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Saturday, September 13, 2014

How to Avert Corporate Scandal by Leveraging Talent Acquisition

Corporate scandals have been sadly rampant over the last 15 years. In 2001 and 2002 alone: AOL inflated sales figures and exaggerated revenue by as much as $49 million in 2002 to secure its purchase of Time Warner. Arthur Andersen was convicted of shredding documents containing information about the Enron audit in 2001. Enron falsified its levels of profits and debts and also bribed government officials in other countries in order to win international contracts in 2001. Halliburton booked $100 million in construction costs before clients had agreed to the cost in 2001. Tyco’s former CEO was indicted for tax evasion in 2002. Xerox falsified five years of accounting, which resulted in showing an additional $1.5 billion of non-existent income. I won't even get into the more recent banking and loan scandals that caused the housing bubble to burst.

The impact of these publicized ethical lapses is diverse. First, employees who already struggle to uphold ethical standards may be inclined to try and copy-cat others. On the other hand, the attention paid to the harsh punishments and devastating effects of ethical breaches may encourage employees who are on the fence to choose the more honorable path. Most importantly, when corporate ethical lapses are publicized, it allows other companies the opportunity to learn from the mistakes of others. For example, Enron had a well-written ethics policy, but did not have a corporate culture that promoted ethical behavior. By analyzing the factors that contributed to the ethical lapses, companies can take a proactive approach to encouraging employees to act ethically. Incorporating ethics into company culture and creating incentive programs that reward ethical behavior are just two examples.

So, how can the recruitment team be a resource that help an organization avoid the fate of the companies mentioned in the opening paragraph? Recruiters are the gatekeepers of company culture. They should be viewed as essential to the current and future success of the company. Recruiters can only gain an in-depth knowledge of the company’s future goals by participating in planning meetings with senior management. When recruiters understand the future needs of the organization, they can hire candidates who will perform well and fit in with or enhance the corporate culture. Recruiters who are participants in strategic planning sessions can support and expedite the execution of managements’ business strategy and contribute to increasing company profits. Additionally, recruiters who understand the company’s future plans can hire not only for the company’s current needs, but also for the company’s future needs.

Neuborne, E. (2003). Incentive ethics under fire. Potentials, 36(3), 5.
Patsuris, P. (2002, August 26). The Corporate Scandal Sheet. Retrieved from
Phillips, J., & Gully, S. (2012). Strategic staffing (2nd ed.). Upper Saddle River, NJ: Pearson.

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