<font color=blue>INDUSTRY BUZZ</font> High-Stakes Hiring

The B-2 Spirit is perhaps the key strategic weapon in the United States’ Air Force. Shaped like a jagged boomerang and designed to be relatively invisible to radar, each one of these planes comes with a price tag of $1.2 billion, and there are only 21 of them currently in existence. The cost of a single B-2 Spirit is roughly equivalent to a nuclear submarine. Whereas a submarine is typically staffed by a crew of over 100, the B-2 has a crew of just two: a pilot and a mission commander. Selecting the people to fly the B-2 is a great example of “high-stakes hiring” – situations in which there is very little room for error, and the consequences of performance, both good and bad, are substantial.

A bit closer to home, high-stakes hiring occurs all the time, as companies throughout North America make decisions about who will fill C-suite and other key positions. Most organizations spend a lot of resources attempting to get the right senior leaders into the right roles at the right times. Unfortunately, evidence continues to accrue indicating that at least some degree of failure in these roles is commonplace, ranging from highly visible and public “flameouts” to relatively hidden situations in which the underperforming executive is quietly shuffled into another role within the firm. My experience working with executives leads me to believe that at least half of them under-perform on one or more of their core responsibilities. 

Why do Executives Fail?

People in “high-stakes” roles within organizations rarely fail primarily because of skill set deficiencies, lack of intellect, or lack of performance. Typically, senior leaders with titles such as CEO, CFO, VP of HR, etc. have demonstrated a consistent track-record of excellent performance throughout their academic and professional careers, and depending on the size of the organization, have been promoted multiple times into positions of increasing scope and responsibility.  Thus, something else must be at work. Executives often fail for one or a combination of the following reasons:

1. Cultural Misalignment: These are individuals who have the requisite experience, intellect and core skills to be successful in a high-stakes role, but under-perform due to a lack of fit between the individual and the culture and values of the organization. Often, these are senior leaders brought in from outside of the organization or who have been promoted quickly from function to function within the same organization.

2. Over-promotion: These are individuals whose performance in prior roles ranged from merely acceptable to superb, are seen as loyal organizational citizens and good people, and are given new, bigger jobs because they are seen as “deserving” them. Often a factor that contributes to this mistake is decision-makers’ fear of being seen as not rewarding hard work, not respecting longevity, and not promoting from within. The danger of over-promotion was voiced by the President of a financial services firm that I recently met with when she was discussing her choice of a new VP of Operations: “Everyone loved him and he was great at a lot of things, but in retrospect, Adam probably shouldn’t have gotten the job. He had been with us for six years, and I was worried what type of message that I would be sending to everyone else if I passed him over.”

3. Failure to Evolve: These are individuals who either cannot or will not adapt to shifting business conditions or priorities, over-relying on their old way of doing things when new approaches, perspectives and personal behaviors may be required. They often live in the past (look for frequent statements such as “The way that we used to do it… The way that we did it at my old company…, etc.) and fail to listen to and respond to feedback.

High-Stakes Hiring: Increasing the Odds

The good news is that companies can take concrete steps to improve the efficacy of their high-stakes selection decisions. Research indicates that companies who are particularly adept at selecting C-suite personnel consistently do the following things:

• Comprehensively analyze the context that the person will be operating in.  Many companies make the mistake of looking almost exclusively at the “internal” attributes of potential candidates, such as personality, experience, decision-making and intelligence. While these factors are critical, so is the environment that the person will be operating in. For example, an effective CFO for a relatively young company in a deregulated and highly volatile market may look radically different than one for a mature, old-line company that needs to maintain steady growth. A 50:50 balance between time spent analyzing the “external” environment and the “internal” attributes of the candidates is a good rule of thumb.
• Seek a multi-level match. Effective executive selection decisions are complex, more like playing chess than checkers, because they assess “fit” at multiple levels, as opposed to just looking at how the candidate matches the position. Questions to ask include how well will the person fit with his or her fellow executives? With the culture of the company? With the operating environment of the country? For example, does the company promote spontaneous, autonomous decisions, or does it favor collaborative and more deliberative approaches?
• Use a disciplined, rigorous and data-driven process, in which candidates are assessed using structured and well-validated tools. Companies get into trouble when they make decisions based on personal biases, intuition, and hearsay, as opposed to logical reasoning and objective data. Additionally, research has shown that selection decisions are more accurate when job candidates are assessed simultaneously as opposed to sequentially.

Following these guidelines should increase the odds that your next high-stakes hiring decision will be a good one.

Todd Harris, Ph.D. is the director of research for PI Worldwide, an international management consulting organization and publisher of the Predictive Index based in Wellesley Hills, Mass. Harris also serves as an adjunct professor of psychology at the University of Massachusetts at Amherst and has published work in the areas of performance appraisal, team-building, organizational behavior and technology. He can be reached at tharris@piworldwide.com.