Background Checks On Executives Really DO Matter

Chief executive officers of major corporations are among the highest-paid people on planet Earth. Since companies pay them so much for one man’s work, it only makes sense for companies that are in search of a CEO to have extensive background checks performed on candidates.

Executive background checks, like those from the highly-rated, thorough, top-tier Corporate Resolutions, are essentially the same as regular background checks. The major difference between the aforementioned two is how thorough they are. Whether normal or executive background checks are concerned, both seek out character defects, problems at previous workplaces, and even one’s habits as a teenager.

Background checks are quite important – check it out!

Samsonite, a world-famous luggage company, once hired a CEO and failed to discover that the doctoral degree he claimed he had was not legitimate. In the handful of days following the spread of such news, the share price of Samsonite’s stock tanked as much as 25% at their worst.

Texas Instruments is arguably the world’s most well-recognized manufacturer of calculators. However, this company also has a bad story about one of its CEOs. Texas Instruments’ board of directors selected a 22-year company veteran to fill its gap at chief executive officer.

The calculator company’s pick of leader turned sour when the then-newly-hired CEO had quit his job just eight weeks after filling the void. The price of shares of Texas Instruments’ ownership stock didn’t fall nearly as much as Samsonite in the example above, though its shares dropped up to three percent.

Here’s why businesses care so much about past histories when hiring C-suite members

The vast majority of C-suite members in the Westernized world are able to boast clean resumes and criminal backgrounds. Those who have exemplary records throughout childhood and teenage years also have at least something to offer companies in the position of chief executive officer.

Executive background checks go as far as contacting distant family members, reaching out to a lifetime’s worth of employers for feedback. These ultra-thorough searches of personal information accumulated throughout one’s entire life are to be sure that the ideal candidates for residency in the C-suite don’t have any blemishes on their record, no matter how small. Even though many people become reformed after getting punished for criminal behavior, it’s best to stay away from hiring anybody who has question marks on their lives’ histories.

More figures of power are getting accusations of bad behavior stuck on their characters

Throughout all of 2017 and the first half of 2018, Bloomberg indicated that a minimum of 437 big-wig C-suite members and people in other positions of importance were slapped with evidence-heavy or baseless claims of sexual or other types of misconduct.

Of those 437 people, well over half of them – 259 – were terminated from their positions.

Due diligence is SUCH a big deal

In short, due diligence means nothing more than doing your job correctly and to your full potential. Due diligence is an especially big deal when big-money financial fields like private equity are involved.

Private equity firms pool together oodles of money to invest. In most cases, these are treated as higher-risk alternative investments. Purposefully or accidentally taking money, securities, or other financial instruments from private equity firms’ banks of financial instruments and money to invest.

Nobody should be at ease with committing mistakes in big-money fields like private equity, potentially resulting in you being forced to pay money back, leave the company, or be faced with criminal charges.

Companies need to know what they’re worth – due diligence equals ease of calculations

The first thing every business owner or investor needs to know about a business is its financial position. Without knowing whether an organization will sink or swim, decision-makers can’t appropriately make decisions, thereby throwing logic away in the trash.

Businesses should be readily comparable

Comparing the financial positions of businesses against their competitors or counterparts informs interested parties of relative and objective measures of performance.

The United States’ rules and laws of accounting – United States Generally Accepted Accounting Principles (GAAP) – are designed with the ability to readily compare public businesses to each other.