Reflection on a Trojan Horse: Why the Yahoo! CEO Debacle Was Important

by Stanley H. Davis, Principal, Standish Executive Search, LLC

It was some years ago that the public learned that the CEO hired to lead Yahoo! and its $18 billion enterprise was using a resume that apparently misrepresented his education credentials.

The incident launched the predictable finger-pointing, e.g. an accusation that somebody else may have changed the resume; that the resume misstatement was not material; that the untruth was mitigated by the candidate’s prior business experience, etc.

The fact is that the Yahoo! Board and the responsible search firm seem to have fallen asleep at
the switch. 

There’s no question that the underlying problem here was integrity. However, scan the landscape of any industry or profession, and this issue periodically surfaces.

The best-run businesses require a third-party background check on every executive hired, including the details of their employment, credit history, driving and criminal records, address tracking, and–oh yes–their education credentials. There are occasional discrepancies that are resolved by a further review of the information, or by discontinuing the candidacy of an otherwise impressive prospect.

Should this potential lack of integrity be a concern when looking for an executive who otherwise brings a professional track record, and impressive references? Absolutely!

It may be the lack of a credential, but it’s also a matter of integrity. Like a Trojan horse, once inside a business an executive’s susceptibility to compromise one small truth can morph into a habit of compromising more and larger truths. It’s a disease that can (and has) jeopardized businesses: Enron, Tyco, MF Global, JP Morgan, and others come quickly to mind.  It impacts investors, employees, and other stakeholders. As for reputable customers and suppliers, they won’t sustain a relationship with a company they can’t trust, or with whom an association may taint their own brand.

Yahoo! and its former Board members and shareholders (whose investments were jeopardized) were burned, or at least tarnished.

Shaded resumes that are deployed to gain entry into a business are not an executive phenomenon, or even a large company anomaly.

Take the example of one smaller company that filled an operations role with a candidate recommended to them. He was a good, reliable worker. When some reports of inappropriate behavior toward his female co-workers began to surface, the management wondered if they should look into his background, which they hadn’t during the recruiting process. They did, and discovered that they had engaged a convicted sex offender.

Why do people misrepresent their backgrounds? How do they avoid being detected? How is it that their hiring is recommended by credible people? Why do some otherwise smart leaders continue to gloss over the entire history of a candidate when investing in a new executive or employee?

Whether a search firm is engaged to recruit for an executive position, or the company’s own recruiting staff is assigned to fill a junior-level position, the completion of a disciplined third-party background check is essential.

Somewhere, this Trojan horse is positioned outside or already within the walls of yet another company.  

 

Stanley H. Davis is the founding principal of Standish Executive Search, LLC. Standish works with company owners, executives and boards of larger and smaller companies to recruit the right leaders for business growth, change and succession.  www.standishsearch.com