The story appears to have been further complicated by Mr. Thompson’s revelation–by all accounts after the Board had decided he had to go–that he was suffering from thyroid cancer.

One casualty that can also be reported is Patti Hart, the Yahoo! director who was on the search committee that ended up recruiting Mr. Thompson.  Ms. Hart is the CEO of International Game Technology. At the request of her own Board of Directors she has resigned from Yahoo!’s board. Rightly or wrongly, as the gatekeeper for this search, she was seen as the one responsible for the gaffe.

HR is generally the gatekeeper for all searches and generally knows, or should know, better. Ms. Hart was not an HR person, and someone in HR should have been the final arbiter of the results of the background check. But the reports in the media do not make mention of any role played by HR in this situation.

Best practices in background checking require that a systematic process needs to be in place for all hires regardless of level. Companies should first start by reviewing their background screening procedures:

  • Which checks will you do on which classifications of hires, and why?
  • What will your process be for conducting background checks? Having an employee bring in a diploma or copy of a degree is not a reliable form of education verification.
  • If a new hire comes “highly recommended” by other peers in the field, you must still do your due diligence and verify credentials.
  • If an employee is being promoted to a supervisor (or above) level, it can’t hurt to run another background investigation rather than rely on the one from the time of original hire.
  • Regardless, a thorough credential verification is highly recommended for the executive level at minimum.

Some companies only do background checks on hourly workers while other organizations only do checks on executives. Neither practice is ideal.  While the searches performed may differ for both groups, there needs to be a consistent practice of doing background checks.

As the old saying goes, an ounce of prevention is worth a pound of cure.

SBAM members receive discounts on background check services from ASE.  Click here to learn more.

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