Talent Differentiation: A Framework for Executive Assessment and Assimilation

30 Sep 2020

Talent Differentiation: A Framework for Executive Assessment and Assimilation

Companies need a new framework to guide and inform their talent decisions, which will move these discussions from transactional and tactical to long-term and strategic.

Background

Carl Simpson (not his real name) had an impressive pedigree: Bachelor’s and MBA degrees in Finance from Ivy League schools and a series of roles with increasing levels of responsibility overseeing the private equity-backed transformation of family businesses into lean, high-growth portfolio companies. He groomed the young, inexperienced, and eager to learn teams he inherited into strong leaders. In these relatively flat organizations, he never really had to sell or champion his initiatives – he had free rein to do as he saw fit and then let the returns speak for themselves.

In 2019, impressed by his track record, the CEO of a much larger firm lured Carl away. The offer was to lead a long-tenured, highly experienced team in transforming the firm’s investment posture from slow moving and conservative to agile and aggressive.

The interview process was short, and the deal was sealed. Afterall, Carl had led a string of successful organizational transitions, and both he and the CEO were confident that Carl’s style and approach would work in the new organization.

Within a few weeks of joining, Carl’s manager announced that he would be retiring soon, and his team was close to mutiny because his leadership style undermined their work.

Then, seeking a quick win, Carl championed an initiative to consolidate two highly successful teams that had many clients in common. This was what transformation was all about: big, bold, fast. Reducing layers and roles in the organization, he reasoned, would significantly decrease costs and enhance efficiencies as well as allow the firm to be more responsive to client needs. Two of his peers led these teams, and the CEO had been promoted from one of them.

He got no buy-in or support, and the initiative went nowhere.  

When asked what went wrong, he stated, “I assumed that the CEO spoke for the entire executive team when he hired me and that I had the mandate to do what was necessary. Everything that worked for me before suddenly no longer seemed to work. I’m like a superhero who’s lost his superpower.”

Then COVID-19 hit, which further isolated Carl from stakeholders as well as his new manager and his team.

If you’re still following along, you can probably guess how this turns out. In a span of just a few months, Carl has gone from the promise of a new and highly touted star performer who is going to change the company to an executive with questionable judgment, poor people management skills, and a lack of self-awareness. As a result, he was identified as a flight risk and, soon after, he left the organization.  

It is a classic mistake: the same assumptions, beliefs, and behaviors that make a leader successful elsewhere can end up holding that same executive back because the new environment is rarely the same as the old environment. It is a topic that Marshall Goldsmith explored in his classic book, What Got You Here Won’t Get You There.

What is not covered in Mr. Goldsmith’s book is that hiring managers and their companies also fall under the same spell of this delusion. As a result, fit is assumed, weaknesses are minimized, and risks are glossed over.

It is hardly surprising then that 50% to 70% of executives fail within their first year and a half on the job, with 3% of these failing "spectacularly" and 50% "quietly struggling."[1]      

These numbers indicate the need for a new talent differentiation framework that reliably discerns between static and dynamic contexts, between performance and potential, between subjectivity and objectivity, between internal and external candidates, and between onboarding and assimilation. This new perspective will help to move companies and managers as well as candidates from a transactional and tactical talent approach to one that is more long-term and strategic, characteristics that are even more urgent and compelling in our at home, more isolated virtual offices.

These elements are explored in more detail below.  

Single Facet, Static Fit vs. Multi-Facet, Dynamic Fit

An oft-repeated maxim is that “Past performance is the best predictor of future performance.” In Carl’s case, this did not hold. When comparing scenarios, economists use a handy phrase called “ceteris paribus,” which means “holding all things equal.” Carl thrived in similar contexts, i.e., fast-moving, flat organizations where he had the authority and flexibility to make major decisions. In reality, no two situations are identical and the greater their differences, the less likely the past will resemble the future.

Within the talent differentiation framework, an executive’s past and recent performance must be examined relative to the demands, constraints, and prospects of the new context. From a people management perspective, for example, what kind of team will this new leader be inheriting? What are members’ strengths, weaknesses, and career goals? And does this new executive have the experience that matches their developmental needs and growth opportunities?

In the above example, the CEO needed someone who was disruptive, who had an appetite for risk, and who could capably challenge and alter the status quo. On the surface, Carl met this description because he had successfully driven cultural change in the past. However, this single element crowded out other critical aspects of fit such as team management and stakeholder persuasion.

By failing to acknowledge that fit is multi-faceted and dynamic, the CEO was unable to compare Carl’s experience and capabilities against the current and anticipated requirements and realities of the role, company, and culture.

Thus, for example, the CEO needed to systematically evaluate Carl’s ability to:

  • Define and communicate a long-term vision and strategy;
  • Align his organization around this new direction;
  • Sell his ideas and influence others around his agenda, particularly in light of his manager’s imminent retirement;
  • Manage an experienced and long-tenured team; and
  • Navigate an organization that is consensus-driven, bureaucratic, and risk-averse.

Spontaneous vs. Planned Assessment Practices

Despite the significant research on the value of conducting assessments in a structured, data-driven way, many companies allow managers to “go with their gut” when making critical hiring decisions. Ironically, these are frequently the same senior executives who rely on financial and other data to drive investments or acquisitions.

Without such structured techniques and the metrics that go along with them, however, decision makers fall victim to mental shortcuts as well as biases like first impression, confirmation, halo, and similar-to-me, which lead to subjective and, frequently, subpar outcomes. Indeed, one survey found that 80% of turnover could be blamed on mistakes made during the selection and hiring process and that nearly a third could be attributed to an overreliance on the hiring manager’s evaluation.[2] As described in Daniel Kahneman’s Thinking, Fast and Slow, these heuristics will occur quickly and automatically unless a deliberate and effortful approach is taken.

Returning to our example, the CEO should have partnered with HR to identify the key competencies required for success. In this role these competencies should have included:

  • Leading the organization (e.g., strategic clarity, organizational alignment, change management);
  • Leading others (e.g., talent development, team building, stakeholder influencing); and
  • Leadership agility (e.g., thinking dexterity, interpersonal savvy, personal spirit).

Online assessments and structured interview questions should then have targeted the above areas with ratings or other numerical outcomes and data that support candidate comparisons and differentiation. For example, the CEO needed to ask Carl to provide examples of how he influenced stakeholders to buy into his strategy and plans as well as how he overcame resistance. Carl’s responses, coupled with results from his online testing, would most likely have revealed that his experience, approach, and style would not have worked well in a larger firm, particularly without significant coaching, support, and guidance.

As an aside, these same best practices apply to the evaluation of internal candidates. When filling an executive role, many companies use a different methodology to assess both internals and externals. When asked why, hiring managers will state, “We know the internal candidates because they already work for us.”

It is no wonder then that less than a third of respondents to a recent survey were either dissatisfied or extremely dissatisfied with succession planning outcomes.[3] Moreover, among those organizations who believe they have high quality leadership, on average only 12.5% believe they have a strong future bench, with a low of 5% in the manufacturing and health care sectors and to a high of 22% in the energy/utility industry.[4]

Within the talent differentiation framework, all candidates must be evaluated in exactly the same way. This serves multiple purposes: first, it ensures that comparisons are performance-based, valid, and consistent; second, it communicates to internal candidates that they have been fairly and objectively considered; and third, the results help to support ongoing development and succession management efforts. Further, all internal candidates get feedback, whether promoted or not, which enhances their self-awareness as well as career and growth potential.

Leveraging multiple well-developed, validated, and metrics-driven assessments, coupled with interviewer training, will not only reduce bias, but also lead to much better performance predictions than the unstructured alternative, an outcome that is particularly salient as companies seek to enhance their diversity. Further evidence as to the importance of this approach: a recent study presented in the Harvard Business Review indicated that the performance of top employees is double that of average employees in highly complex jobs and that adding a star performer to a team boosts the effectiveness of other team members by up to 15%.[5]

Onboarding vs. Assimilation

Most new executives are expected to figure out how things work in their new environment. A new laptop, online access to insurance and 401k plans, and a few introductions frequently represent the extent of most companies’ “onboarding” process. While organizations with very effective new hire programs have three times more highly engaged new employees[2], less than a third of companies actively support new hires in adapting to their new culture and up to a fifth of new hires can take more than nine months to have a full impact.[6]

Carl was hired to change the organization as he had successfully done in several other organizations. Yet, he was a leader using a roadmap for essentially what was a different country. Carl was on his own as his manager shifted into a retirement mindset and other leaders remained hands-off. He needed one or more guides who could help him navigate cultural landmines and sacred cows, understand each stakeholder’s style, goals, and agenda, evaluate his team to understand their needs and opportunities, and raise his self-awareness via surveys and other feedback loops.

Within the talent differentiation framework, all of the data collected during the selection process are used to discern the level of support and development a new hire will need to be successful, an approach that less than a quarter of organizations actually take.[2] It is a deliberate, thoughtful process which recognizes that:

  • There is no such thing as a perfect candidate;
  • Each leader joins with a unique profile of strengths and risks that need to be thoroughly identified during the screening process;
  • This profile must be considered against the multi-faceted and dynamic context of the role as well as the culture and company; and
  • Ongoing mentoring, coaching, and development must be provided to maximize opportunities for individual, team, and organizational success.

The new differentiation framework emphasizes assimilation over onboarding because the former views talent as a deliberate, long-term, and strategic investment. Such planning means that little is left to chance, particularly in this time of pandemic-driven isolation. For these reasons, assimilation is as important as the selection process because it galvanizes resources such as coaches and mentors based on the new hire’s leadership profile and leverages measurement and feedback, all of which encourage integration and allow for course correction.

Summary

The current COVID environment has actually magnified to businesses and their leaders that they must be able to continually adapt to the needs of team members and employees as well as stakeholders and customers. The new differentiation framework leverages data and planning to acknowledge and discern strengths from risks, performance from potential, one context from the next, internal candidates from external ones, and onboarding from assimilation.

With this in mind, organizations and hiring managers must be more deliberate, structured, and methodical in how they assess and assimilate candidates. This must include going beyond experience and capability to determine candidates’ potential to effectively deal with new, unfamiliar, complex, and fluid situations.

 

[1] 4 common reasons half of all new executives fail

[2] Global Selection Forecast (2012)

[3] Succession Matters (2015)

[4] Global Selection Forecast (2018)

[5] What Science Says about Identifying High-Potential Employees

[6] Onboarding Isn’t Enough (2017)