Wrong Process = Wrong Results

I had an opportunity to read a literature review from last year that drew some pretty interesting conclusions not only for the U.S., but worldwide.
Steven Zaccaro, in his piece, Executive Talent Assessment and Selection: A Literature Review described a five step process.

• Defining executive candidate position requirements (technical skills)
• Delineating appropriate candidate attributes (cultural fit)
• Recruiting the candidate pool
• Assessing the candidate pool
• Making the final decision and "onboarding" the successful candidate

He goes on to say that the failure rate for executives is extraordinarily high and that failure to spend appropriate time on all of these elements is a probable cause.

He has some pretty good data to back him up. He cites the facts that CEO's hired after 1985 were 3 times more likely to be fired than those hired prior to that date and that the overall turnover rate for CEO's has from 6% in 1995 to 14% in 2002. In case your conclusion is so what, there is a direct correlation between CEO performance and organizational performance that has been documented by everyone from Jim Collins in Good to Great to the Department of Labor.

Another source describes the failure rate of new managers as exceeding 40% in the first 18 months. The costs of turnover is estimated at between two and five times annual salary in "hard" costs, so we aren't talking about a tempest in a teapot.

He shares some pretty interesting insights as to the causes of these failures as well. Succession planning in most organizations is frankly reactive. People don't like to consider and plan for their own departure. Another reason is that while many C level people are gifted business leaders and strategists; selection and placement are not core competencies for them. A study by Drucker shows them to have about a 33% success rate at choosing their own successor.

The literature indicates that when it comes down to it executive search committees tend to rely on their own "gut" instincts, select candidates who "mirror" their own attributes, and other human tendencies in making their selections. The least reliable indicator of success is an interview without other validating information. Similarly "track records" aren't always reliable unless the organization is facing similar challenges and an operating environment to the one the candidate faced. The skills sets at each level of management and leadership also become increasing complex- success as a middle manager or operational executive is not necessarily indicative of success at the higher level.

Last week I talked about the "leadership crisis" with something approaching 50% of middle managers rejecting providing "clarity", direction, and attending to morale issues as being their responsibility. When does the recognition that these responsibilities are part of their job occur if not built into the process? Correspondingly we know that highly engaged employees outperform their colleagues by a rate of 21% and that the "engagement" factor is synergistic to total organizational performance. The number one criteria for engagement is clarity.

Since many of our CEOs and other key executives come from "within" I don't think we can discount our investment in the process of their recruitment, selection, and development either.

So I guess it might be time to ask ourselves when we are ready to accept the idea that using the same process over and over and expecting a different result is a bit silly. Given the state of our economy, the costs of "presenteeism", and turnover shouldn't we consider making some changes?

Do We Have A Leadership Crisis?

We are in an interesting time and as you know this whole topic of leadership is a passion of mine. I become especially concerned when we can use language like 'jobless recovery" with a straight face.

I had a chance to read John Baldoni's blog on Harvard Publishing-http://blogs.harvardbusiness.org/baldoni/2009/11/what_it_takes_to_lead_now.html and I have to tell you that it didn't provide me any comfort.

Baldoni references a recent McKinsey and Company survey citing that only 48% of managers believe that providing inspiration during the crisis is their job and 46% feel a responsibility to provide direction. Even more alarming the numbers drop to 45 and 39% post crisis. To make me feel even worse only 30% felt responsible for motivating their employees during the crisis and it drops to 23% post crisis!

Let me sum it up, less than 50% of the managers surveyed believe that inspiration, direction, motivation, and accountability are essential for managing corporate performance! I don't know about you, but that scares the hell out of me!

The defenders of course say that those are "senior management" or "executive responsibilities". They see their roles as tactical, gutting it out on the day to day. The problem is this is the "corps" of where that future leadership comes from. When does the age of enlightenment kick in and they recognize and develop their skills in these other areas.

When you add these facts to those including that 40% of "new" managers fail in their first 18 months on the job, usually for "non-technical" reasons, the costs of failures is estimated at between 2 and 4 times annual salary, and less than 30% of the organizations in the world have an employee engagement strategy it provides a pretty grim picture.

To quote Baldoni; "Execution without adequate leadership is short sighted. It will carry a company through a quarter or a year, but it will not provide a foundation for what organizations really need to do, and that is to grow."

I agree with Baldoni and also with Marcus Buckingham -
“Effective leaders don’t have to be passionate. They don’t have to be charming. They don’t have to be brilliant […] They don’t have to be great speakers. What they must be is clear. Above all else, they must never forget the truth that of all the human universals […] our need for clarity is the most likely to engender in us confidence, persistence, resilience, and creativity.”

A recent study by Rhoads and Whitlark also discusses that the crucial foundation for engagement (which by the way yields some wonderful byproducts in areas like productivity, sustainability, and profitability) is trust. Doesn't seem like we are moving the ball in the right direction.

I see time and time again where we seek to systematize leadership- to define it in terms of metrics and statistics. Looks like once again we are missing the point that it is relationships and people.

"Presenteeism" costs the U.S economy an estimated $200+ billion per year and a majority of our managers don't see the underlying issues that cause this phenomena as being their responsibility. We are in deep shit!

I guess these statistics say a couple of things to me:

• I am hoping that the organizations I am working with are represented in the 48% who "get it".
• We need to re-evaluate or management talent acquisition and development processes in a big hurry if we are going to have to make meaningful changes.

So I guess if I was leading an organization I would be asking myself - "Where is my management team on these issues?" and maybe even more importantly, " as a leader what am I doing about it?"

So I guess I have answered my own question- now I would pose one to you " Where do we go from here?" By the way, I wouldn't suggest turning this over to your HR department to fix. This is a key leadership issue.

Change Is In the Air- I Think....

It has been an interesting couple of weeks. I have heard from several people I am close to that they have found important new roles that they are pleased about. I have decided to make a change and sharpen my focus in my own endeavors. The stock market is up- at least temporarily. Many economists are declaring the recession over.

The first thing that is interesting to me is the issue of the economy. I have heard "experts" begin to refer to this as a "jobless" recovery. I don't get that. Is that like Jumbo Shrimp? How to we pronounce the recession over if we have large numbers of people who are still unemployed or underemployed? Because the stock market is up? How is that affecting your personal financial well being?

I read some information recently about a change that concerned me, but didn't shock me. The "change" was that the large financial players have been using the bailout money to fund investments in the market rather than reinvesting in programs and things that really benefit the average American. Coming from financial services recently that doesn't surprise me that much. Most financial service organizations stopped making their profits in the traditional sense; the "margin" between what they paid for deposits and what they make loans for some time ago. They borrowed some "creativity" from other industries and found that there are much better opportunities to generate fee income for "services" such as overdraft protection, ATM access, and other transaction fees.

The interesting thing to me is that they are missing huge opportunities to increase their income and benefit their stakeholders by utilizing things like supply chain management and TQM techniques, but they have been relatively slow adopters.

This weekend the House passed the most sweeping legislation since Medicare on health care reform. Depending on which side of the equation you represent this is either a huge step forward or the continuing "socialization" of our economy. I am suspending judgement. I think our current health care system has significant flaws in a number of areas, notably our ability to deliver high quality health care in an efficient and cost effective manner.

I had hoped that the recession might cause more employers to examine their relationships with stakeholders, especially employees and to address flaws in our models that have existed for years. In many cases I feel like we lost traction. We went back to the "be grateful you have a job model".

We need a new leadership model. Much of our leadership modeling is based on financial and economic metrics- i.e. a "jobless" recovery. When I read about the stresses and reactions from those stresses I am concerned that we are kidding ourselves.

I have decided to focus my "change" efforts at a very basic level, by hopefully effecting the way organizations select and orient their senior leadership teams in their hiring and selection process. My colleague, Joseph Skursky refers to this as "hire hard-manage easy".

I see things on the web asking whether it is OK to probe employee's values alignment with your organizational values before you hire them. My answer is "duh", of course. You can't and shouldn't get into protected areas, but do you really want people in your lifeboat who don't support or understand your core values? I have to tell you after thirty years of experience, changing somebody's values is really hard. It is much easier to align them upfront.

As an employer you also have the freedom within reason to set the values of your organization and require compliance if not commitment to those values. You aren't saying to those who don't share your values they are bad people, you are saying they would be better suited in an environment where they share the organization's values. Trust me, people who are technically competent , but don't represent a good "fit" will never really be outstanding performers.

So I think that we are at a stage where we accept the status quo or we become our own personal change agent. I know which choice I have made, what about you?