Want to Save the Staggering Cost of a Failed Executive Hire? Follow These Best Practices

Image credit: Business 2 Community

Over the last four months, I have conducted nearly 50 interviews with folks who have been directly involved in executive search, in some cases for decades. These include executives, private equity partners, hiring managers, board members, and executive search professionals. Collectively they have hired hundreds of senior leaders across multiple organizational contexts and provide a rich source of information about what has worked well and not so well in the process of hiring executives.

The participants were quite candid, even when discussing the shortcomings in their own hiring processes, both those that were conducted internally and those supported by executive search firms. Those interviews, and my own experience with executive recruitment, have resulted in a fairly comprehensive and accurate picture of what works and what doesn’t relative to making successful hires (and avoiding mistakes). And this is not just an academic exercise. The cost of failed hires, both financial and organizationally, is shockingly high. You can see an analysis of the cost of such mistakes here.

To the question, What works or looks good when a search delivers value? (and conversely what doesn’t work or look good?), I found a number of commonalities, suggesting a high degree of shared experiences despite the diversity of interviewees and the organizations and industries in which they work. The list below reflects a consensus on what factors have supported successful search. Of course, the converse is also true. When these elements are not present or are not fully realized, that compromises the likelihood of a successful search. These practices broadly fall into pre-hire, hire, and post-hire phases.

Best Practices

The hiring organization actually knows what they need.

More people “confessed” to this internal short-coming than to any other problem, but reported when they took the time to figure it out, they were more likely to hire the right person.

The hiring organization devotes the necessary time and effort to the process.

As important as hiring is, it must receive the same focus, time, and resources dedicated to other initiatives.

The hiring organization is culturally ready to hire the right person.

When organizations get beyond their internal inertia, politics, and biases, they are more prepared to hire folks who aren’t status quo executives.

The search partner is an executive level expert in the industry/field in which the hire takes place and is involved from beginning to end (not just for the sale and at the end).

For searches supported by search firms, clients get much better results when the search partner is actually an executive level expert in the area being hired. That sounds obvious, but it’s actually rare.

The search partner is willing to push the hiring committee beyond the status quo.

Interviewees reported that they achieved the greatest results when an external search partner pulled them out of their comfort zone and/or old habits, both in creating spec sheets for a role, and in reaching out to the most dynamic candidates.

The search partner wants to learn about the hiring organization and the role being hired.

The entire process goes better, and the search partner is more effective, when he/she takes the time to really learn about the hiring organization.

Candidates are effectively screened relative to the specs before being presented.

In many cases, search firms do “paper” evaluations, then throw candidates over the wall to the client organization. Searches are much more effective when the search partner does extensive vetting before presenting candidates.

Candidates are thoroughly assessed for leadership style, org fit, etc.

Whether a search is being conducted internally or with a search partner, hires are much more likely to be successful if the vetting process goes beyond interviews and includes high quality assessments of a candidate’s leadership style, fit with other executives and organizational values, beliefs, etc.

Candidates are sourced from a broad and diverse pool, including outside of the industry.

Organizations often fish in the same pond over and over again, limiting the diversity and quality of potential executive hires (this is particularly acute in higher education). When they are willing to look to other industries and contexts, they tend to find the most game-changing candidates.

The search process delivers exceptional candidates that generate significant impact

Searches often only provide adequate candidates, but not game-changing candidates. As obvious as it sounds, successful searches result in hires that dramatically impact critical organizational outcomes.

The search partner can help the committee/board “sell” the hire within the organization.

Interestingly, multiple interviewees reported that a critical value add from search partners is assistance in presenting a finalist in compelling ways that generate broad-based internal support for the hire.

The hiring committee includes operations people, not just HR or hiring manager.

Second only to failure to fully understand what the organization needs in a new executive hire is the failure to include a broad enough set of constituents in the hiring process and decision to effectively assess a candidate’s ability to meet multiple, sometimes competing needs within an organization. When a committee includes internal customers, HR, colleagues, and others with a vested interest, the quality of the hiring decision tends to be much better, even if it takes slightly longer.

Hiring decisions are based on multiple, defensible data points.

A surprising number of hires end up being “gut level” decisions despite the huge financial and organizational implications. While intuition can be an element of the hiring decision, the most successful hires are based on a combination of data points such as interview ratings, psychometric and organimetric assessments, reference conversations, etc. as they relate to the position specifications.

Part of each interview was dedicated specifically to the participant’s experience with search firms and most (including those from search firms!) did not hold back on discussing what “bothered” them. At a high level, although most interviewees understand the retained search model, they don’t necessarily like it because they often felt taken advantage of by large firms that sold a customized, concierge product, but delivered a cut and paste commodity. The list below represents another area where there was consensus.

What bothers clients who contract with a search firm?

  • The dog and pony show at the beginning, delivered by the heavy hitters, who then disappear, handing off the search to “junior” staff
  • When search firms sell themselves instead of selling solutions to client needs
  • When search firms sell sizzle (or past success) and forget the steak
  • When updates and communications are with junior employees
  • When search firms use templates rather than custom materials
  • When search firms present candidates that have failed elsewhere
  • When search firms don’t take the time to learn about the client organization

Lastly, the interviews also provided some commonalities related to problems that consistently crop up in executive searches. These can occur in both internal and retained searches.

  • Committee/Board isn’t strong enough to go a new direction
  • Search specs don’t align with internal politics/culture or don’t include a broad enough perspective
  • Daily grind gets in the way of both careful due diligence and future/strategic thinking
  • Search firms are too busy/have too many clients
  • Organizations feel obligated to hire someone even if none of the finalists meet all the requirements

In short, there was a fair amount of shared opinion across the folks I interviewed, with common experience around the factors that lead to good search outcomes and those that compromise good outcomes. Whether a search is conducted internally or with the assistance of a search partner, when it fails, it is painfully expensive, in both time and money, to all involved. Fortunately, there are some hard-earned lessons shared in this article that we can use to increase the likelihood of getting the right execs in the right roles. The most critical are: Knowing what you need; dedicating the necessary time, care, and resources to the search; hiring partners that are executive level experts for the role being hired (and who won’t pawn the search off on junior employees); and being willing to hire non-status quo candidates who might require the organization to stretch, but who will return high-impact results.

A Note for After the Hire

Although this was a less emphasized element of the interviews, best-practices don’t end when a candidate signs an offer letter. To the contrary, it is actually one of the more critical phases of hiring. For example, the folks I spoke to said that one of the most important elements of hiring a new executive is an effective on-boarding process. However, almost all said that their own organizations fell short on this count! Other opportunities include executive coaching, which is separate from on-boarding, and an evaluation of the hiring process itself. It is a perfect opportunity to assess what worked well, what can be improved, etc., while the process is still fresh in the minds of the hiring committee.

The New Normal

While much of what was learned from the many folks who contributed to this article still applies in the context of the COVID-19 crisis, there are clearly a few “curveballs” that have to be effectively addressed. One is the difficulty in conducting face to face interviews. Another is simply hiring in the midst of a crisis, which will require candidates who are a good match under the circumstances, not just for “normal times.” It may very well be that some organizations will have to make hiring decisions in the absence of meeting candidates face to face, or possibly the in person interview is reserved only for a finalist as a means of confirming a de facto hiring decision. In either case, hiring organizations will need to leverage tools that provide deeper insight into candidates than under the “normal” conditions of the past. Examples might include using particular psychometric and organimetric instruments and/or more creative use of existing due diligence processes. For example, rather than the customary (and often superficial discussions with references), a hiring organization or partner search firm might conduct a 360 review with candidate evaluators comprised of previous colleagues and supervisors. Regardless, successful executive recruitment will require new thinking.

Footnote

Because most of my experience has been in the education space, I have some additional insights to executive searches in those institutions. As it relates to traditional higher education, executive hiring decisions tend to be far more driven by politics and culture than in private sector companies that tend to be more agnostic about a candidate’s background, while being evangelical about desired performance. Colleges and universities are unfortunately often more concerned about checking all the boxes related to optics and varied constituencies, even at the expense of future performance on the part of the executive. As a result, they are generally good at creating the appearance of a thorough process, with broad-based input and “proper governance,” but such searches often sacrifice best practices behind the scenes, particularly when they involve traditional search firms, which are often co-conspirators in preserving the status quo.

One thought on “Want to Save the Staggering Cost of a Failed Executive Hire? Follow These Best Practices

  1. WP
    Good stuff.
    Everyone is in good health I assume and you are fine too.
    Let’s catch up – let me know what is good for you.
    Be well.Dave
    David Ruggieri
    Managing Director
    Collegiate Solutions Group
    407-506-5771

    Like

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