Don't Get Burned by Smiling CEO Candidates

This article is adapted from "A Baseline of Executive Backgrounds," which appeared in the Winter 2002 issue of Directors & Boards magazine. The magazine's Web site is: www.directorsandboards.com. - ed. 

Applicants for top executive positions may have impressive résumés and reputations but extensive background investigations may uncover hidden, illegal activities that can hinder or destroy the organization.

When the Sunbeam Corporation board hired Al Dunlap as its CEO in 1996, it expected him to restructure the financially ailing company to profitability. Instead, it fired him 23 months later amid plummeting stock prices and allegations of fraud.

If the Sunbeam board had done a better job of checking into Dunlap's background it would have found that in the 1970s he was accused of similar fraud charges as president of Nitec Paper. Dunlap conveniently omitted all references to Nitec in the résumé he submitted to Sunbeam. But Sunbeam, which is currently in bankruptcy proceedings, could have easily found reports of his previous professional conduct on public electronic media archives.