Why Selecting Leaders Is

So Difficult In Practice

Prepared by
Robert Hebert
Table Of
Content
Reason #1: Companies Often Don’t Really Know What They Need

Reason #2: Companies Reflexively Seek Balm For The

Immediate Pain

Reason #3: Companies Obsess Over The Destination While

Overlooking The Journey

Reason #4: Context Kills

Reason #5: Companies Misunderstand Corporate Culture

Reason #6: Executives Lack Self-Awareness

Reason #7: Companies Hide Behind Bromides

Reason #1: Companies Often Don’t Really
Know What They Need

Most selection systems work best in steady state situations. Think of air traffic
controllers or call center agents where many people perform identical,
repeatable, measurable tasks and where the attributes for excellence can be
extracted from those who do it best to help select others into the job.

Unfortunately, most hiring is not so straight forward. Companies, industries,

markets are highly dynamic and complex systems with many moving parts.
Context, ownership, culture, industry, competitive landscape, pace of change, life
stage and many other factors all inform the requirements for hiring leaders.

Consider a company whose high velocity growth has slowed, profits flattened, its
stock has been battered, shareholders are anxious, and the board of directors is
feeling the pressure to do something. But what? Boards often lack visibility into
their companies – they meet quarterly with summary binders in hand. They often
have only one primary touch point into the company, the CEO. Some board
members are financiers with limited operational acumen. All they know for certain
is that the fortunes of the company need to improve. Change is viewed as decisive
and buys time.

Unfortunately, this sets up all manner of potential problems for invariably what is
judged to be broken, correct or otherwise, will drive the skills believed necessary
for the fix. Hiring the right person for the wrong job is as plausible an outcome as
any.
Reason #2: Companies Reflexively Seek
Balm For The Immediate Pain

Home Depot, the GAP, and Starbucks are all examples of companies founded
by visionary entrepreneurs who built iconic global brands. Innovation and
fearless expansion fueled years of spectacular growth. Over time however
the need for ever-more sophisticated coordination, supply chains systems
and processes gained importance and concerns gradually grew as to
whether these founders were best equipped to be at the helm of highly
complex multinational businesses.

In each instance the founders were eventually replaced with ‘professional’

CEOs, executives experienced in leading large distributed businesses. In at
least one instance the person hired was a noted efficiency expert with a
reputation for managing with the precision of a Swiss clock. The founder
subsequently returned in at least one instance.

Unfortunately, the science of management must always find a balance with

the art of leadership, innovation and entrepreneurialism. While the founders
of these businesses may have been less skilled on matters of managing
global supply chains and KPIs, it was their vision and highly tuned intuition
around retail and customer tastes that made them possible. Losing that, as
Apple and Starbucks found after replacing their founders, is sure to exact a
cost.

If boards of directors focus solely on a leader’s deficiencies without

considering their strengths, they risk creating more problems than they
solve. For example, while replacing the knowledgeable and pleasant retired
handymen who inhabited each aisle of every Home Depot with a much
smaller contingent of energetic forty- year-old former military officers may
have been efficient and cost effective it did little for the experience of
shopping at the stores. As Home Depot soon learned, efficient stores did not
necessarily translate into full stores.

Organizations regularly respond to whatever is not working today by hiring

an expert in ameliorating that pain. Or, equally commonly, they hire the
opposite of the person with whom they wish to part company. Unfortunately,
focusing on symptoms or the immediate pain can obscure what is needed
for overall organizational health. This can lead to mistakes.
Reason #3: Companies Obsess Over The
Destination While Overlooking The Journey

The most common variety of this tendency is when organizations hire skills
for where they plan or hope to be while overlooking the skills required to get
there. Consider for example the venture-funded $2mm per year company
with aspirations to be a $50mm company within the next few years. Funding
is tied to their lofty business goals and everyone is steadfast in their resolve.
The firm identifies the need for a high caliber VP of Sales to drive revenue
growth and, convinced of the inevitability of their targets, hire someone
experienced in leading sales in a $50mm per year company.

A variation of this is when a company shines a light on the future at the

expense of the present state. Years ago there was a period when Computer
Associates was described as “the most dysfunctional big company in
America”. The leadership team was ‘resigned’ and plans were made to hire a
new CEO. The company’s chairman described the plan as follows, “I figure I
can clean-up whatever needs to be cleaned before the new CEO arrives
letting him or her focus on the strategy and growing the business”. After a
formal search, the company hired Canadian John Swanson, a 26 year sales
and marketing veteran from IBM.

In both of these cases the firms’ rose-tinted glasses refracted the light
towards the future at the expense of the tasks required to realize that
future. In the case of the ambitious start-up, by hiring a resident of their
destination, they overlooked the arduous hands-on work required to get
there. A process-oriented professional manager may have little experience
leading from the front and putting process in place on the fly for a $2mm
per year company. The desire to get quite this ‘hands-on’ may also be
missing.

In the case of CA, two years after he was hired the war weary Mr. Swanson
stated, “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 could not get out
of his own end. While in this instance Mr. Swanson proved to have the
versatility to deal with the situation at hand, for others the reality is that
they were hired for tomorrow’s job, not today’s. Failure often ensues.

The lesson is that effective selection processes incorporate an

understanding of the journey not just the starting or end point.
Reason #4: Context Kills
Context is the set of conditions that defines a particular organization. It
includes location, structure, culture, political environment, competition,
employee demographics, ownership, financial resources, markets and
strategy. Context affects the characteristics of a business, its prevailing
attitudes and behaviors. Early stage companies differ from mature
companies; cash-starved companies differ from those rich in resources;
Israeli companies differ from Korean companies; a branch office differs
from a head office environment; and a family business differs from a
professionally managed enterprise. Most importantly perhaps, the people
who thrive in one context cannot be assumed to thrive in another.

I had the occasion recently to chat with an entrepreneur still licking his
wounds from a stalled start-up venture. His tale is a reminder of how easily
companies misunderstand organizational context when hiring. For start-
ups, such a misunderstanding can be fatal.

The start-up in question was incubated within a large corporation. When its
technology began to show commercial promise the parent company
decided to spin it out and replace the young techie-founder with a more
experienced CEO. As the founder adjusted to being relegated to CTO, the
parent firm retained a big international search firm to conduct a global
search for a CEO who would launch the company’s technologies into the
marketplace.

After several months, the new CEO was introduced, an individual who had
been the European head of a major player in their sector. The executive
boasted ‘global perspective’, intimacy with the start-up’s products and
target markets, strong relationships within his employer of the past five
years (an important potential partner for the start-up), an excellent track
record in driving revenue growth and……. according to the announcement at
the time ‘start-up experience’. Specifically, the individual had successfully
established and scaled his firm’s subsidiary operations across Europe.

With the primary objective of growing revenues, the new CEO put his team
together and took the very young company aggressively into the
marketplace. Unfortunately, the market did not respond as expected.
Undeterred, the sales-pedigreed CEO persevered, pounding away, month
after month working harder to find customers. Eventually he was forced to
retreat and recommend to his board that they pivot the business in another
direction. By this time however, both the company’s funds and optimism
had been depleted and the parent company pulled the plug on the start-up.
Despite what the organization trumpeted when they hired him, the
‘experienced’ CEO was not the start-up savvy operator they expected or
needed. Instead he was a subsidiary savvy professional manager. He was
experienced at taking a proven business model, tweaking it for the local
market and then implementing it. Success came from localization of a
playbook. An early-stage start-up, on the other hand, is more trial and error
experimentation. It is improvisational, bobbing and weaving, shape-shifting
adaptation in response to market feedback. Growing revenues is not ‘sales’
as understood by someone working for Oracle or IBM but rather early stage
business development, missionary stuff made of proselytizing, and
evangelizing. It is creative work that requires an entrepreneur’s ear for
meaningful feedback and nose for course adjustment. And while these early
stage attributes may or may not scale as the business starts to grow, an
overly optimistic company that hires directly for the scaling stage may find
it has no company to scale.

The company in question knew it needed a ‘fighter’ and paid a fortune to

hire a professional boxer from half-way around the world. It then threw this
individual into an ‘anything goes’ local street fight. The ensuing pain was a
direct result of misunderstanding differences between the two contexts
and type of fighters who thrive in each.
Reason #5: Companies Misunderstand
Corporate Culture

Organizations hire executives to either fit into their corporate culture or to

help change it.

Corporate culture is among a constellation of ‘fit’ considerations. Tasks and

responsibilities are ‘what’ organizations want undertaken which drives the
requisite experience and skills for a given role. Performance measures are
what organizations need delivered in order for an executive to be
considered successful in a role. Motivation is the degree, duration and
intensity with which employees ‘will’, or won’t, pursue those performance
measures. And finally, corporate culture is ‘how’ all this will be carried out,
how priorities will be established, decisions will be made, and how people
will work together collectively. Unfortunately, for many organizations,
articulating ‘how things work around here’ is a constant work-in-progress, a
mishmash of how things are and how they should or could be. It is a
particularly challenging issue for organizations whose leaders struggle to
understand the impact of their own behaviors.

Many companies skirt the challenges of culture fit by hiring instead for the
textbook culture to which they aspire. They assign themselves a mix of
positively-charged cultural attributes such as dynamic, participative,
collegial, non-political, action-biased, passionate, values-driven and team-
based and then proceed to select candidates who they believe are best
aligned. The ensuring selection process, generally friendly and ‘best-foot-
forward’ in spirit, masks any underlying discrepancies between the talk and
the actual walk.

Once the newly hired executives arrive on the job however, they are often
taken aback by the actual corporate cultures into which they are immersed.
The relaxed and charming CEO, so attentive during the interview process,
proves to be a decidedly more volatile, directive micro-manager who
rationalizes his outbursts by pointing to the inadequacies of those around
him. And the non-political ‘straight-talking’ culture turns out to be code for
one where emotional control is in short supply and whoever screams the
loudest prevails. As the new executives quickly learn, the employees who
survive are those least unlikely to push for change. While the company’s
cultural aspirations may be genuine, the new executives are often ill-suited
to the current culture. They were also unlikely to have been selected for
their track record as an agent of change.
While corporate culture is misunderstood by some firms it is subordinated
by others. These firms become infatuated with market leaders whose
success they covet. Seeking the cachet of hiring from ‘successful’ firms they
focus on industry and product knowledge, customer relationships and
sophistication. Unfortunately, the corporate cultures of the firms they target
cannot be assumed or ignored.

An executive forged by the fire of a take-no-prisoners corporate culture

promises to be unsettled by and unsettling to the inhabitants of a land of
milk and honey, and vice versa. Problems of fit invariably follow and the
ability to adapt cannot be assumed.

Corporate culture is an important yet oft misunderstood variable in hiring. It

is also one of, if not the most common causes of hiring mistakes. It merits
discussion and care to get it right.
Reason #6: Executives Lack Self-Awareness
Simply stated, self-awareness matters. The more one understands their
personality, decision-making style, strengths and weaknesses, what
motivates them and how these combine to impact those around them, the
better equipped they will be to surround themselves with complementary or
compatible staff. Not inconsequentially, the better equipped one will also be
to develop their career.

Self-awareness however does not just happen but rather is a purposeful,

iterative effort of seeking feedback, reflecting and making sense of that
feedback, adjusting, taking corrective/developmental action and starting
the loop all over again. Self-awareness is not easy as it demands intellectual
honesty and a rigorous commitment to seek truth and act upon it. High
performers tend to be more self-aware than most. They are also, not
coincidentally, more likely to have sought out the counsel of a coach and/or
mentor along the way.

For naysayers however, self-awareness is nothing more than psycho-babble.

These people will argue that speed rules, time is money and executives
should reflect, nourish their souls and self-actualize on their own time.
Learning and developing is on-the-fly trial and error and experience is the
only mentor that matters. Introspection is what one is forced to do when
facing life-altering moments such as death, divorce or job loss. In other
words, self-awareness takes care of itself with the occasional pit stop to
‘take stock’ before putting the pedal to the metal once again.

Since self-awareness is either hard work or work to be avoided, many hiring

managers tiptoe gingerly around the whole subject. They under-rate or
over-rate their portfolio of capabilities and traits or they simply skirt the
issue altogether by describing themselves in motherhood terms such as
‘participative’ or ‘authentic. They then hire against the aspirational rather
than actual qualities. Some sugar coat their leadership styles by using terms
such as ‘passionate’ (likely means explosive), ‘focused’ (most likely
obsessive) or ‘detail-oriented’ (almost always micro-managing) allowing
them to ignore the real attributes as factors when hiring.

Fortunately, since many candidates are equally lacking in self-awareness

they cannot judge let alone articulate the environments in which they are
most likely to thrive. So together the hiring manager and new hire enter the
employment relationship blissfully blind and unprepared. Often only
serendipity will lead to a positive outcome.
Reason #7: Companies Hide Behind
Bromides

Several years ago, a major company trumpeted the hiring of its new CEO,
describing the executive as “a star – unshakable, self-reliant, passionate
about the big picture, a leader who really embraces change”. On the same
day, a second firm said of their newly hired CEO, “We set out to find a winner
and we did. He will elevate our company’s fortunes and take us where we
need to go”.

Generalizations are the default setting for many organizations when talking
about leadership attributes. They are safe, bordering on unimpeachable.
Who doesn’t want an ‘A’ player, a ‘rock-star’ or a ‘winner’ in an important
role? Such terms punctuate the desire to hire someone better, more
accomplished, or perhaps of a higher caliber than what might be considered
‘average’. They make the statement that the firm has set the bar high and
will not compromise.

Unfortunately, generalizing leadership requirements is fraught with risks.

Rather than focusing the selection process on identifying candidates with
specific experience solving specific problems or managing in specific
contexts, the generic search for stars becomes a beauty contest where the
best educated, best looking, best sounding candidates from the most
prestigious companies have the advantage. And since no one will ever lose
their job hiring from such organizations the strategy has the added allure of
defensibility.

Inconveniently, many such well-publicized ‘stars’ have proven to be less than

sparkling in their new roles. Remember Bob Nardelli from GE? He was one of
the prized GE executives made available after Jeff Immelt won the internal
competition to replace Jack Welch as company CEO. Described at the time
as ‘can’t miss’ by many, he was hired by Home Depot to bring rigor and
discipline to the fast-growing global concern. But excellence in one
sophisticated, world class multinational is no guarantee of excellence in
others.
As Home Depot and other firms such as the GAP came to realize, retail has
unique drivers and leadership requirements. Retail is a very fickle business
embodying elements of art as well as science. In what became the lasting
image of a failed experiment, Mr. Nardelli’s drive to implement GE styled
efficiency and profitability led to some unintended consequences.

For example, replacing the retired handymen/women who could be found in

every Home Depot aisle with younger, quicker ex-military customer service
personnel in every 4th aisle, while cost effective, had a severely adverse
effect on customer experience and ultimately brand. The stores found
themselves efficient and empty with customers having crossed the street to
Lowes.

While searching for generic leadership excellence may be on the surface an

appealing strategy, it is always prudent to let the specific needs of a
specific business guide the specific requirements for success.
 Since 1981, organizations across Canada have chosen
StoneWood Group Inc. as their preferred executive search
provider. We’re passionate about delivering the best talent,
whose drive and leadership promise to propel organizations to
the next level. Clients trust our consultants for their decades of
experience, deep sector knowledge and network of
relationships that spans the globe.

www.stonewoodgroup.com