Differentiating Executive Talent: A Case Study on What Can Go Wrong
The right leadership can make or break a company. Yet, as critical as leadership is to the success of an organization, many fail to take a strategic, holistic view when assessing executive talent before making an offer. The following case study (a fictional amalgamation of real-world examples) illustrates what can go wrong when leaders are hired for the wrong reasons, based on the wrong criteria.
A Fast Track to the Wrong Job
Carl Simpson had an impressive pedigree: a bachelor’s degree and MBA in finance from Ivy League schools, followed by a series of roles with increasing levels of responsibility. He began his career in the private equity (PE) world, overseeing the transformation of PE-backed family businesses into lean, high-growth portfolio companies.
Carl excelled at grooming the teams of young, inexperienced, but eager-to-learn professionals he inherited with each PE transaction. Since most family-owned organizations are relatively flat, without the levels of bureaucracy typical of a large corporation, he rarely had to advocate for his initiatives. In some respect, he had free rein to do as he saw fit. As long as his ideas produced solid returns, Carl remained in good stead.
As often happens with stellar performers, Carl’s track record garnered attention, and he was soon recruited by another company. The CEO of a much larger firm in a related business lured him away by dangling an attractive proposition: Lead the transformation of a large, slow-moving, conservative organization into one that operates and makes decisions more nimbly and aggressively.
The hiring process was short and sparse: After just one interview with the CEO and no assessments, Carl received an offer. Since Carl had already led a string of successful organizational transitions, the CEO was confident he was a great fit for the role. Still basking in his most recent achievements, Carl was equally confident. There was never a question about whether his style and approach would work in this environment or whether his experience prepared him well for a different role. The idea never crossed either party’s mind.
Reality Sets In
Carl joined the company with what he perceived as a clear mandate: To transform the organization from a bloated, slow-to-move entity into one that moved faster and more decisively on investment opportunities. Seeking a quick win, he proposed an initiative to consolidate two highly successful teams that shared many clients. It was a big, bold move designed to reduce layers, consolidate roles, cut costs, and improve efficiency—the very model of transformation. He reasoned that a lean, streamlined team would be more responsive and more agile, just as the CEO was hoping.
Because Carl believed he was charged with effecting broad change, and because he’d never needed to champion his ideas before, he charged full steam ahead without attempting to build relationships or secure buy-in. Yet, the two teams he was proposing to consolidate were led by peers—important stakeholders he needed to develop relationships with before proposing to upend their organizations.
Unfortunately, the only people in the company who knew about Carl’s mandate were Carl and the CEO. There were no leadership meetings to lay out a vision of where the company was headed. No discussion about transforming the business. And no explanation for what Carl was hired to do. Simply put, the CEO didn’t set up Carl for success.
The combination of Carl’s leadership style and lack of experience influencing stakeholders, building relationships, and advocating for new ideas only made matters worse. He wasn’t big on networking and didn’t naturally develop bonds. Since he hadn’t needed those skills in his previous environment, he hadn’t had the opportunity – or incentive – to develop them.
When Carl’s transformation plans met with resistance, he didn’t know how to adjust. Worse, the CEO didn’t step in with support or guidance. The change initiative went nowhere, and Carl became a pariah. In a very short time span, he went from a highly touted star performer charged with leading the company’s transformation to a leader who lacked the skills and awareness to operate in this new environment. The CEO feared Carl would leave the company, and he was right: He resigned just nine months after joining.
How Did It Happen?
Carl and the CEO each made errors that led to a disastrous outcome.
Carl mistakenly assumed the CEO spoke for the entire executive team in hiring him and giving him a mandate for widespread change. And he assumed the skills and approaches that served him well in his past roles would work equally well in a different environment. As he later shared with an executive coach, “Suddenly, everything that worked for me before no longer seemed to work. I’m like a superhero who’s lost his superpower.”
The CEO made the mistake of assuming that Carl’s past performance guaranteed his success in a new, very different environment. So, he greatly shortcut the hiring process, failing to diligently evaluate Carl to ensure he was the right fit for the job.
The same assumptions, beliefs, and behaviors that make a leader successful in one company can work against them in a different company, because the environments are rarely the same. It’s a classic problem, which author Marshall Goldsmith explored in his book, What Got You Here Won’t Get You There. When hiring managers fall under that spell, as the CEO in this case did, they assume fit, gloss over risks, and ignore weaknesses, creating a “halo effect”— one of many biases that can derail the talent selection process.
What Could Have Prevented It?
Sadly, Carl’s experience isn’t unusual. In fact, research from the Corporate Executive Board indicates that as many as 50-70% of leaders fail within the first 1½ years on the job (a figure that includes both internal promotions and external hires). And while an inadequate hiring process wasn’t the only problem that led to Carl’s quick exit, it was one of the biggest contributing factors.
A more rigorous approach to differentiating candidates during the talent selection process is vital to avoiding the pitfalls that can lead to poor leadership hires that don’t succeed and don’t last. By replacing subjectivity with objectivity, discerning between past performance and future potential, and moving from single-facet evaluations to a multi-faceted and multi-trait assessment method, organizations can be much more effective in filling critical leadership roles with the best-fit candidates.
Part 2 of this series will explore a framework for differentiating executive talent to avoid biases and optimize success.
The Leadership Advisory Practice at Odgers Berndtson helps organizations discover and develop leaders, strengthen value-creating teams, and prepare for what’s next. Learn how our highly experienced assessors and coaches can help you and your team make a positive impact on your organization and those around you.