Hire Better, Fire Less – Poor Decision-Making and Garden Leave is Money Lost – Part 1

In his 2016 article, “New rules for hiring executive candidates”, Dana Stadler outlined the rules for successful C-level recruitment. In truth, I found much of it uninspirational but one nugget I liked: “Courting your candidate – The close is a critical part of a successful recruiting process. The current hiring market rewards entrepreneurs who understand that closing the right candidate is always about more than checking boxes on a spec list. Take the time throughout the process to show you are genuinely interested in them as a person. Understand your candidate’s personal drivers and tailor a package to their needs. Think of out-of-the-box, personalized touches to make the candidate feel special. Most of all, be prepared to invest the time and effort required in today’s highly competitive environment to get the person you want”.

The bullet here is, I think, “…invest the time and effort…”. If you’re recruiting a C-level to deliver shareholder value, productivity, improved ROI and so on, (Dana Stadler) “Be prepared to show your commitment by meeting on site and off site, outside weekday work hours and on weekends. Drive to meet them if you need to, and be open to talking over coffee, lunch, dinner or drinks. These encounters outside the workplace allow you to develop a deeper connection and, as a bonus, give you more data on the candidate’s fit with the company”.

The negative side – or perceived negative – of this to those of us non-C-levels is the image it conjurs up of cosy lunches in an expensive restaurant, or a weekend at a club. The “jobs for the boys”, “it’s not what you know but who you know” situation.

I believe we would have less of this view if C-levels consistently, and almost always, performed exceptionally well across all industries, and this was made transparent to external agencies – the media, commentators, the wider public. And, crucially, they were seen to be recruited in a structure where “garden leave”, “new challenges” and so on didn’t exist. You fail, you’re fired. That, of course, requires rigid KPIs. These may seem not to sit well in a role which, when conducted properly, is fluid, changing, multi-faceted. But then isn’t every role, at least to varying degrees? I think so.

So, where and what is the balance between cosy chats between old university pals or chaps who sat on the same House of Commons committees before taking a directorship; and a more formal, standardised recruitment process?

Whether for CEOs recruiting other C-levels for their organisation, or headhunters recruiting for corporations, hiring has never been easy. Trying to fill senior-level positions carries on the unhappy tradition – using interviews, reference checks, and sometimes even personality tests, the recruiters try to permeate logic and predictability into hiring. Still, success can remain elusive.

In The New Yorker, in his 2016 article “Why C.E.O.s Are Getting Fired More”, James Surowiecki noted that “One recent study of CEO tenure found that the percentage of forced turnover tripled between 1970 and 2006, and another study concluded that boards of directors now “aggressively fire C.E.O.s for poor industry-adjusted performance.” In addition, the average duration of a C.E.O.’s tenure has fallen”.

In April 2014, Mozilla’s own blog noted that “On April 3, 2014 Brendan Eich voluntarily stepped down as CEO of Mozilla. It has been well documented that Brendan’s past political donations led to boycotts, protests, and intense public scrutiny. Upon his resignation, Brendan stated: “Our mission is bigger than any one of us, and under the present circumstances, I cannot be an effective leader.”

If hiring has always been a daunting task, today’s economy makes it more so. The global scope of business has increased the demand for talented senior executives in the corporate ranks. Meanwhile, supply is shrinking as more and more people – in particular, promising MBAs – choose to work for startup ventures or go into business for themselves. Whilst not scientific, I know this from the large number of clients I work with who are MBA-or-similar-certified and don’t always take the traditional corporate route.

At the same time, the nature of work itself is in flux. Before the technological revolution – let’s be honest, it has been nothing less – jobs were uniform. In the standard organisation, everybody knew the responsibilities of the CEO and other senior executives. Most organisational cultures were comparable – formal, hierarchical, and based on individual achievement. But with the advent of more joint ventures and strategic alliances, and with the growing prevalence of free agents, freelancers, home-workers, and networking, finding the right person to fill a job has become more complex. What competencies, after all, do these new kinds of companies and cultures require? Indeed, nowadays the CEOs of two companies in the exact same industry may need entirely different skills and personal styles to succeed. Think HSBC vs Apple, Uber vs Total, and so on.

Consider, too, the increased stakes of hiring today. Historically, pre-Twitter, Facebook and instant castigation, business people and senior executives could learn on the job. Today, global competition, instantaneous client and competitor feedback, and the wider media – which itself is fed by immediate social media reaction – make a senior executive’s performance a high-profile affair. It’s hard to make an error, let alone try to recover from one.

Successful hiring is difficult—but not impossible. The right executives do sometimes end up in the right jobs. Otherwise Exxon Mobil, Verizon, etc. would fail or at least wouldn’t be growing so effectively to be placed in the world’s top 10 most profitable companies (http://fortune.com/2016/06/08/fortune-500-most-profitable-companies-2016/). It has been clear to outside observers that a systematic approach to key appointments has had a quantifiable effect on the successful expansion of those companies.

But hiring surely goes wrong as often as it goes right: when it does, why? In most cases, the company has fallen into one—and often more—of the common hiring traps that occur at all levels. None of the traps are the result of ill intentions; instead, they reflect many aspects of human nature and the executive’s need for convenient solutions.

Unless a company is entering a new market or is a startup, most job openings are the result of a firing or resignation. You might think that companies would look for someone radically different from the departing executive. Instead, companies typically seek someone with the same good qualities as the previous jobholder but without the failings. What the company really needs is an executive who is experienced and able to effectively convince his colleagues that the previous executive’s strategy needed to change. The problem with this approach is that it focuses the search on the familiar personality and effective competencies of the predecessor rather than on the job’s requirements going forward.

Too often, senior teams recruiting C-levels put together long and detailed job descriptions that could be filled only by God. These job descriptions are usually filled with contradictions: the candidate should be a forceful leader and a team player, a high-energy “doer” and a thoughtful analyst.

At the most senior level, such job descriptions are sometimes drawn up by a team that interviews – or at least seeks feedback from – everyone in the company who will work with the incomer. The team records each person’s view of the job’s requirements and concept of what qualities lead to excellent performance. The specifications are usually compiled without considering the few critical priorities that the new manager should accomplish. Nor do they consider which skills already exist in the organisation. The result is that the number of “suitable” candidates becomes very small. And, because the criteria are based on assumptions and data which is subjective (opinion), it may still leave out the best candidates who might have the essential mix of competencies needed for success even if they don’t meet some of the specifications, such as an MBA or a certain number of years of very specific experience.

Executives often have favourite questions that they ask regardless of the situation’s specifics: “What are your strengths and weaknesses?” and “Where do you want to be five years from now?” To the people asking them, these questions have either and only good or bad answers. The answers to these are only opinions rendered with no thought to context and are simply taken as fact.

I also know from much experience that unlike the camera, the CV sometimes lies. A candidate recently asked me to add a degree from Cambridge “because it will look good!” I didn’t succumb but the fact is many job candidates aren’t thinking about long-term fit with a company; they’re thinking about making more money, boosting their profile, or being taken on by what they feel is a better organisation.

People often use their own-edited CV to skew the interview – I know this because they tell me. During interviews, people often “adjust” the truth to fit the question. The fact is, the hiring process isn’t very conducive to complete honesty. People want to put their best selves forward, and to do so often involves showing the camera your best angle. The problem is that most companies never try to see any other.

References are another fatal trap if the recruiter isn’t careful. Just as people tend to accept interviewees at their word, so do they with references. But references need to be handled with care. Interestingly, executives usually believe what they hear from a reference even when they don’t know if that person is credible. There are few other circumstances in life in which we accept someone’s judgment with such trust. Who would allow an independent car mechanic to repair their Bentley without investigating, probably with Bentley, that he was capable? When it comes to selecting a potential employee, executives very often think nothing of taking the word of a perfect stranger. Often, they feel as if they have no choice. Time is short. They also have no way of getting to know references well enough to judge their assessments. Executives trust strangers, they may posit, because there is no alternative.

Recruiting executives also need to be careful how they delegate. As I often point out to clients, you must not assume, for the CV, that your intended recipient is the first person who will read it. You may intend it for a CTO but it is just as likely to be initially screened by HR who are given set criteria.

Most executives want to make hiring decisions personally. They want to interview finalists and pick “the winner.” However, many executives delegate the critical steps leading up to that point. Most often, they ask their direct reports or members of the human resources department to create the job description. Such delegation would not be bad if the people creating the description were properly briefed on the nature of the job opening and if top managers remained involved in the hiring process along the way. But that rarely happens; the executive is too busy. That’s why he or she delegated the task in the first place.

It takes no time researching to establish that the efficacy of various evaluation methods, including different forms of interviews, reference checks, personality tests to build structured interviews are the most reliable of all popular techniques for predicting performance. The interviewer must have a list of well-prepared questions designed to reveal the candidate’s competencies—relevant knowledge, skills, and general abilities. Such interviews, which often include difficult or uncomfortable questions, must be carefully planned, and executed. Most interviews are anything but. They are loose conversations that cover subjects from the candidate’s and the interviewer’s mutual acquaintances to the recent Arsenal vs Tottenham game. When it comes to business, the interviewer throws a few predictable questions to the candidate who bounces them back. The session becomes a friendly chat – we’re back to cosy lunches. The participants may walk away from it happy, but little about the candidate’s ability to perform has really been learned. The costs of unstructured interviews are many, but perhaps the most damaging one is invisible: rejecting a highly qualified candidate who simply didn’t excel at gossip.

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Nigel Benson is a professional career sector specialist with over 12 years' experience writing executive level CVs and expertise in recruitment, job interviews and training.

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