Decision making is difficult for CEO’s as well

Fifteen years into his career as a head-hunter, one Mr. X was hauled up by an unhappy client for whom he had found a marketing manager. The hired candidate had impeccable educational credentials and an impressive career record but was a disaster in the new job.

In the few months he had worked there, he had developed a bad relationship with his team and was now behaving in a way that was absolutely countercultural and border-line unethical.

X who had an unblemished track record till then, recalls this case as one of the biggest embarrassments of his career. Complacency is a twin that grows side by side with superb performance. That’s what had happened to X.

The candidate had been referred to X by two people he knew well, but X admitted he had failed to conduct a more reliable reference check with individuals who had worked closely with the candidate. It turned out that he had been forced to leave his previous company for reasons similar to those later experienced by their client. X swore he would never again take any short-cuts while checking references.

People decisions can be incredibly hard. Falling for the brands in the candidate’s resume Ivy League b-schools, stints with famous corporates is but one of the pitfalls. Organisations often procrastinate over filling a vacancy till the last moment, when they swing to the other extreme and take snap decisions based on hunches.

Candidates, for their part, tend to overstate their capabilities in trying to land a job (to be fair, this is not entirely malafide: one recent executive survey actually had 90% of the respondents saying they were in the top 10%) and company bosses are seduced by their motivation and hunger.

So much analysis goes into financial decisions, but so little into people decisions says X. This is a pity, because people decisions are not an art. It is a craft that can be learnt.

The author of Great People Decisions: why they matter so much, why they are so hard and how you can master them is liable to being hauled up for recommending bad candidates to his clients but how often are company bosses held accountable for selecting someone who turns out to be a misfit?

The fact is, companies rarely have an internal mechanism for reviewing past people decisions. As a result, bad selectors are rarely identified. There may be interviewers who are like monkeys with machine guns. They actually have a bias for hiring the wrong people and rejecting the right ones. You would be better off selecting candidates with a flip of a coin.

CEOs are generally assumed to be adept at taking people decisions but ask them and they would tell you how hard it can be. One Mr.Y got his people decisions right just 50% of the time when he became CEO of GE. It was only towards the end of his long tenure that he felt he has improved his score to 80%.

So what goes into making great people decisions? For senior positions, it is recommended a well-planned structured interview, with a list of questions that aim to identify whether the candidate has the competencies required for the position.

For example, if the candidate is expected to be a change agent, he should be asked to describe how he handled organisational resistance to a new idea he was responsible for implementing. If strategic thinking is the key competency, the candidate should be asked to name the top three strategic issues, current company faces and describe a situation where she has been involved in addressing one of these issues.

People may have experience in a sector or a function or in an M&A situation, but experience doesn’t always equal competence.

An effective interviewer would try to understand the candidate’s behavior in real situations, which may illustrate he or she has the competencies for the job.

Culling candidates with the right competencies is the beginning. This is usually followed be a few more filters before the final decision is taken. It has been established that as the number of filters is increased, the probability of eliminating good candidates shoots up. Experts recommend a series of sequential, independent filters, numbering no more than three, with interviews by the immediate boss, the boss’s boss and a HR professional.

Every stage of selection involves tradeoffs and this gets accentuated in the final stage when the number of candidates is down to single digits and all of them have what it takes, in various degrees. The most common trade-offs are between parameters like experience, IQ (as reflected in educational qualifications) and EI (emotional intelligence).

If you are faced with a choice between these three parameters, it is best to go with the person with the highest EI, though he may not be the smartest or the one with the most relevant experience.

EI is even more important in a country like India, where you have to manage your networks with the government, your partners. Interactions with HR chiefs here, reveal they are very aware of the importance of EI.