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Avoid Hiring Mistakes

March 3, 2020

In a March 2009 article in the Financial Times, Brooke Masters quotes Kevin Kelly, CEO of executive search firm Heidrick & Struggles: “We’ve found that 40% of executives hired at the senior level are pushed out, fail, or quit within 18 months. It’s expensive in terms of lost revenue. It’s expensive in terms of the individual’s hiring. It’s damaging to morale.”

Almost every business day since August 2, 1996, the day I founded Allen Austin, I study one or more failed executive placements to determine the reason for failure. At the time of this writing, I have examined 3,263 CEO and executive level placements that failed. My conclusion is that all of these failures could have been predicted and, therefore, prevented.

During the hiring process, we rely on simple job descriptions and résumés. We typically do not define all of the critical success factors and performance objectives in advance. And because we cannot fast forward the tape and look into the future, the selection process can become more like a beauty pageant. We hire a new executive because he or she looks good, attended the right schools, knows the right people, and is oh so charming. Then, in three to six months, we start to have that uneasy feeling in our gut that suggests that things are just not working out and we might have made a terrible mistake.

So, how can organizations improve their chances of hiring the right person? Here are some things to keep in mind:

Focus on values. Executive hires go awry when the values of the organization and those of the candidate are not in alignment. This is not about good and bad, right or wrong. It is about fit. Some organizations value innovation, some do not. Some companies value creativity and risk taking while others expect their leaders to be good soldiers. Be very clear about the company’s value system and about the kind of individual you seek.

Don’t ignore culture. What behaviors do you seek? Behavior that is revered in one company will get a person fired in another. Also, don’t assume that culture remains constant throughout an organization. Each level within an organization has its own subculture complete with its own set of land mines, so culture must be considered even when a candidate is promoted from within.

Most organizations have what I call an execution style, which is sometimes referred as “the speed of the company.” Some companies are very fast while others are painstakingly slow. Much of this is driven by the nature of the board of directors and the ownership structure. A new CEO can become frustrated at the speed (or lack thereof) at which the board will allow him or her to effect significant changes within the organization.

Establish specific performance expectations. Fast forward to three months, six months, one year, and two years beyond the date of hire. How will you know that the new executive has been successful? How will the numbers look different? Will the organization look different? Will the capital structure be different? Performance metrics should be specific, measurable and have a time table. They may or may not be tied directly to financial statements.

Has the person been successful in the past? Success is never a surprise or an isolated event. Regardless of the nature or scope of their position, successful people exhibit behaviors that unsuccessful people do not. Successful people are successful time and time again, over long periods of time.

Consider the environment in which the candidate will be expected to operate. Ideally, he or she should have proven ability to lead in similar situations, with similar autonomy, resources, support and competitive landscape, just to name a few. Also consider that different leaders thrive in different situations, including turn-around scenarios, rapid growth periods and maintenance mode.

High performance leaders consistently lead in a manner that inspires others to trust and follow them. They know how to connect with the workforce in such a way that everyone in the organization understands the mission at hand. They are involved in all of the critical areas of the business: strategy, people systems and operations.

Don’t overvalue first impressions. Many bad hiring decisions are made because we decide too soon. We are too emotional, we do not know what we are looking for, or we do not know what questions to ask. Traditional interviewing techniques used by many managers are so flawed that they produce results just marginally better than a flip of the coin.

Sometimes “A” players are overlooked because they do not meet some superficial standard or because they do not perform brilliantly during the interview. Most managers do not realize that some of the most stellar performers are not great interviewers. Conversely, I’ve seen many “professional interviewees,” who are substandard performers. Many of these candidates perform so remarkably in interviews because they have so much experience interviewing! Here’s the truth: a candidate’s superior interviewing skills will not add one iota of value to your company.

Hone your interview skills. Weak interviewers fall into three broad categories. The first category includes those who are too emotional. They make very quick decisions based on first impressions and personality. The second category includes those who are overly intuitive, to the extent that they short-circuit the process, superficially assessing only a narrow group of attributes. Finally, there is the technical interviewer, who is great at fact-finding, but lacks decisiveness.

Effective hiring constitutes 80% of a manager’s success. One of the best ways to get to the root of this challenge is to ask your candidate to describe his or her hiring successes and failures. Because the selection process is tedious and time-consuming, it’s all too easy to choose the energetic, attractive, affable and articulate candidate who may fall far short of expectations once on the job.

The very best interviewers and hiring managers understand that the hiring decision must be intuitive to some extent. There is never enough information to match abilities, needs, and interests completely. Yet they recognize that the hiring decision must be based on an analytical, fact-finding process and carefully crafted goals and objectives.

Every executive search starts with a comprehensive list of questions. The bottom line is, if you do not ask the right questions, the answers do not matter. Whether you use a professional search firm or not, the process is the same. Do these things right the first time, and you will reap the rewards. Take short cuts, and chances are roughly 50% your new hires will fail within eighteen months.

And no business can afford that.