How to Avoid Executive Hiring Mistakes

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Let’s face it – making the wrong appointment at any level is costly and frustrating. But at a senior management or executive level, the wrong person in the wrong job in the wrong company is just….well….VERY wrong!

Which everyone realizes, hence the laborious rounds of interviews, the psychometric assessments, the risk profiling, the reference checking, etc, in order to avoid expensive and potentially destructive mistakes.

The reality is – none of the above is a perfect tool for successful hiring. Of course, we know that both interviewing and reference checking are relatively subjective activities. And psychometric assessments….well, the companies that sell these would have us believe that their assessments can provide scientific answers about potential hires. But let’s think about it – if this was possible, there would never be any issues with under-performance, poor fit or lack of management and leadership skills.

So the bottom line is, there will always be a measure of risk when you take on a new hire. Here are some tips on how to minimise these risks as much as possible.

  1. Accept that there are NO PERFECT PEOPLE

Once you’ve stopped looking for the holy grail, you can manage your expectations. Because one of the biggest risks to a successful appointment is the gap between the wish list and the real thing (a live human being with imperfections that will require a measure of compromise).

  1. Look for patterns in performance, both good and bad

By the time a professional reaches senior management, he has usually had a few jobs in a few companies – so he’s moved about a bit. Which is a good thing, because you can then ask him the golden question – why did you leave? Ask this question for each career move or role change, and you’ll start to see some interesting and insightful patterns. You’ll spot the people who chase money, who leave on good or bad terms with their previous bosses/ companies, who have ‘issues’ or success stories. And when the answers don’t add up, there’s probably something fishy. So keep asking until you’re satisfied. Because the greatest chance of future success is determined by past success.

  1. Let candidates talk

Particularly when you’re not entirely sure. My strategy is to give candidates ‘enough rope…’ so to speak – and then wait for clarity to reveal itself. Which it will, if you have a bit of patience and time.

  1. Don’t be intimidated by great CV’s

I can’t recall the number of times in my very early career when I would be ‘impressed’ by a candidate prior to even entering the interview room. For some reason or another – usually their seniority, the amount of money they made, the prestigious companies they’d worked for, etc. And this would result in me NOT asking all the questions, NOT getting into the substance, and accepting weak or general answers instead of pushing hard for detail and specifics.

  1. Make sure that the appointment will be MUTUALLY beneficial

The key to a successful appointment is when both parties – the employer and the candidate – can see what’s in it for them, respectively. If you start wondering why the candidate is keen on the role (it’s a sideways move at best, the package upside is not going to be all that competitive, the challenges and growth may be limited, the demands of travel are going to be excessive, etc), you should be on the high alert for an appointment that will be short-lived. So the fact that a candidate may be able to ‘hit the ground running’ may not be as brilliant as you think….in the long term.

I hope you get some value out of these tips and that you never make a hiring mistake – ever!

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How to turn off a headhunted candidate

In the last while I’ve had some interesting feedback from candidates after their first, second, third (or in some cases sixth or seventh) interview with a prospective new employer…..along with a bit of a moan from them about ‘stuff’.

The ‘stuff’ includes such petrifying experiences as being kept waiting in the reception area before being seated in a meeting room – headhunted candidates are usually VERY concerned about confidentiality, as they should be, and it is potentially career limiting to be seen by someone you know in the lobby. Try as you will, there is no mistaking the pre-interview ‘aura’ – any alert person can pick this up – and so paranoia about waiting out in the open is a pretty valid emotion!

shutterstock_122625739Being kept waiting beyond the appointed interview time is one of the biggest pet peeves of headhunted candidates. They are business people that made the effort to be there on time and keeping them waiting sends the signal that your time is more important than theirs. And even more irritating is being blasé about having kept them waiting.

Then, there is the ‘read the CV’ grumble! By the time the headhunted candidate is on to their second or third interview with (usually) various individuals from the executive team, he/she has an expectation that a) they will have read their CV, and b) they will have conferred amongst themselves regarding which questions have been asked and answered so that the same slew of questions and answers are not repeated in each meeting. A pretty reasonable expectation, one would think?

Another little aggravation is the inevitable interview question ‘So why do you want to leave your current company?’. This particular question may seem completely innocuous and without any malicious or negative intent…but if there’s one thing that gets the headhunted candidate’s blood to boil, it’s this one! And assuming that everyone in the room (and on the interviewing panel) knows that the candidate has, in fact, been approached by an executive search firm (yours truly), this would also seem understandably annoying.

So here’s the thing – companies spend LOTS of money, time and effort trying to woo top people to their organisations. They strategise, they plan, they commit the time of their executive team to the interview process, they utilize the services of the best headhunters around to bring the best talent to them. And then ‘stuff’ happens in the interviewing process that turns the candidates from interested to off!

Of course, savvy companies have the interview process so waxed that headhunted candidates can’t wait to sign on the dotted line.

Is the executive bonus system botched?  

The executive bonus has become a somewhat controversial topic in recent years and, in some countries, even the rallying cry for those wanting to apportion blame for the causes of the Global Financial Crisis. Perhaps it is no coincidence that 2007, the year the economy began its decline, was a record year for executive bonuses.

However it is not just the ‘Wall Street investment banker’ who is the recipient of remuneration outside the traditional salary payments. Most executives today receive some form of bonus remuneration as part of their total compensation. Often it includes both a cash payout and a substantial stock award.

shutterstock_149304473The original objective of the bonus system was as a means of incentivizing performance by motivating excellence in terms of employee output. However, increasingly bonuses are associated with motivating other than excellence – the reward itself has become the motivation.

At best many would argue that bonuses seem to be delivered merely for ‘turning up’ rather than for delivering excellence. A great example is the many top executives who were fired for lack of performance that were compensated with enormous golden parachutes, the popular exit “bonus”  for having failed. At worst they can actually incentivize ‘selfish’ behaviour which may be contrary to the long term best interests of the organisation or its stakeholders. Generally designed to reward quarterly performance it actually removes the incentive to perform well in the long term, thereby having a decidedly negative impact on shareholders.

In the hunt for the best and brightest, many organisations have convinced themselves that high bonuses are necessary to attract the best talent, despite the fact that contemporary research does not necessarily support this view.

While we are not advocating the removal of bonuses, indeed this would be extremely difficult given how they appear to have permeated the executive mindset, nevertheless there are a number of ways suggested to improve their effectiveness:

  1. Bonuses are only effective in incentivizing excellence for individuals who have direct control over their own performance – ie: external factors should be limited.
  2. Bonuses should always be discretionary; a culture of automatic bonuses negates their effectiveness. An ‘automatic bonus’ is a camouflaged additional salary or fixed compensation, not an incentive!
  3. Bonuses should be associated with long term collaborative behaviour and thinking – which is much more in the organisation’s interests rather than short term individualism. One way to ensure that is to award bonuses with the stipulation that they be used to purchase company shares. That way the executives interests are better aligned with the shareholders.
  4. The allocation system should be reflective of differences between employees in terms of their performance.  Differences in skills and abilities should be reflected in performance outcomes. If the organisation is not prepared to do this it should not pay bonuses.
  5. A bonus system must be both objective and subjective. It should use an objective criteria to measure outcomes and performance and it should do so on the basis of both short term and long term performance to ensure the future health of the company as well. It should also be a subjective system which looks at how the outcomes were achieved. This will ensure that the way people achieve results will not be ignored, ensuring unethical behaviour is not motivated.
  6. Finally and most importantly, but surprisingly often least recognized, is the importance of the bonus system being clear, transparent and understood by all.