When do most organizations conduct due diligence? Often, it is too late in the executive search process.
In the course of a typical executive search, the search committee, board, or search firm defines a pool of semifinalist candidates. After additional assessment, one semifinalist is selected as the finalist. This is when due diligence often occurs – and at this point the costs of unknown information are already very high.
Consider the following case study:
In 2009, an Illinois school district selected a new Superintendent, set to begin in July. In May, local news reported that she had a DUI, unbeknownst to the district. News outlets ran multiple stories, the School Board was questioned, and, ultimately, another candidate had to be found. The outgoing Superintendent said, “We would have done (a background investigation)…but we never got that far.”
At the executive level, due diligence should be performed when semifinalists are identified. This ensures that the finalist is selected from a pool of viable candidates. In other words, it is critical to screen-out unqualified or unsuitable semifinalists before selecting-in a final candidate. The following are potential consequences of discovering that a candidate is not the right fit after that person has been named as the finalist:
- Public embarrassment: If the executive search is public knowledge, news that the finalist is unsuitable often leads to questioning of the Board’s and/or search firm’s credibility and care in the overall search process.
- Loss of qualified candidates: Semifinalists who were actually qualified may no longer be available – or willing – to fill the position.
- Wasted resources: In some cases, the search process will have to reboot entirely, incurring additional costs to the organization.
- Delayed transition: Regardless of the steps that have to be taken to find a new finalist, there will be a delay in naming a successor to a leadership position.
Our point? Semifinalist screening, as a cost-effective risk management tool, is worth consideration.