C-Suite Recruitment – Challenges & Opportunities

Case Study #1 Company A is desperately searching for a suitable candidate to head their operations in South East Asia. After performing consistently well in North American and Central European markets for more than three decades, this company is trying to make inroads in the emerging markets of Asia. But its efforts have somewhat been thwarted due to regular changes at the helm. Indeed, there have been four changes at the top most level in past six years.

Company A used time-tested methods and trustworthy sources to find suitable candidates and utilized its substantial experience in making the selections. Yet, it seemed both the company and its head of operations had to part ways after mutual disillusionment, sometimes only after a tenure of six months.

Case Study #2 Company B, one of US Midwest’s most prominent names, is facing a different kind of concern. It is having two of its top level management positions (one of which is at C-level) vacant for more than six months. The talent acquisition team has interviewed a number of candidates meanwhile, but to no avail. The team is receiving regular heads up from its recruitment partners. The compensation on offer is competitive. But it seems all of a sudden, “the talent pool has completely dried up.”

The two above mentioned examples amply showcase the challenges involved in finding and then recruiting talent at senior level positions. Before we delve deeper into this discussion, let me share with you a striking bit of information (keep in mind our case study #1 while going through this). A report published by Strategy& earlier this year measured the cost of poor succession planning in C-suite appointments in financial terms. This turned out to be in excess of USD 100 billion! (1)

“Human resources are like natural resources; they’re often buried deep. You have to go looking for them, they’re not just lying around on the surface. You have to create the circumstances where they show themselves.” – Sir Ken Robinson

Why Failure Seems to be a Norm rather than an Exception?

Today, every company, directly or indirectly, operates at a global scale. Even more locally concentrated smaller enterprises are not immune to global impacts on their businesses. Accordingly, the roles of the senior managers – the decision makers for any business – are experiencing a rapid change.

(I) More often than not the recruitment team, including the agencies handling the job, find themselves unaware of these changes. They neither keep themselves updated about the changing needs of the market nor are this information conveyed by their corporate counterparts. The latter often mistakenly assumes a premium fee (USD 80,000 upward) to be a guarantee for reliable services.

(II) In this process of recruiting senior executives, many recruitment partners fail to act as consultants. This results in lack of clear understanding among the parties about what exactly is wanted from a candidate. The foggy job descriptions that are published to attract suitable candidates exhibit this lack of clarity in glaring terms.

Brad Remillard, co-author of You’re NOT the Person I Hired, narrates his experience (2) about how a flawed job description resulted in hiring a candidate not fit for the job at all.

“The job description didn’t really define the real job. It defined a person everyone expected or thought could do the job, because they had done it before.”

In fact, job descriptions such as these put off potentially qualified candidates from applying for the position at all.

(III) It is a common knowledge that some premium recruitment agencies provide little better than a glorified resume service. If it is a contingency recruitment then the situation becomes worse. Besides, multinational companies are known to involve more than one agency to assist them in spotting the perfect candidate for their job. Many unscrupulous agencies are known to push their candidates through without due consideration about their fitness for the job. In the end, the entire process turns out to be a disappointing exercise for everybody involved wasting precious time and money on the way.

Companies find themselves left with the bottom quartile of the talent pool consisting of a few very aggressive candidates and hardly ever manage to get in touch with the relatively passive ones who may have had better qualifications and compatibility for the job.

(IV) Recruitment consultants sometimes fail in possessing a thorough knowledge of the brand they are representing. Without a good understanding of a company’s culture, work environment, stage of development and other crucial aspects it is unlikely that a consultant will be able to spot someone eligible for a senior level management role and then coach that person accordingly before sending him or her off for the interview.

Remember what Nick Corcodilos, an experienced headhunter and author of Ask The Headhunter: Reinventing The Interview to Win The Job (1997), has to say in this regard, “When you hire, you don’t hire a person. You hire the person’s work.”

(V) It is also true that recruitment partners, both agencies and recruiting managers are responsible in this case, often get too bogged down into the specifics of the job requirements. Details like educational and technical skills and experience take precedence, much like “ticking the boxes” for a list of wanted items, over the broader picture, i.e., how good a person is in performing the tasks at hand and solving the issues that are being faced by the company. Too much emphasis is also given on the so called first impressions.

Many companies tend to delay proper succession planning for senior positions until it is too late. What A G Lafley, P&G’s Chairman of the Board and Chief Executive Officer, found out in 2011 has hardly changed over time, “Two-thirds of all corporate directors admit they don’t give succession planning sufficient energy and time.(3) An age old wisdom – “there is nothing in the world that remains unchanged. All things are in perpetual flux and every shadow is seen to move (4) – is often conveniently forgotten. It proves perilous for the organizations and there remains hardly anything to do when a contingency arises.

How can these Situations be Avoided?

A great hire has a genuine capacity of transforming your company. But how do you go about it and avoid the common pitfalls on the way?

(I) Understand the fact that a high paying contract with a reputed recruitment agency is not a guarantee for finding qualified top level candidates. Try to partner with consultants who have excellent domain knowledge and experience about the business you are dealing with. For example, all these years you have partnered with XYZ Agency to assist you to locate excellent talent for senior positions. But now you are foraying into a new business or perhaps exploring a new geographical location. Does XYZ Agency has an adequate knowledge about the challenges a potential candidate may face while leading the company into this new business area or location? If not, then consider opting out of the existing relationship, at least in this instance.

(II) Maintain a database of precious contacts as well as people who have sent unsolicited resumes in past and seemed to be fit for positions of authority and responsibility. Ensure your recruitment partners are indulging in the same practices.

(III) Rely on those consultants who perform the right amount of background check on candidates before or during the process of selection. Do not shy away from speaking with the references yourself.

(IV) Share a clear image of your company and its workings with a recruitment consultant. Better still, rely on someone who is already in possession of such information.

(V) Recruitment too is a PR operation. Nurture your brand image carefully. Foster your existing talents, irrespective of their positions in the company. In a different way, they too are your brand ambassadors. The positive vibes of your employees would help attract newer talents to your company at every level including the senior executive positions.

(VI) Do not eliminate the other sources of information beyond recruitment agencies, traditional ads or social media contacts. A word of mouth is still a great way to find the right person for the right position. Trust those who are known to have extensive insider knowledge of the industry.

(VII) Do not make the mistake of hiring someone on face value or solely on the basis of his or her impressive resume. Make sure a potential senior manager exactly understands the demands of the job, the company’s ideals and working methodology. It is better to acquaint him or her with people he or she is going to closely coordinate with beforehand.

What Peter F Drucker realized through his experience (5) is worth remembering here,

“Effective executives differ widely in their personalities, strengths, weaknesses, values and beliefs. All they have in common is that they get the right things done. Some are born effective. But the demand is much too great to be satisfied by extraordinary talent. Effectiveness is a discipline. And, like every discipline, effectiveness can be learned and must be earned.”

What others define as a harrowing experience could as well turn out to be the most rewarding experience for you, not to mention your organization and the other important stakeholders, if you care to profit from the frequently committed mistakes by others.

Author: Kristian Cvetkovic

(1) The cost of failed CEO succession planning by Ken Favaro, Per-Ola Karlsson, Gary Neilson (http://www.strategyand.pwc.com/global/home/what-we-think/reports-white-papers/article-display/cost-failed-ceo-succession-planning)
(2) “She Seemed Perfect … Wrong?” (http://www.impacthiringsolutions.com/blog/she-seemed-perfect-for-the-position-what-went-wrong/)
(3) The Art and Science of Finding the Right CEO by A G Lafley, Harvard Business Review, October, 2011
(4) Ovid (43 BC – circa 18 AD)
(5) What Makes an Effective Executive, Harvard Business Review, June, 2004

The Art of Counting the Uncountable

Sometime back Tony Hsieh, CEO of Zappos, revealed that his mistakes in hiring may have cost the company over USD 100 million (1). According to him, the relative inexperience of his startup was mostly responsible for these recruitment blunders. However, we know that this phenomenon is not limited to the startups at all. Studies show, mis-hires at the top cost the US economy USD 14 billion per year (2). Forty percent of the CEOs are replaced within first 18 months (3) and two-thirds of them are shown the door by the end of fourth year (4).

In sporting terms, this can be compared with Spanish footballer Juan Mata’s failure to deliver the expected results in Manchester United. In exchange of a cool sum of USD 60 million (5) he was brought in from Chelsea, only to be used in wrong positions causing disaster and humiliation both for the team and the footballer. Two-time world champion Fernando Alonso’s similar high profile yet frustrating excursion (6) with McLaren Formula 1 Team in 2007 is another case in point.

Notice how both in organizational terms and from the team perspectives, these incidents result in low employee morale, missed opportunities and public embarrassment the impact of which in financial terms can hardly be measured with accuracy.

Now picture this against the potential gain of hiring the right personnel for your business. According to Professor Boris Groysberg’s (Harvard Business School)estimation, even for a USD 100 million business, a 10 percent improvement in the assessment of a potential hire can earn an additional profit of USD 2 million and increase the market value by at least USD 30 million (7). Could there be any excuse then for not getting this right? One of the major reasons for repeated hiring disasters is a failure of making a subjective assessment of the prospective hire. In organizational terms too, 20th century poet Edgar Guest’s words prove to be extremely relevant:

“You are the person who has to decide.
Whether you’ll do it or toss it aside;
You are the person who makes up your mind.
Whether you’ll lead or will linger behind.
Whether you’ll try for the goal that’s afar
Or just be contented to stay where you are.”

Subjective Assessment

Much like in educational parlance, subjective evaluations receive a lot of flak during recruitment processes mainly because of the possible biases candidates are exposed to. There is always a lurking danger that certain factors related to race, color, gender, physical attributes or abilities can be used against the potential recruits. But one must remember subjective assessments hardly involve such things. Instead, it aims at going beyond the typical interviews to assess someone’s person–environment fitness (8).

Some aspects like contextually sensitive actions, abilities of complex thinking and decision making can hardly be measured with precision through objective ratings. Behavioral traits like energy level, assertiveness, independence etc are taken into account to understand a person’s suitability with the various conditions he or she is going to be exposed to. After all, simple IQ tests are never going to be adequate for hiring top talents.

A Question of Compatibility

A thorough understanding of a candidate’s distinctiveness; his sufficiency in meeting the demands of the job; goals and aspirations he or she shares or does not share with the company often lead to making a better hiring decision.

In 1989, Kodak was in search for a replacement of its then retired CEO Colby Chandler. The choice came down to two persons – Phil Samper and company veteran Kay R Whitmore. The board decided to promote Whitmore who had a known preference for the company’s film business. In September 12, 1989, The New York Times reported, “Mr. Whitmore said he would make sure Kodak stayed closer to its core businesses in film and photographic chemicals.”

Whitmore lasted three years at the helm during the course of which, and the following years, it became obvious how costly a mistake Kodak committed in hiring him for the top post. Samper had a deeper appreciation of the digital photography technology, something that Kodak invented itself. It was the way forward for the company which Whitmore and subsequent CEOs in Kodak failed to take note of. Whitmore’s conventional approach might have gone unnoticed in a situation where the company is enjoying a good run. But Kodak was desperately trying to restore its reputation then.

An impartial assessment also leads to a better predictability of a candidate’s relationship with his/her peers and superiors, the breakdown of which invariably leads to the employee leaving the company dissatisfied.

John was always a charismatic go getter, something that brought him rapid success and growth despite occasional mistakes on the job. He was promoted as an executive level sales manager and needed someone to assist him in his work. The company chose Jennifer to support him. Jennifer too was an ambitious person, but she always liked keeping the company’s long term goals in mind. In her entire career, she rarely took any rash decision in spite of the obvious lure of achieving immediate and often glowing results.

As she took over the job and learned more about John’s ways of working, she made efforts of molding her approach and supporting John’s plans. She also tried to warn John of some of the long term implications of his decisions. But John was never the one to take notice of those and since his approach paid immediate dividends the company remained happy. After some months of struggle Jennifer left the job dissatisfied. Why, at the first place, did the hiring team fail to observe Jennifer’s different approach to work than John?

Behavioral Interviews

In their studies, Jesús F. Salgado and Silvia Moscoso, University of Santiago de Compostela, Spain, showed the shortcomings of run-of-the-mill behavioral interviews (9). When asked to testify a particular competency, a candidate with long work history, good knowledge and social skills has a lot of examples to draw inspirations from. But a series of one-on-one meetings tend to reveal enough information to anticipate someone’s fitness in various organizational situations.

Skillful talent scouts use various ingenuous
methods to understand a potential hire’s core
competencies. At one point of time or the other,
almost all recruiters experience a bad hire.
So there remains a considerable pool of
past instances to fall back on and help
formulate tactics that prove effective
for all the concerned parties.

In this regard, one of the most valuable tools is to give the candidate fact-based situations where he or she will not be able to get away parroting something from his past. It is important to remember that different people may address a situation differently. There is hardly one way of solving a complicated issue.

As Doug Conant, Chairman of the Kellogg Executive Leadership Institute, pointed out, “The black-and-white, right-or-wrong decisions happen before they reach the CEO’s office. The gray area is where the CEO lives and proves his or her worth.” The success of the decisions undertaken may also depend on a number of factors. But with such an approach to hiring a candidate’s primary competences cannot remain hidden for long.

Clarity about the organizational philosophy, expectations and environment is a prerequisite here. An experienced recruiter is going to carefully look into all the following questions and more.

Job Related

Is this person a leader or an entrepreneur at heart, a micro manager or someone with a laissez-faire approach, a profit maker, dollar stretcher or both? What are the capabilities he/she is more inclined to develop? What are the roles and jobs he/she wants for himself/herself in near future?

Team Related

How this person’s skills match up against the others of the team? If there is a mismatch then is it an added advantage or potential cause for disruption at work? How well is he/she equipped to handle interpersonal conflicts? How good is he/she in responding to the ever evolving political dynamics within an organization?

Company Related

How well is the person going to adapt to the organizational culture? Does this individual come from a background where he/she had greater resources at his/her disposal than is supposed to have in the organization he/she is about to enter? Is the current organizational set up helpful to see the candidate’s talent flourish?

A close observation coupled with honest analysis of the answers lead to an appropriate selection for a key position. It is an inherently difficult process, for understanding intangible qualities, traits and ever changing job roles is never easy. It is not beyond the realm of possibility though, if we only care to try a little harder, because to borrow Molière’s words,

“It is not only what we do, but also what we do not do, for which we are accountable.”

Author: Kristian Cvetkovic

(1) Inc. [http://www.inc.com/allison-fass/tony-hsieh-hiring-mistakes-cost-zappos-100-million.html]
(2) Chief Executive, December 12, 2008
(3) The New Leader’s 100-Day Action Plan, George Bradt, Jayme Check and Jorge Pedraza, 2006, Hoboken, NJ: Wiley
(4) Harvard Business School Press 1999
(5) Mail Online [http://www.dailymail.co.uk/sport/football/article-2965060/Juan-Mata-s-Manchester-United-career-looks-going-way-did-Chelsea-going-wrong-Spaniard.html]
(6) BBC Sport [http://news.bbc.co.uk/sport2/hi/motorsport/formula_one/7074737.stm]
(7) Harvard Business Review, May, 2009
(8) Muchinsky & Monahan, 1987
(9) Research Gate, University of Santiago de Compostela, Santiago de Compostela, A Coruña, Spain