• CEOs are less scrutinised than graduates as it is assumed leaders do not lie
• A reputational scandal is being suppressed by one in three boards because of inadequate screening processes
• Yet almost all businesses are under the impression they carry out an adequate amount of due diligence on new leaders
Senior leaders in the UK’s largest organisations often become untouchable as businesses are failing to check their career and qualification claims, according to new research from HireRight, Ltd, a leading global due diligence company.
Despite the risks posed to company reputation and performance, two-thirds (66 per cent) of businesses do not consistently verify the background of new members of their C-Suite.
Almost half (45 per cent) of HR leaders know organisations where Chief Executives go through fewer interviews and tests than graduates and a third (37 per cent) admit this is the case in their own company. One in three (31 per cent) CEOs do not undergo any form of due diligence during their appointment.
As many as a quarter (24 per cent) of HR leaders believe their board members may never in their entire career have had their qualifications, work history, criminal record or media profile looked into.
The result of these inadequate screening processes is that a reputational scandal is lurking in a third (33 per cent) of organisations.
The Untouchables: Protecting Your Organisation from Leadership Risk is a major new study released today (Wednesday 15 October 2014) based on the perspectives of senior HR leaders in some of the UK’s biggest companies.
Steve Girdler, managing director EMEA at HireRight, comments:
“Leaders are no longer figureheads only at carefully orchestrated press conferences. An entire organisation’s reputation can be damaged with a mobile phone image or an inaccurate CV, followed by the click of a mouse.
“Yet companies are putting the reputation and success of their entire business at risk by not carrying out suitable levels of due diligence on their board members – who clearly pose a significantly greater threat than graduates.
“Reputational risk is rising up the boardroom agenda – but not fast enough.”
What Lies Beneath
HireRight’s research reveals that the overwhelming majority of HR leaders (93 per cent) believe they carry out an adequate amount of candidate due diligence on new board members.
Yet half (49 per cent) admit they simply assume candidates applying for senior positions have not lied on their CV or application, with connections winning half (49 per cent) of all high level positions in UK organisations.
However, checks are clearly vital because, when they are carried out, they have exposed a leadership lie in one in three (36 per cent) companies.
A quarter (27 per cent) of HR leaders went on to confess that they have hired people that they would not have had they been properly screened.
Steve Girdler adds:
“There’s no doubt that preventable mistakes are being made when recruiting senior leaders, risking irreparable damage to company reputation, operations, culture and performance.
“But there are steps that can be taken to lessen your company’s own risk. Look around your boardroom and ask, who exactly are these people? If you are not certain, find out.
Have your screening and recruitment policy and processes examined. Ensure you have an auditable, transparent and measurable system in place. Assess it regularly to keep up with the changing business environment and international laws.
“Only then can you be sure the leaders in your own organisation are who they say they are and have not become untouchable.”