How Well Do You Know Your Candidate?

March 12, 2017

Taylor Callery for The Chronicle
The presidential-search season is winding down, and colleges are starting to announce a new crop of leaders.

With some notable exceptions, such as the appointment last fall of the Kennesaw State University president, the process for getting to this point is surprisingly similar across campuses in the United States. As we reported last June at the annual meeting of the American Association of University Professors, this includes the hiring of an executive search firm. In fact, we found that the vast majority of public-university presidential searches performed last year — more than 75 percent — were conducted with the assistance of such firms.

According to research cited by Fortune magazine, nearly 40 percent of newly appointed corporate executives fail within 18 months. While this percentage may be lower in higher education, there have been a number of news reports of failures among university presidents, provosts, and other senior administrators. The Chronicle and other media have reported on many such failures, at least some of which had their origins in information about the candidates that was learned only after they assumed office.

With this in mind, one set of elements we most closely examined in our study were those involving the search firms’ responsibility for conducting what we called "due diligence" — that is, the firms’ research on candidates being considered for the position. We identified 13 due-diligence elements and the number of searches in which the firms were obligated contractually to provide these services. These elements included verification of degree attainment and employment; credit checks; DMV and criminal-background checks; on- and off-list references; checks for litigation and civil-rights complaints, including sexual harassment; and media reports. We also included LexisNexis and other database reviews as well as formal reports from private investigators and psychological testing as due-diligence elements.

One of our assumptions was that given the fees being charged — over $150,000 in many cases — the firms would have a contractual obligation to conduct thorough background reviews of those candidates actively being considered for the highest-ranking and most important posts at any university. The data proved us wrong.

We looked at due-diligence elements that were included in the base fee as well as those that the firm would undertake for an additional fee. We were surprised to find that on-list reference checks, the most-often-completed element, were included as part of the base fee in only 51 percent of the contracts and were not mentioned as an extra cost in any contract. Contacting off-list references was included in only 46 percent of contracts and again not mentioned as an extra cost in any contract. Verifying educational degrees was listed in 43 percent of the contracts, with about half of the firms charging extra for this service; media checks — including social media — were listed in only 22 percent of the contracts and were typically included as part of the base fee.

Credit reports were listed in 32 percent, and criminal records in 31 percent — and in both instances about two-thirds of the firms charged an extra fee for this work. A simple DMV check was included in only 8 percent of the contracts, with another 16 percent offering the service for an extra fee. Involving a private investigator was mentioned in 26 percent of the contracts, nearly all for an extra fee. Litigation, LexisNexis, and psychological testing were rarely mentioned.

It is important to note that these findings are based solely on a review of documents that were provided by either the institutions or the search firms and which represent written obligations. It is possible that some number or perhaps even the majority of these firms provide these services even if they are not contractually obligated to do so. However, the only services we know must be completed are those that are committed to in writing.

In addition to the quantifiable evidence suggesting that the majority of search-firm contracts do not provide thorough due diligence, there were two other interesting findings. One firm states that it verifies educational degrees by checking "publicly available sources." There is no explanation of what that means. It could mean looking in the Dissertation Abstracts International database as a way of verifying that someone received a doctorate, but that is not the same as obtaining an official transcript from a university. We hope this does not involve checking candidates’ vitae published solely on their own websites.

Perhaps most interesting is that in a number of contracts, we found explicit language stating that the firm would not guarantee the accuracy of its findings with regard to any aspect of due diligence. That was the case even when an extra fee was involved or a third party, such as a private investigator, was hired to conduct the review.

We have personal knowledge of a recent search during which members of the search committee, as well as the faculty, believed that the search firm would fully vet the final candidates; indeed, during a presentation by the firm, a specific person was identified as being responsible for contacting references. Yet to the surprise of everyone, the committee members ended up with the responsibility for all aspects of the due-diligence process — including all reference checks.

Considering these findings and this cautionary tale, what questions should be asked of a search firm about its services? First, make sure that any request for a proposal for a search consultant specifies what services the firm is expected to provide and the form in which it is to report its findings. Will the firm provide only an oral report, as many of the contracts we reviewed stated?

Next, read each proposal carefully and remember that any representations made in a presentation are unlikely to be contractually binding. Finally, ensure that the specific services you expect are part of the written agreement, and that the firm assumes responsibility for the information it provides as well as for any material omissions.

Given the stakes involved — and the substantial fees — no one’s interests are served when we learn after the fact that some disqualifying piece of information was not uncovered during the search process.

Judith A. Wilde is a professor and chief operating officer, and James H. Finkelstein is a professor emeritus, in the Schar School of Policy and Government at George Mason University.