Executives may make representations during the interview process such as embellishing credentials, omitting prior criminal or regulatory infractions, or providing false circumstances concerning their departure from a prior employer. The challenge for corporate directors and management teams is to avoid potential embarrassment and negligent hiring litigation by properly vetting these candidates prior to making hiring decisions. By conducting a thorough executive background check, a qualified investigator can identify relevant issues concerning a candidate’s professional career and personal history, which in turn protects the prospective employer’s business, reputation or shareholder value.
Below are 9 potential red flags that you could uncover in an background check prior to hiring your next executive:
(1) Unverified Credentials
In addition to stories of individuals who have blatantly lied about their education history, prior employers or military careers, candidates have also been known to misrepresent their professional designations, “hide” former employers or misrepresent volunteer work. While a little “white lie” may not necessarily be grounds to disqualify a potential employee, even a minor misrepresentation can reflect a broader pattern of behavior of a person.
(2) Bankruptcy
Learning about a personal bankruptcy filing by a candidate may not be a “deal killer,” but the specific facts surrounding to the filing may be telling. A review of the case documents can provide a host of information relating to the candidate’s stated income, debts and other assets held at the time of filing. An additional red flag involves candidates who “accidentally” transpose digits in their social security number in an attempt to mask the fact that they have been involved in a bankruptcy at all.
(3) Reasons for Leaving a Job
While layoffs have been prevalent due to current economic conditions, candidates may use this fact to their advantage with prospective employees. During the interview, a candidate may mislead the prospective employer to believe that they were a victim of downsizing, when they were actually terminated for performance issues or disciplinary complaints. In addition to interviewing references to verify information provided, former colleagues or business partners may shed light on the “real” reason an individual left the company. The discovery of litigation with a former employer may also produce relevant facts about prior conflicts.
(4) Litigiousness
Records of civil litigation are scattered throughout the U.S. where the candidate has lived or worked. The first step in identifying relevant civil litigation is to locate and thoroughly research such jurisdictions; a review of pertinent court documents may identify accusations of misconduct, harassment or questionable business dealings.
(5) Tax Liens & Financial Disputes
The existence of tax liens, judgments or financial disputes may suggest that the candidate is under financial pressure or may be living beyond their means. Candidates who are under financial strain may be more susceptible towards committing fraud. Executive candidates with access to a company’s financials are at an even higher risk of future embezzlement.
(6) DUI/DWI arrests
A review of motor vehicle records within the appropriate DMV office(s) that the individual has resided could identify a prior DUI/DWI charge. Multiple DUI/DWI arrests may raise concerns about a candidate’s potential substance abuse problem while police records relating to the respective arrest may identify other relevant information.
(7) Prior Criminal Convictions
Typically a “hot button” item for corporate directors and hiring staff, it is vitally important to understand the wide range of differences between federal and state court procedures with respect to housing and disseminating criminal record history. Identifying a candidate’s address history and relevant jurisdictions is the first step towards locating potential criminal records. Depending on the territory searched and disposition of the respective criminal charge, many minor infractions and/or misdemeanor charges may not be identifiable. More prevalent criminal case files which are readily available, typically provide a wealth of valuable background information on a potential hire (which may or may not be openly discussed by the candidate during the interview process).
(8) Regulatory Issues
If a candidate has been professionally licensed or certified with a local, state or federal regulatory agency (i.e. SEC, FINRA, State Licensing Boards, etc), they may have been sanctioned or reprimanded by the respective agency for professional misconduct.
(9) Hidden Corporate Affiliations
Findings of associated corporations that an executive or his/her relatives have established, raises questions about potential self-dealings or conflict issues. Note that this “shell” entity may been set-up as a vendor or customer to misappropriate funds.
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