The Gap between Theory and Practice

Or… Why Recruiting is Harder than you Think (a lot harder) !

Consider the Following Companies who hired Presidents in the past 5 years…

The GAP Nortel Home Depot Hewlett Packard Computer Associates Yahoo Chrysler Dell

All are…

World-class companies with thousands of employees

All have boards of directors dominated by the titans of industry

All have Senior Vice-Presidents of Human Resources

Each of those VPs has departments with specialists trained in hiring talent including the ability to take any given job, deconstruct it (job analysis), profile it, generate a competency or success factors profile, and apply multi-trait, multi-method assessments to pick the right person (ie. they should know what they are doing).

Now…Consider the success of some of those hires

The GAP …“ He (Paul Pressler) was the wrong guy. The board screwed up. He was a numbers guy who didn’t understand the drivers of the fashion business”.

Home Depot… “This is a retail operation not the military and he (Bob Nardelli) never really understood the difference. We hired the wrong guy, simple as that. Let’s hope we can recover”.

Nortel… “It only took us a few months to realize that he (Gary Daichendt) was the wrong person for us. The chemistry was just wrong, way wrong in fact.”

Hewlett Packard… “She (Carly Fiorini) lacked the requisite skills to move the business forward. She was deeply divisive, self-centered, narcissistic and autocratic in style. What was the board was thinking”.

So…

How is This Possible???

Top 10 Reasons

#1Complexity Confounds

Companies and their jobs are often conceptualized as org charts with boxes connected by solid and dotted lines. Discrete boxes allow easy analysis.

But companies are much more than collections of boxes. They are complex systems with many interacting parts. The system are dynamic and non-linear. Elements evolve with one another and with the environment. They are emergent, messy, unpredictable and difficult to understand. In other words, the boxes move and shape-shift.

Jobs are also dynamic. They cannot easily be modeled. The information is always imperfect. Respect the complexity or pay the price..

Recruiting and selection excellence, especially at a senior level, always starts with an understanding of the system not the box – it starts with a ‘god’s eye view’.

#2Many companies react to today’simmediate pain

Today’s pain overwhelms and obscures the requirements for tomorrow’s gain. Something is broken now so hire someone who can fix it…..

Straw man/Ideal candidate is often constructed as the mirror opposite of outgoing CEO. Eliminate the flaws of one by hiring the opposite. But what about the strengths of the person being replaced??

Home Depot, the GAP, Starbucks .. all successful companies founded and built by entrepreneurial legends who were true visionaries – But as their empires grew so did their complexity. Need for sophistication in coordination, supply chains, systems and processes…..

As soon as meteoric growth slows (which it eventually must) boards seek to greater profitability to compensate - replace founder with a professional CEO, experienced in running big businesses … efficiency expert

BUT…..businesss like retail are art and science, retail geniuses are intuitive…what about the culture? Bob Nardelli/Paul Pressler

#3 Obsess with Tomorrow

“Predicting the future is easy. It’s trying to figure out what’s going on now that’s hard”

Example A – Company shines a light on the future at the expense of the present state

Eg. Computer Associates “the most dysfunctional big company in America”. Chairman Ranieri “I figure I can clean whatever needs to be cleaned before the new CEO arrives letting them focus on the strategy and the software issues”.

Two years later the beleaguered CEO said “I sort of perceived, perhaps naively that I would spend only a little time cleaning up the problems and a lot of time focused on growth and strategy. I was very wrong”. They hired a goal scorer who never got out of his own end ….. If assumptions wrong – right guy/wrong job

#3 Obsess with Tomorrow (cont)

Example B - Company hires for where they plan to go but ignore the skills required to get there.

A $2mm per year company has aspirations to be a $100mm company in the next 5 years. They need a VP Sales and decide to hire someone from a $100mm per year company.

A person managing the sales of $100mm company is likely wrong for a $2mm business today.

You cannot hire more than one or two steps ahead…

The ‘Art’ of selection is about the journey not the starting or end point

#4Context is a Killer

Context is ‘the conditions or circumstances surrounding a company which gives it individual meaning”. It includes variables such as location, structure, culture, political environment, competition, employee demographics, ownership, financial resources, markets and strategy.

Context affects attitudes and behaviors…. DIFFERENT CONTEXTS CALL FOR DIFFERENT LEADERSHIP.. a company starved for cash behaves differently than one rich in resources, a branch office is different from a head office, a family business has different dynamics from a professionally managed business etc. MUST RESPECT CONTEXT WHEN HIRING.

A star performer in Bell Canada is very different than a star performer in a company such as Globalive. RIM versus LCBO

Context matters in all walks in life .. the neighborhood informs the best means by which to deliver educational or policing services. The context of the war determines how it should be fought. (contingency theory, life stages etc)

#5 Companies Misunderstand Corporate Culture

Most companies will hire for the culture they wish they had rather than the culture they actually have. …they describe themselves the same way - participative, team-based, blah blah blah

Firms devalue the journey from the ‘as is’ to the ‘to be’ and hire someone from the ideal who has no idea how to operate in the actual culture.

#6 CEOs/Business Owners Lack Self-Awareness

CEOs/Owners often lack an understanding of the impact they have on an organization. This is especially true of founders and owners. ..

They almost never understand what it feels like to work there, nor do they see the value in someone like me talking to other team members to find out. You must become a translator…

“I am a passionate leader” - read explosive and volatile: “I am hands-on” - read micromanager: “I believe in open, free dialogue” – I like yelling and screaming a lot

Founders/Owners/Family businesses are an Alice in Wonderland parallel universe for recruitment and selection – VP will report to Owner while owner’s wife reports to VP, Five brothers..

When an owner tells you he wants you to do something, he does not mean that he really wants you to do that.

Family dynamics are uncomfortable discussions and thus avoided… Succession is a huge complicating variable in hiring - Rogers

#7 Attributes are abstracted

Companies abstract attributes. “We want to hire a star..someone ambitious, brainy, decisive, aggressive, charismatic, hard-working, proactive” .

When HP hired Carly Fiorina, the WSJ described her as “a star – unshakeable, self-reliant, passionate about the big picture, a person who embraces change. She is perfect to inject life into moribund HP”.

GE is a world-class leadership factory, Bob Nardelli was a star at GE therefore Bob will be an unassailable choice for Home Depot

#8 Attributes are undervalued, misunderstood or hard to weigh in importance

Consider Attributes such as:

Adaptability/flexibility Self-awareness Motivation Judgment/intelligence Character

Domain expertise valued higher than change management skills – know the business versus know how to deal with the challenges of the business

#9 Many Companies Hate…

Process… ‘simplicity sells, complexity languishes’- job analysis tool to assist our clients define their

requirements…- multiple stakeholders – to profile or assess- everyone an expert in hiring – secret sauces (favorite questions, horoscopes, handwriting analysis)

Behavioral-based approaches.. takes too long, what do you know about our business, our industry, who do you know, if you worked over there you must be good… Tell me your strengths/weaknesses.What are your hobbies? Favorite book? What animal is most like you? – “an abyss of logical and legal indefensibility”

#10 Recruiting Leaders - Speed Dating

Headhunting Process

Senior level recruiting is irrational process – hormonal

Everyone puts their best foot forward –think courtship

Questions not asked – Gary Daichendt – Cisco to Nortel

“Turns out Gary was a bit of a religious zealot who not only regularly talked about prayer with his staff but also told the Nortel board he had a message from God to depose the incumbent CEO”.

Buying and selling

What I have learned … Though it covets the stature of science, selection has

always been the sum of stubbornly independent and subjective inputs – little consensus on the attributes that predict success in leadership roles or how they interact and are optimally weighted.

Little agreement on the degree to which leadership is

situational or why so many leaders appear to have shelf-lives of effectiveness.

No agreement on how best to assess candidates for the attributes we cannot agree upon.

Recruitment and selection excellence is about increasing the probability of making good hiring decisions.

What I have learned …

Companies are complex systems, and like any complex system their parts are interrelated. Recruitment and selection starts with the big picture of the system. Get the context and culture right.

Be thoughtful and disciplined – more rigor is better than less – strategy/obstacles/performance measures etc. What will they need to do particularly well to be successful? Role clarity is key ! Add process to the tolerance level of the organization

Multiple inputs are important – the mountain looks different from the top than the bottom

What I have learned …

Take your time if you can – use multiple approaches if you can. Failing that use behavioral/chronological approach

Develop Models – eg. potential to grow = intelligence/motivation/self-awareness; Character = ?; head, heart and hands

Respect the beast - beware the Love Patents – eHarmony has secured a patent for a technology

that ‘predicts with an over 90% likelihood that its couples will end up in the top quartile of the Dyadic adjustment Scale’

Prepare, constantly learn, stay current, and practice and gain wisdom..

Conclusion

Thank You