Modern Due Diligence: 3 Reasons Why Search Firms Must Enhance Executive Vetting

For decades, due diligence for executive risk was something executive search firms simply checked off a list. Did they graduate? Did they work where they said? Any criminal record? Once the boxes were checked, due diligence was done.

However, decades of research suggests the process that has always been done may not actually be the best approach. Research across the Center for Creative Leadership, McKinsey, and Spencer Stuart shows 30–50% of senior executive hires derail, materially underperform, or exit within 18–24 months. Many of these exits weren't from a lack of technical skill, but from poor behavior, judgment, and ethics.

In today's digital age, executive search firms face a new reality in which leaders' behavior is more public than ever. Successful placements now require more than determining whether a candidate can do the job. It's whether their behavior, judgment, and history will survive the scrutiny that now follows every leader in real time. Your firm's reputation and business depend on whether you caught it before you put their name on the shortlist. 

This shift has fundamentally changed how executive search firms grow their business and make successful placements. The three most compelling competitive advantages used to be time, cost, and comprehensiveness of a search. While they still matter, search firms are facing a new challenge: leadership risk has moved online, making enhanced due diligence more important than ever. Here's what that means for modern placements and screening.

3 reasons why executive search firms must modernize due diligence

1. Leadership risk is changing, and moving online

The number of CEO exits is actually falling: the first half of 2026 saw a 26% decline. But the reasons leaders are leaving tell a different story. Even as overall turnover cools, CEO departures tied to allegations of professional misconduct rose sharply. Thirteen CEOs exited due to professional misconduct in the first half of 2026, up from just 1 in the same period last year, and forced terminations more than doubled. Leaders are being replaced less often overall, but removed for conduct far more often.

The kind of failure that ends a career has also changed. According to the University of Florida, CEOs are 5x more likely to survive major fraud allegations than a workplace romance. Researchers believe this is because CEOs can blame a financial problem on systems that can be contained with new controls. A personal-conduct problem, however, speaks to the individual's judgment. And judgment is the one thing you can't remediate with a policy.

Behavior and judgment are more public than ever. Think about how quickly word spread after Astronomer CEO Andy Byron was caught with the company's chief people officer on a concert kiss-cam. The two-second clip generated an estimated 22,000 news articles in 24 hours. And Byron was out within days. Without modern vetting, search firms and employers can easily end up in hot water.

2. Enhanced vetting is critical: screen behavior and online presence early in the process

A search process can improve selection. But if your diligence is simply a standard background check at the end of the hiring process, you won't be able to identify the leadership risks that are impacting placements the most.

Outdated search and vetting processes are creating glaring blind spots as leadership risk moves online. Diligence workflows of the past were slated for the very end of the recruitment process and were built to answer clean, structured questions. While this process worked in the past, today it misses the risk that actually ends modern placements.

Many search firms are now screening earlier in the process so they don't shortlist candidates with obvious red flags. Public risk means clients can spot the same problems you can. Boards and hiring committees are using AI tools and public data to research candidates on their own, often before the final decision and in some cases before you've even presented. If a stakeholder finds something you missed, the conversation stops being about the candidate and starts being about your firm.

Conducting diligence earlier also helps firms improve search times. The earlier you find issues, the better. Discovering a red flag on Day 20 of a search means you can quickly pivot and move to the next candidate. Discovering the same red flag on Day 120 during the final background check means hundreds of hours of research, outreach, and partner time have gone to waste. Not only are the efforts not billable, recoverable, or reusable; the search starts over and your credibility takes the hit.

3. Reputation is currency, and it's every search firm's best competitive advantage

Employers hire executive search firms for many reasons. But the most notable reason is trust. They trust you to find the best possible candidates for them, ones that will elevate their teams, strategic vision, and company goals.

Unfortunately, trust is only as good as your shortlist. Without proper vetting, delivering on that promise isn't a given. Missing a scandal that makes the news costs your current relationship, but it can also follow your firm into every pitch or even court after. And the trust that took decades to build can be undone by a single placement.

At the end of the day, clients don't care how long your firm has existed, how much money you make, or how many employees you have. What they really care about is whether the candidates you shortlisted were thoroughly vetted and presented no major problems, whether criminal, financial, or behavioral. Protecting your reputation and your client's are now the same job, and both are decided by what you surface before the shortlist, not after.

Why executive search must modernize due diligence

The search firms that are growing the most are the ones adapting to modern best practices. They understand that executive risk has moved online, and placement-ending risks are no longer primarily in structured records but in digital footprints. Not only that, they understand that changing risk means new problems are rising, and firms who think "We've never had this problem before, so we won't now" will be the ones who lose to competitors.

They also know that yesterday's search doesn't carry the same weight. Boards are running their own research and can uncover problematic candidates in an un-vetted shortlist. Today, a clean background check is table stakes, not a defensible shortlist.

Finally, they know that their credibility and reputation is their most important competitive advantage. Because clients can do their own research, the goal post for executive search has changed. Search firms no longer need to be the largest company or the least expensive. What they do need is a reputation of great placements, high client satisfaction, and unmatched credibility. Presenting a shortlist before proper vetting opens the door for breakdowns in credibility. It takes years to build credibility and trust, and it only takes one bad shortlist or placement to ruin it.

Your reputation is only as strong as your vetting process. With modern vetting for online behavior risks, search firms can close the gap between what traditional vetting sees and what actually gets executives fired. And you can do that vetting before you share your shortlist with a client. If you're evaluating partners to help you build that into your process and tech stack, this article can help understand what to look for in a vetting partner. 

Because in executive search, the most expensive mistake isn't placing the wrong person. It's thinking you found the right one and realizing too late, in front of your client, that you didn't.

Request a demo to see how Fama surfaces behavioral and reputational risk before you present the shortlist.