Tips for Hiring High-Performance Executive Leaders
If you're looking to expand your company's leadership team, there are important steps to consider when hiring executives. Learn more with Fifth Third Bank.
Your company’s success depends on many things. Chief among them is a strong leadership team. Hiring executives who succeed as leaders is a combination of art and science. There are some straightforward do’s and don’ts, as well as some “in certain cases.” By providing clear guidance for your hiring team (whether that’s the HR department, search team, executive recruiter, senior family members or a combination of these), you can help keep your growth strategy on track, your company culture consistent and supportive, and your costs for “mistakes” to a minimum.
Internal vs. External Candidates
When the need arises, hiring a strong leader becomes a top priority. And with that priority often comes considerable cost in both time and money. With budget in mind, should companies save recruiting costs and hire new leaders from their current ranks? Or is it better to invest in recruiting fresh talent and energy from outside? This is a clear case of “it depends.”
Many researchers and recruiters vote “yes” for looking first at internal candidates. As organizational expert and author Ron Ashkenas recommends, the secret to “increas(ing) executive hiring success is to reduce the number of outside hires.” He adds that internal candidates “already know how to succeed in your company’s culture.”
Beyond cultural fit, research published in the Harvard Business Review points to another time-saving reason to hire from within: outside hires take twice as long to ramp up as leaders who come up through the ranks.
But what if your company is on the hunt for new ideas or culture-shifting leadership styles? Or the guidance from the board or advisors favors external candidates? The Society for Human Resource Management offers a succinct view of how to match your search universe with key characteristics of your company:
Hiring from the outside can be a particular challenge for family-owned businesses. However, many “are coming to the realization that looking outside the family for the next executive leadership may be in the best interest for maximizing the economic legacy of the business,” says executive recruiter Joe Reardon. He adds that when family-owned businesses look for outside talent, often they “are treading into uncharted territory.” He recommends exercising exceptional due diligence, including assessing cultural fit, and working with search firms specializing in family-owned businesses or tapping into resources offered at university-based centers such as DePaul’s Chicago Family Business Council.
How to Test the Candidates
The key to hiring leaders who succeed—whether they're your company’s veterans and standout performers, or talent from outside—may lie in testing. Beyond the resume reviews and the initial interviews, executive search professionals who specialize in filling C-suite positions recommend a variety of testing techniques when recruiting senior managers:
- Personality testing—assess characteristics such as the ability to collaborate, integrity and customer awareness.
- Structured behavioral interviewing—focus interview questions and conversations on the candidates’ specific past behaviors in work situations that are common in your company.
- Cognitive ability testing—make use of psychometric assessment tools to measure candidates’ general intelligence.
- Group and individual exercises—in both one-on-one and group settings, simulate likely situations and conditions of the position to be filled as a gauge of potential for success.
What if the Vacancy is the CEO’s Chair?
Replacing the chief executive can be either a stumbling block in your company’s future or a big step forward. Four tips that can help clear the path to success:
- If your organization doesn’t have a succession plan, consider developing one—have a plan in place so the organization is ready for unplanned departures.
- Look to the board of directors or advisors—your financial advisors, banks, accountants, attorneys, etc. - for technical and cultural competence when forming the search committee, and then add diverse perspectives to ensure a balanced assessment of the candidates.
- Network in your industry—being actively involved in trade associations or groups that specialize in family-owned businesses, not just ones with passive membership, multiplies your network.
- Be prepared to compete—across-the-globe CEO turnover was at a record high last year, making for serious competition to lure talented new leaders.
How to Avoid Hiring Missteps
Hiring the wrong person to fill a senior role can be costly—in lost progress, culture erosion, and disgruntled or even departing star performers.
To steer clear of hiring missteps, it’s helpful to:
- Look beyond the candidates’ technical skills—strategic thinking and foresight are must-haves for success among the senior ranks.
- Define the role for both hiring team and candidates – be clear about expectations as well as challenges.
- Don’t hire in your own image—if searching for your own replacement, conquer the fear of letting go; if looking for another leader, resist efforts to clone the one you’re replacing.
- Make sure the investment in compensation matches the talent caliber the role requires—check with trade associations who track salary data from member companies, or leverage the resources of an executive recruiter with deep experience in your industry.
- Take your time—dig into references, including conversations with some who worked with, or reported to, the finalist candidates.
While it’s important to put in place processes and procedures designed to limit the chance of hiring the wrong person, mistakes happen. Don’t feel obligated to stick with a bad hire—turnover is costly, but keeping a bad hire could cost even more in lost productivity and lowered team morale. Like any misstep, the sooner you learn from it and fix it, the sooner your company and your plans for the future can get back on track.