When building an ethical culture, and the associated trust that comes with it, corporations must ensure that the individuals filling critical roles have gone through the appropriate due diligence to ensure they share the values of the company. While all roles are important, we are primarily focused on senior managers, executives and Board members.
That’s a nice way of saying, “you want to make sure you don’t hire damaged goods, who may erode the company’s reputation”.
Yes, they do check
Several months ago, when having a discussion with the Chief Compliance Officer (CCO) of a Fortune 100 company, I mentioned a circumstance with a senior manager who was stigmatized because of his three-year role as an executive of a division that had undergone a foreign bribery investigation.
The senior manager was unable to secure a job, because recruiters determined, via a Google search, that he was an executive in the specific division that was the focus of the bribery investigation. Although he was not involved in the discrepancy, recruiters quickly turned their eye to the next candidate.
The CCO of the Fortune 100 company proclaimed that he didn’t understand the view of the recruiters. He said “we hire criminals all the time!” and gave an example of an employee in one of their divisions who was undergoing an investigation by law enforcement, which may lead to a criminal indictment.
Unfortunately, the CCO’s view was inconsistent with industry standards and other examples within his own company. Over a three-year span, two directors on the CCO’s Board were asked to quietly step down (or they offered themselves) because of the stigma associated with their current or previous roles.
One director, who was the chairman of the Audit and Risk Committee on the CCO’s Board, was entangled in a money laundering scandal associated with his directorship in another company. The second director was being investigated for his alleged involvement in a foreign bribery scandal, when he was a Board member of an entity with business interests in Africa.
Why is it important?
The simple answer is, reputation is critical. As reported by the Harvard Business Review (HBR), “the impact of misbehavior on corporate reputation is significant and long-lasting”.
Companies and their recruiters do, and should, perform detailed due diligence on potential employees and contractors. In fact, it’s part of the control mechanisms that many companies have adopted in order to ensure they remain free of ethical lapses and scandals.
Unfortunately, these due diligence efforts can result in the stigmatization of innocent people, as I described above. These individuals, and sometimes their families, become collateral damage.
Escaping from the stigmatization and its impact on one’s career can be difficult, if not impossible. As stated in an HBR article, How to Survive a Company Scandal You Had Nothing to Do With, “a long-severed employment relationship can emerge from your past and trip up your career mobility”.
This is more of problem for full-time employees, then contractors. You will recall from a previous post that we discussed a hypothetical involving tainted evidence that was submitted in an arbitration case. In that situation the lead attorney (yes, still hypothetical) was able to delete his almost three-year involvement in the case, with no direct impact on his biography or career.
Job candidates perform due diligence
Its not just employers who are performing the due diligence, but also those seeking employment. Perspective employees want to ensure that the values of the corporation align with their own.
For the most part, job candidates are using the internet and social media outlets like Glassdoor to perform their background check. And, these reviews often involve more than just a quick look at the overall approval rating for a company. Many times, candidates are delving into the specific information included in reviews, with special attention paid toward the “cons” section.
Its amazing how many times a reviewer will give an employer a score of 5 out of 5 just because of one positive (like salary), but go on to mention at least three “cons” of why they don’t like working there.