While general elections call upon the public to choose a new leader, in the corporate world many decisions about hiring and promoting leaders are made behind closed doors. Many business leaders would argue that they are more level-headed than the public when selecting leaders, and their methods more objective. Yet their track record of appointing the right people in these roles is far from perfect.
Research from CEB, now Gartner, shows that nearly half of leaders (46%) moving into new roles fail to meet their business objectives in the first 18 months of their tenure. The ripple effect of a leader’s under-performance creates significant risk and cost for the entire business, affecting the engagement and productivity of their direct reports, and potentially stalling critical new strategies or causing significant business opportunities to be missed.
Leaders often fail because they’re either not ready to step up to the challenges of the role or they’re not the right fit for the role and its context. Too often this is the result of decisions about hiring and readiness being made in a vacuum without objective data.
Scenes from House of Cards capture this beautifully – incumbent leaders huddled with people from their inner circle in a private room discussing the fate of their frontrunners. Each takes a turn to nominate their preferred candidate for the job and strategises on how to mobilise other key players for best effect.
Putting aside the obvious issues with hiring accuracy and transparency, this approach may be well-intended but it is hugely biased and doesn’t take into account any of the factors that determine a leader's success in-role.
Just like any other role, leadership performance can be predicted. Using science-based assessment tools companies can objectively measure a candidate’s skills and experiences against those required to do the job, and then match these to the context – the unique set of situations and challenges that is specific to each leadership role. So for example, leading through mergers and acquisitions requires different skills and experiences to those that grow the business through innovation. By adopting this context-specific approach companies are three times more likely to identify leaders that will succeed in the role than with human judgement alone.
Interestingly, companies that don’t consider the context of their leadership positions are more likely to hire, or promote, the wrong individuals into the wrong roles. This can lead to higher turnover and the firm constantly having to hire external candidates who are ultimately more expensive, slower to on-board, and more likely to fail.
It’s crazy to think that every year organisations invest vast amounts of money in assessing and selecting the right candidates for virtually every role and yet they don’t apply the same rigour, data and objectivity to decisions about leaders. And the effect of making the wrong leadership decision can be the most harmful; with an immediate, negative impact on an organisation’s momentum, reputation and bottom line.
To turn the tide, HR and business leaders must challenge some of the long-established approaches (including current leaders’ mindsets) by drawing a line under the drama of secret meetings and lobbying for favoured candidates. Instead they should use assessment tools and data to better understand and measure the leadership profiles that are needed both now and in the future.
Nick Shaw is managing director, UK and Ireland at CEB (now Gartner)
