Reputation risk heightened by ‘untouchable’ C-suite and board members

The Untouchables: Protecting Your Organisation From Leadership Risk report from due diligence experts HireRight is based on a survey of 140 HR directors at the UK's largest organisations. It finds that CEOs are less scrutinised than graduates in the recruitment process and that one in three boards are likely suppressing a reputational scandal. It concludes that senior leaders in the UK's largest organisations often become 'untouchable' to the detriment of their business and that reputational risk is climbing the board agenda at insufficient pace. Despite the risks posed to company reputation and performance, two-thirds (66%) of respondent's businesses do not consistently verify the background of new members of their C-suite, the survey shows.hideAlmost half (45%) of HR leaders questioned know organisations where CEOs go through fewer interviews and tests than graduates. Just over a third (37%) admit this is the case in their own company. One in three (31%) CEOs do not undergo any form of due diligence during their appointment, the survey suggests. Furthermore, 24% of HR leaders surveyed believe their board members may not have had their qualifications, work history, criminal record or media profile checked during their entire career. A third of respondents (33%) believe that partly as result of this inadequate screening process a reputational scandal is lurking in their organisations. Steve Girdler, Managing Director EMEA at HireRight, said: "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." He added that 'reputational risk is rising up the boardroom agenda-but not fast enough'. Despite the figures mentioned above, 93% of HR leaders believe they themselves carry out the appropriate due diligence on new board members. However half admit they simply assume candidates applying for senior positions have not lied on their CV or application. "There's no doubt that preventable mistakes are being made when recruiting senior leaders, risking irreparable damage to company reputation, operations, culture and performance," said Mr Girdler. "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," he advised. He said organisations should ensure they have an auditable, transparent and measurable recruitment policy and screening system in place. This system must be regularly assessed to keep up with the changing business environment and international laws, he added. "Only then can you be sure the leaders in your own organisation are who they say they are and have not become untouchable," said Mr Girdler. The 140 senior HR leaders were from regulated and non-regulated UK companies with more than 5,000 employees.

Reputation risk heightened by ‘untouchable’ C-suite and board members

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