Resume Fraud

What to do, what to do...

When Job Seekers Cheat

  What is a company to do when it finds out that one of its hires committed resume fraud? The quick answer is easy: Fire him! Real life, however, is seldom that easy to navigate. Suppose the person's been with the company ten years before the error on the resume surfaces. What's
the impact to the company overall if that person is fired straight away? If they don't fire him, what do the employees and stockholders think?

  A November 13, 2008 story in the Wall Street Journal Online1 tells of a recent study surveying resume fraud from executives of 53 publically traded companies. Approximately 2% of the 358
executive biographies and resumes surveyed contained substantial, factual errors. Most of these errors were in the form of overstating their academic qualifications. Some of the discrepancies were originally pointed out by a stock market guru who specializes in shorting equities. The article points out that short-seller Barry Minkow was responsible for publicizing biographical errors resulting in the firings of executives at Herbalife Ltd. and Usana Health Sciences, Inc.

  In their defense, the common response from the executives was that the error was unintentional and they will correct it. Specific examples include one gentlemen claiming to hold a Master's Degree in Electrical Engineering from Massachusetts Institute of Technology and another executive claiming to hold an accounting degree from University of South Florida. In both
cases, no degree was ever earned but they each claimed that they thought they earned the degree. 

  The article goes on to point out that regular employee job seekers have an even worse track record. According to background investigator Kroll Inc., the percentage of resumes with inflated educational credentials was about 20%.

  What are companies doing about this problem? There have been different responses depending on the facts of the individual cases and which company is involved. For publically traded companies, the company management has to consider how all the stakeholders will view resume
inflation: as a mistake or as fraud. Publically-traded companies have to consider the trust of their key stockholders, partners, and suppliers. If these trusts degrade, the stock price and company performance will most likely follow.

  For privately held companies, the choice on how to handle these incidents is more autonomous to the will of the company management. A private company does not need to be concerned with how
stockholders will view the misstep. Private companies are generally smaller and more reliant upon personal relationships with partners and suppliers. The company would still need to examine how these relationships would be damaged if word leaked out about error.

  For both public and private companies, how their customers react to the news about the credential inflation could be key to their decision making and future health of the company. Also for both types of companies, the reaction from the rest of the employees must be taken into consideration. If an incident leaks out about a favored executive and the company decides to sweep it under the rug, employees could take that as a sign that the company condones situational ethics and as long as a "greater good" is served, there is no need to be strict about standards. 

  Any company facing a revelation about resume fraud on the part of one of its employees must consider all the facts and pros and cons how to respond. If the management responds correctly, the company could come out ahead in the eyes of all stakeholders. If the management takes
the easy way out and looks the other way, the company could suffer long-term damage.


Winstein, Keith J. "Inflate Credentials Surface in Executive Suite." Wall Street Journal 13 Nov 2008. 17 Nov 2008  <>