Comment: The nightmare hire that could have been avoided

As it’s Christmas, I thought I’d make this column particularly festive by talking about referencing.

Before you turn the page, may I tell you a story that will strike fear into the heart of anyone who in the past has not taken this subject seriously or only took references from the people recommended by the candidate.

Nine times out of 10 this may work out fine, but for Myer department stores in Australia it turned into a nightmare – and a public embarrassment.

Earlier this year the retailer went to market to hire a senior executive and potential successor to the current chief executive.

It appointed a man called Andrew Flanagan, who had a very impressive CV which claimed experience at Zara, Tesco and Walmart. Unfortunately, none of this was true – not only had Flanagan falsified his CV, he was a convicted felon in his native Texas.

So how can this happen to a reputable company operating in good faith and how can it be avoided?

Flanagan had set up a complex network of ‘mates’ using false names, job titles, email addresses and telephone numbers to provide references to his past career and achievements. This is an extreme case, but crucially it could have been avoided if a wider range of referees beyond those offered by the candidate had been sought.

Although in most cases it is highly unlikely that references given are fraudulent, if they come from ‘friends’ they will inevitably be flattering.

It is vital to obtain a rounded picture of an individual’s strengths and weaknesses as well as their past experience or functional expertise.

The key is detailed and thorough referencing from a wide range of sources and on a 360 degree basis, ie present and former bosses, colleagues and team members.

No one is good at everything but some people are better at managing up than building and motivating a team. And how do they interact with their peers – do they drive their own agenda or take on board the views of others? All this is vital to determine how they will fit into the company culture and whether they will stay the distance.

While this approach is recommended at any level, the repercussions are obviously far greater at the top.

The appointment of a new chief executive or board member is a lengthy and expensive process and if it is not successful, the disruption is considerable – not to mention the impact on the financial standing.

In my experience, PLCs are less rigorous than private equity-backed companies. All too often they will only speak to the people suggested and then just two or three. Private equity houses regularly take 10 or 12 references from a wide range of sources including banks and analysts.

Of course, the more references you take, the more likely you are to find someone who has a negative comment to make – the rule of thumb is to keep digging until you are satisfied that the overwhelming feedback is positive and if you still need further validation, consider a psychometric evaluation, probing areas of concern.

• Fran Minogue, managing partner, Clarity