Article
Harvard Business Review

The Scandal Effect

By: Boris Groysberg, Eric Lin, George Serafeim and Robin Abrahams

Format:Print

Abstract

Executives with scandal-tainted companies on their résumés pay a penalty on the job market, even if they clearly had nothing to do with the trouble. Because the scandal effect is lasting, a company you left long ago could have an impact on your current and future job mobility, not to mention your compensation. Overall, executives who suffer from the effect are paid nearly 4% less than their peers. You can’t control this risk, the authors write, but you can and should plan for it. They offer three steps to help you survive a corporate scandal. 1. Be forthright. Transparency and full disclosure are key to overcoming the stigma. Executive recruiters, who do due diligence on candidates, can help you create a full, clear, and succinct narrative for hiring managers. 2. “Borrow” reputation and legitimacy from others in your network, establishing innocence by association. Executive search firms can also act as references and sponsors. 3. Take a “rehab job,” one at which you so clearly excel that it creates a persuasive story to compete with the scandal narrative.