Fred Clayton | Michael Hofman | Martha Stewart | Jayson Blair

Here's everything you need to know to ensure that the staffers you hire - from the copy guy to the CEO - are not only talented, but virtuous as well.
With the Enrons, WorldComs, and Tycos of the world falling like dominoes, the casual observer might think we live in an age when scandal is routine. We do not, but there is more than one bad apple upsetting the cart that is the U.S. economy. In companies large and small, one person's actions can damn an entire organization. Martha Stewart's travails are outside the scope of her company, but that doesn't bring solace to her stockholders. Jayson Blair's phony reporting toppled several of his superiors at the venerable New York Times. Ironically, several institutions of higher education recently asked new hires to resign over falsely claimed advanced degrees.

When one wrong hire can do so much damage, and even cost the person doing the hiring his career, this is obviously not a problem to be ignored. "The one thing I find, talking to CEOs, is that they are really concerned about this, unlike any time I've ever seen," says Paul Danos, the dean of Dartmouth's Amos Tuck School of Business. "I think basically what you're going to find in the next few years is a tremendous amount of concern for this issue. It's going to be comparable to the quality movement of the '80s. This is going to be the ethics movement of the first decade of this century."

So how can you protect your company and make ethical hires? Follow this advice.

THOROUGHLY CHECK RÉSUMÉS
"The most obvious [red flag] is educational credentials not matching what the candidate says," advises Fred Clayton, president of the executive search firm Berkhemer Clayton and author of the handy brochure, A Guide to Assessing Executive Character. In an article on résumé fraud, Judy Olain, dean of Penn State's business school, referenced a 2001 study showing that nearly a quarter of job applicants misrepresented their qualifications. In recent years, a few notable examples include former Notre Dame football coach George O'Leary, who lost his job because the master's degree he said he had did not exist; the then-CEO of software giant Lotus, who exaggerated his education and military service; the past CFO of Veritas, who left over a phony Stanford MBA; and the CEO of Bausch & Lomb, who forfeited a bonus of more than $1 million because he claimed a fictional MBA.

Clayton also suggests checking for timeline gaps. "Résumés are presented as an accurate, chronological record of a career," he says. "If they leave an employer off, it [might be that] they worked there and that they were asked to leave."

The subtlest form of résumé fraud is simple embellishment, which is harder to spot. "An executive says he or she had direct responsibility for certain functional areas and that he or she achieved certain things, but when you talk to someone inside the company you find out that they didn't really."

Taking the time for due background diligence is the best way to avoid problems later, says Michael Hofman, an editor at Inc. Magazine. "I think we all believe that most people probably embellish," says Hofman. "In terms of flat-out lying, I have to imagine that out of 10 or 15 candidates, some do, which is why having someone actually call everyone and make sure that the person worked there is a simple step every potential employer can take to protect themselves."

"We will definitely contact references," including candidates' supervisors, peers, and subordinates, says Clayton. "And we will, if appropriate, also check public records for civil and criminal litigation [with the client's and the candidate's knowledge]."

Hofman notes that the Internet has made this easier, especially for smaller companies without any human resource personnel. "Companies are getting much more aggressive about doing a background check, checking the legal database, and seeing if the person has been involved in any big lawsuits," he says.

The best thing to do is compare the reference list against the résumé, looking for omissions, and whenever you speak to a listed reference, ask them if someone else at the company might be able to offer additional insight.

ASK THE RIGHT QUESTIONS
During the interview, use ethics-based and self-descriptive questions to get to the character issue. Adrian Gostic, head of marketing for O.C. Tanner, an employee recognition company that recently won a national award for its ethical practices, coauthored the book The Integrity Advantage. His favorite question is, "Tell us about a time when you were asked to compromise your ethics." This can yield very informative answers, and "if they have trouble answering," says Tanner, "it's a red flag, because at the very least it means they've never given any thought to the ethics issue."

Clayton recommends these self-descriptive questions:

Take me behind the decisions for your career moves.

Who is the best CEO you have ever worked for and why?

Describe yourself. With this one Clayton cautions, "If the candidate sprinkles the conversation with how honest they are, beware. Generally, people who are honest don't talk about it repeatedly."

You should also have candidates fill out an employment application, which can be bought off the shelf. They ask direct questions such as “Have you ever been convicted of a crime?” Hofman recommends personality tests. “There are a whole slew of written personality tests, or you can use web-based products,” he says. “It tells you kind of what their mindset and skills are. Certainly, a growing number of companies have invested in these systems.”

HAVE A PROCESS
Experts note that the main hiring concerns are skills and qualifications, so it’s easy for ethics to take a backseat. A formal hiring process, including background checks and a separate ethics interview, can keep it in the forefront. “The most important tip is for this issue to be top-of-mind to any HR executive, and to put in place a process,” says Clayton.

“Everybody would like to complete the hire as quickly as possible,” adds Hofman. “But to make sure you get someone who is both appropriate for the job and has [an] ethical background, you have to be rigorous in your screening. Just make sure that if you’re in a rush, you take the 10 steps you’ve set up and do them quickly, but don’t cut corners.” Because if you don’t cover all your bases, it could not only crush your company, but your own career as well.