Employer Due Diligence, Part 2-What Do You Need to Know?


The flippant response to this question is: everything. Since that is not achievable, you need to focus your investigation on learning as much as you possibly can.

Breaking that down by information categories, your filter for these specific indicators should be the following: data that are signposts to the present and future stability, viability and prospects of the employing organization. This data is not going to be the same for every job candidate, every employer or every employment “transaction.” Job candidates are likely to give different weights to different factors they consider depending on their own unique requirements and needs.

Similarly, employers are all different and situations will vary with features such as:

  • the size of the employer. Large employers may require less due diligence than smaller employers for which information is harder to find. As a rule, the larger the employer, the more information is available…in fact, you may be afflicted with “information overload.”
  • The prominence of the employer. Employers that are “household names” generally require less due diligence than other employers since they are scrutinized much more closely by both their regulators and the media. Thus, their triumphs and missteps are much easier to identify.
  • the nature of the employment sector. Public sector employers are usually “open books” for which a great deal of publicly available material is accessible. Private sector employers, even those that are publicly-traded and subject to extensive reporting requirements, are not. However, if a private sector employer is publicly traded, you will be able to find more information than if it is privately held. Nonprofits fall somewhere in-between insofar as transparency.

Caveat: Uncovering information about U.S. government agencies and offices has become a bit more difficult under the Trump administration. Much data that was readily available prior to January 20, 2017 has been removed from federal agency websites.

The Due Diligence Baker’s Dozen Plus One

Using the following “Due Diligence Baker’s Dozen Plus One” groupings as a guide should unearth the basic material that you need to inform a decision about whether you want to work for a particular employer. I’ll summarize them here and go into greater detail about them in ensuing blogs in this series.

  1. Financials
  2. Employment Trends
  3. Employees
  4. Marketing
  5. Technology
  6. Industry Trends
  7. External Influences
  8. Other Employer-Specific Vulnerabilities
  9. Competition
  10. Clients
  11. Legal Exposure
  12. Assets
  13. Reputation
  14. Staying Power

Some of these categories do not apply to certain types of organizations due to the nature of the employer. For example, public sector employers generally do not have competitors. Even in government, however, there are exceptions. The military services compete with one another every year for their respective chunks of the defense appropriations pie, which is often a zero-sum game. Whenever government goes into one of its rare moments of concern about “efficiency” and discovers that functions are being duplicated among agencies, it’s possible that it might execute a reorganization that either eliminates certain offices or merges them. A third scenario results from the occasional urge to deregulate something. In 1995, Congress deregulated the trucking industry and terminated the Interstate Commerce Commission, suddenly throwing several thousand people out of work. Consequently, even if you contemplate a public sector job or career, you may need to factor such possibilities into your due diligence investigation.

Some categories may not be capable of discovery by you. Closely-held corporations are notoriously secretive when it comes to their financials, for example. Absent a highly-publicized lawsuit by a third party, unearthing their financials may be out of the question.

Some items can be ascertained by “eyeballing” the organization’s premises, furniture and equipment. If you are confronted with threadbare appointments or less than state of the art computers, that could be a signal that you need to factor into your employment decision.

Some items will require responses from interviewers or organization management. They will require you to pose good questions to at either the interview and/or job offer stages of the hiring process. You need to be mindful, especially at the interview stage, not to get too far ahead of yourself. Asking penetrating questions at this stage could risk your job candidacy.

A good bit of your due diligence can be initiated even before you and your prospective supporters get serious about one another.

Next: Employer Due Diligence, Part 3-Financials