What Are the 3 Obstacles to Overcome while Selecting Senior Executives?

Editor's Note: Take a look at our featured best practice, Recruitment Strategy Toolkit (606-slide PowerPoint presentation). Curated by McKinsey-trained Executives Boost Your Hiring Success with the Ultimate Recruitment Strategy Business Toolkit Are you ready to revolutionize your recruitment process? In today's fast-paced business environment, finding the right talent isn't just a task--it's a critical [read more]

Also, if you are interested in becoming an expert on Human Resource Management (HRM), take a look at Flevy's Human Resource Management (HRM) Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

* * * *

Mediocre people occupying senior Leadership positions is one of the chief reasons for the fiasco and humiliation that organizations like Enron and WorldCom faced.  The practice of recruiting average people at the top is omnipresent and often goes unnoticed until the results begin to surface, which is typically too late for any intervention.

Smart people decisions matter a lot in achieving profitability.  Research indicates that a return on average human asset of 5% is typical in many industries.  However, a senior executive selection of 2 standard deviations below the average yields -15% return on asset.  An executive selection with 2 standard deviations above average causes 25+% return, which is 5 times the average.  Increased investment in finding and hiring the best senior executives fetches returns to the magnitude of 1000%.

Attracting and selecting the best people for senior leadership positions isn’t a small feat.  The future of organizations depend on it.  However, not too many organizations succeed in getting the right people at the top.  The reason for this failure is attributed predominantly to 3 critical obstacles that hinder in making the right recruitment decisions at such a crucial level.  Wrong Executive Selection decisions due to these 3 obstacles bring about losses and negative returns:

1. Obstacle of Rarity
2. Obstacle of the Unknown
3. Obstacle of Psychological Traps

Let’s talk about these obstacles in a bit of detail.

Obstacle of Rarity

The first barrier to finding outstanding executives for senior positions is their scarcity, as excellent executives are a rare breed.  Sophisticated skills that make an executive standout aren’t common.  They are distributed in a given sample.

Outstanding people perform at a much higher level than that of their peers, particularly at the top positions.  A blue-collar executive with 1 standard deviation above the mean translates to 20% more productive individual than an average executive.  With increasing complexity of job, the difference between the top performer and an average performer increases considerably.

Appointments at the senior positions do not go without assessment errors, which can prove to be extremely costly.  Even an accuracy level of 90% in executive assessment isn’t satisfactory.  This results in a number of mistakenly categorized top performers and rejection of outstanding candidates.

Obstacle of the Unknown

Another barrier to the Executive Selection process is the predictive assessment of candidates on the skills and attributes required and the actual delivery capabilities of the individuals.  It is difficult to assess the unknown.

Competencies at the junior levels are easier to define, but it gets difficult to pinpoint the skills required at the top level.  The skills required at the top keeps on changing due to the evolving political, technological and economic landscape.  The skills required today get obsolete over time.  In case the exact requirements for a position are fully known, it isn’t certain whether a candidate meets the requirements in their entirety.

Accurate assessment of the candidates’ behavior and competencies is difficult but worth investing efforts and resources.  “Soft” skills—e.g., leading people, coaching and developing teams, teamwork, and managing Business Transformation—are what differentiate the senior leaders, but gauging these skills necessitates thorough evaluation and considerable time, which is difficult at senior levels.

Obstacle of Psychological Traps

A number of psychological traps are associated with cognitive biases in humans that hinder the decision making abilities in people and incapacitate the hiring process.  8 types of psychological traps are most common in individuals:

• Procrastination
• Assuming incorrectly
• Impulsive judgment based on first impressions
• Discounting the warning signs
• Covering mistakes
• Bonding with familiarity
• Emotional anchoring
• Tendency to follow the majority

Interested in learning more about the 3 critical obstacles that hinder right Executive Selection?  You can download an editable PowerPoint presentation on Executive Selection here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”

– Michael Duff, Managing Director at Change Strategy (UK)

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

“Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”

– Omar Hernán Montes Parra, CEO at Quantum SFE

Want to Achieve Excellence in Human Resource Management (HRM)?

Gain the knowledge and develop the expertise to become an expert in Human Resource Management (HRM). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

The purpose of Human Resources (HR) is to ensure our organization achieves success through our people. Without the right people in place—at all levels of the organization—we will never be able to execute our Strategy effectively.

This begs the question: Does your organization view HR as a support function or a strategic one? Research shows leading organizations leverage HR as a strategic function, one that both supports and drives the organization's Strategy. In fact, having strong HRM capabilities is a source of Competitive Advantage.

This has never been more true than right now in the Digital Age, as organizations must compete for specialized talent to drive forward their Digital Transformation Strategies. Beyond just hiring and selection, HR also plays the critical role in retaining talent—by keeping people engaged, motivated, and happy.

Learn about our Human Resource Management (HRM) Best Practice Frameworks here.