The Yahoo CEO Resume Falsification Scandal: Lessons Learned

Importance of Background Checks

Human resource (HR) managers say that 53 percent of résumés and job applications contain falsification, and 21 percent of résumé falsification state a fraudulent degree. In this age of digital and social media, it’s hard to imagine anyone falsifying their records, much less someone who’s in a company’s top position as CEO.

After a thorough search, Scott Thompson was named as Yahoo!’s CEO in early 2012. Prior to his appointment at Yahoo!, Thompson was president of PayPal, and prior to that he was PayPal’s chief technology officer. Thompson replaced Carol Bartz, a well-known computer industry executive, who, after two years on the job, had been unable to resolve Yahoo!’s troubles.

In his first months on the job, Thompson formulated a strategic plan for turning around the company, including a massive layoff of employees. Then, the whole situation started to unravel. An activist investor sent a letter to Yahoo!’s board of directors expressing concern about an SEC regulatory filing signed by Thompson “that stated to the best of his knowledge its contents were accurate.” That document said that Thompson had earned a college degree in accounting and computer science in 1979 from a small university south of Boston. The activist investor said he had reason to believe that the degree was in accounting only. And, come to find out, the university didn’t have a computer science program until the early 1980s and school officials confirmed that Mr. Thompson received a bachelor’s of science degree in business administration.

The activist investor questioned if Thompson had embellished his academic credentials and if the board had failed to exercise due “diligence and oversight in one of its most important tasks—identifying and hiring the chief executive officer.” Would YOU lie on a résumé to get a job you want? 70 percent of college students said they would! After all this came down, a person close to the company said that, “In the absence of evidence that Mr. Thompson actively misled Yahoo! about his résumé, Yahoo!’s directors likely won’t force him out. Maintaining him as CEO of Yahoo! at this time is more important than whether he had a computer science degree or not.” And at first, that was the stance Yahoo!’s board took.

However, the controversy continued to grow. In a meeting with senior Yahoo! officials, Thompson said he “regretted not finding an error in his public biography.” He then suggested that maybe an executive search firm might have inserted this information more than seven years earlier. Yet, this blame game backfired. Some of his comments ended up on tech blogs, which angered the search firm, which produced documents from Mr. Thompson showing his inaccurate biography. As one person close to the situation said, “The cover-up became worse than the crime.” Not long after, Thompson ended up resigning his position. Although the board did not give him severance pay, he did get to keep $7 million of the cash and stock he received when appointed to the position. Not a bad haul for only four months’ work. (Epilogue: Thompson was replaced by Marissa Mayer, whom we introduced in Case Application #1 in Chapter 6)

Answering the following questions.

1. What does this story tell you about the importance of checking a job applicant’s

2. background?

3. What stakeholders are affected when an executive has inaccuracies in his or her résumé? How might they be affected?

4. Look at the statistics in the first paragraph of this story. Are you surprised by them? Why or why not?

5. What can you learn from this story (a) personally and (b) professionally?

In recent times, many of the cases have been seen where job applicants made fraudulent misrepresentations in their resume to get job opportunities. One of the lead cases is Yahoo where the CEO got the opportunities by falsification in resume. This story provides many lessons and the importance of checking the background of the applicant before providing them a job. Such due diligence is important for many of the reasons. Firstly, it brings the serious risk of liability to the employer. An employer who fails to make a proper investigation regarding the background of the applicant may held liable for negligence if such an applicant finds to be involved in illegal activities or misconduct. Further, such an investigation is also important for providing for customers and employees. In conjunction with this, the verification of the information mentioned under the resume is also important to motivate honesty and integrity in the application process (Hiresafe.com, 2019). The given story provides that falsification in a resume may defeat the goodwill of corporation and employee may lose his/her job as the CEO of Yahoo did.

When an executive provides inaccurate information in the resume then it affects many of the stakeholders of the company. For instance, business owners may affect in a manner that they face loss due to the poor decision-making skills of a less qualified employee. Further, when such news comes into the knowledge of public it defeats goodwill of the corporation that adversely affects share values. In this manner, another stakeholder i.e. shareholder faces loss. Further society is an important stakeholder of the company but such issues lead to a negative impact on the same as it increases unemployment among qualified people.

The statistics believe that a 53% resume contains false information (Orr & Orr, 2012). This is a surprising data as it represents more than half. This is a world full of technology where any records can be checked and verified. Despite this more than half of the people using such tactics to get a job, which is truly shocking. Further, the number is also shocking for another reason that is business/professional ethics. This is the 21st century where every profession develops ethics in its members yet such activities are happening which can make a reasonable person surprises.

At a personal and professional level, many things can be learned from yahoo stories. On a personal level, this is to state that slightly changes can be done in the resume but a whole fake claim cannot be made. On the different side, this is to state that at first instance it may look attractive to get a job by easily modifying information of a resume. Nevertheless, one may have to lose his/her job in a situation where the truth reveals. In the given story, the CEO had to lose his job after a short period of joining and it led to serious consequences on his career (Lake, 2015). Hence, a job applicant must follow professional ethics in job applications.

References

Hiresafe.com. (2019). Why are background checks important? Retrieved from: https://www.hiresafe.com/client-support/background-check-faq/why-are-background-checks-important/

Lake, R. (2015). Beware: 23 Resume Falsification Statistics. Retrieved from: https://www.creditdonkey.com/resume-falsification-statistics.html

Orr, L., M. & Orr, D., J. (2012). When to Hire—or Not Hire—a Consultant: Getting Your Money's Worth from Consulting Relationships. US: Apress.