The Case for More Thorough Executive Pre-Employment Checks

Kreller doesn’t get involved in routine, lower level, check the box, pre-employment checks due to the high volume, quick turn and systematic approach required to produce high quantity, low price reports.  In their defense, these reports provide a quick and inexpensive solution for specific research to expedite the hiring process in a cost-effective manner.  However, hiring or promoting existing employees to an executive role or highly sensitive position is one of the most consequential decisions an organization can make. Unlike other hires, executives have outsized influence over company culture, strategy, finances, reputation, and legal compliance. The risks associated with poor executive selection—ranging from reputational damage to regulatory fines—are too great to rely solely on resumes, interviews and low threshold checks.  

Areas of concern include:

Mitigating Reputational Risk

Executives represent the public face of an organization. A history of misconduct, misrepresentation, or litigation—even if not criminal—can quickly become a public relations crisis. In an age of social media and rapid news cycles, scandals involving top executives often go viral, resulting in long-term brand damage and shareholder backlash. Comprehensive background checks, including adverse media research and reputational analysis, help surface these risks before they become liabilities.

Preventing Financial and Legal Exposure

Executives have access to sensitive financial and operational controls. Past involvement in fraud, regulatory violations, or litigation can be predictive of future behavior. A deeper dive into financial history, directorships, regulatory sanctions, and conflicts of interest are critical for ensuring regulatory compliance and avoiding costly lawsuits or fines.

Ensuring Cultural and Ethical Alignment

Cultural fit is essential at the executive level. A leader who diverges from the organization’s core values can erode morale, alienate talent, and destabilize operations. Thorough background checks can uncover previous issues such as toxic leadership, discriminatory practices, or ethical breaches that may not be evident in basic employment verification or reference checks.

Validating Credentials and Achievements

Inflated resumes and unverifiable credentials are surprisingly common, even among senior candidates. Executive background checks should include credential verification (degrees, licenses, certifications) and a review of claimed achievements. This ensures integrity and helps organizations avoid embarrassment and disruption post-hire.

Protecting Stakeholder Confidence

Investors, regulators, board members, and employees expect diligence in leadership selection. Thorough vetting demonstrates that the organization takes governance seriously and acts responsibly, reinforcing stakeholder trust.

Reducing the High Cost of a Bad Hire

Executive mis-hires are not only costly to reverse but also deeply disruptive. The financial impact can run into millions, considering severance, recruitment costs, lost productivity, potential litigation and potential business setbacks. Thorough screening is a modest investment relative to the potential downside.

Case Study

After a standard pre-employment check was done on a potential VP candidate, no red flags were uncovered.  However, due to the sensitivity of the position, Kreller was retained to dig deeper.  

We reviewed the initial screening results, and our research determined that although they searched in the jurisdiction in which it was filed, the screening company had not included a criminal conviction for 4th degree Forgery from 15 years prior.  This is standard procedure for many screening companies as they may only allow a search of 7 years of history or they may have internal rules about not including convictions older than 7 or 10 years. This is based on their compliance with the Fair Credit Reporting Act (and pertinent state laws) reporting requirements for candidates making less than $75,000/year— the majority of their searches.  

Further, our research found that a former employer of the candidate had been investigated for securities fraud during the time he was employed and the fraud was in the department he managed.  Lastly, several dated disciplinary actions were identified with the Financial Industry Regularity Authority (FINRA).

To be clear, the initial check completed the assigned tasks, but they do not have the time, budget or skill set to look beyond their specific scope of work, provide the narrative or context regarding a record or utilize dynamic search methodology to identify potential issues.  

Conclusion

While no process guarantees perfect outcomes, increasing the depth and scope of executive pre-employment checks is a strategic safeguard. It’s a necessary due diligence step that protects the organization’s future, ensures leadership integrity, and reinforces confidence among stakeholders. In today’s high-stakes business environment, superficial checks, at least those for executive or positions with access to sensitive or financial information, are a risk organization can no longer afford.

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