Why No CEO Should Go It Alone

In this series, professionals share their hiring secrets. Read the stories here, then write your own (use #HowIHire somewhere in the body of your post).

If there is one thing that I ought to be really great at, it’s hiring. I’ve spent the last 20 years working in leadership roles at the same company — one that is more dependent than most on top talent. Given my tenure, I’ve got an unusually deep level of insight into my company’s services and culture; I’ve had lots of practice at bringing people into the business; and my client base includes about 3,000 heads of HR at the world’s leading companies, so I benefit hugely from proximity to the best in the business.

Now add to that the fact that a good chunk of our revenue comes from helping the world’s largest companies acquire and develop talent of their own, and one would argue I ought to be the Serena Williams of making great hiring decisions — long track record of achievement, good in all situations, and seemingly getting better every day.

I ought to be, but I’m not. Left to my own devices, I make a litany of mistakes. Just ask our recruiters, who usually talk me out of my worst ideas, but not all. (As an example, I once hired a sales executive whose particular skill was leveraging great marketing lead flow to close business. I neglected to inform her that, at the time, we did not actually have lead flow, or — for that matter — a marketing department.)

It turns out that I’ve got a lot of company. Hiring someone is the most common task across all executive roles and yet even the most successful executives (when left to their own devices) fail routinely. In fact, our data suggests that up to 50% of executive hires fail, and of those who make it, only 10-20% are considered high performers.

Obviously, this matters. More than half of long-term corporate revenue stalls are as a result of talent gaps, and about 1 in 10 were due specifically to gaps in the leadership bench. To give you a sense of the financial impact, organizations with the strongest leaders have nearly double the revenue growth compared to those with weaker ones. Who wants to leave that kind of money on the table?

So if it matters so much, why are so many hiring managers (including yours truly) bad at it?

1. We refuse to admit we need help. No matter how much we try to avoid it, we bring with us a set of biases about people, roles and cultures that often lead us astray. Either because our perceptions of candidates are biased or because our perceptions of the true demands of the role and context are.
   
   As an example, I carry around a warped notion about the size of our company. When I joined, CEB was about one-thirtieth the size of the company today, and I still have an image in my head that — when we really need to think through an issue — we can just gather everyone in the Map Room and talk it out. While it sounds charming, it can cause me to wrongly prioritize certain elements, and even misrepresent certain attributes of a job to candidates.
2. We overestimate our sample size. Over my decade as a CEO, I’ve hired or elevated roughly 40 people to my leadership team – either as a direct report or in other key roles. So about four a year. Even assuming that I seriously evaluated five or six candidates for each role, I’m evaluating roughly 20 people a year. To put that in context, our various hiring analytics platforms will evaluate nearly 40 million people this year. By leveraging broader analysis of people, jobs, and outcomes, I can hugely improve my odds of making great decisions. No CEO worth his salt would evaluate the effectiveness of a marketing strategy using only customers he or she had talked to, but we seem to do this routinely with hiring strategies.
3. We can be out of touch with labor market realities. Labor markets are incredibly dynamic and often hiring managers can miss the mark on a position description or comp package. Worse, they may incorrectly prioritize attributes, appealing to the wrong type of talent. Pretty simply: if you are aiming at the wrong target, you’re guaranteed to make a bad hire.

So if I (and frankly every other hiring manager) can’t be left to our own devices to hire, what should we do? Don’t get left to your own devices.

Instead, take advantage of the huge advances in behavioral economics and psychology, which when coupled with advanced outcomes data management and analytics, make it possible for hiring managers and their partners in Recruiting and L&D to:

• more precisely understand labor markets and pools
• correlate key behaviors with outcomes data
• better document the key contextual factors of a role, and prioritize attributes accordingly
• measure skills, cognitive ability and behaviors
• target and remedy skill or competency gaps
• measure the impact of different training platforms
• better tap and access nontraditional profiles for roles

Collectively, these devices are a lot better than my own. Properly deployed they won’t make me a perfect hiring manager, but they will improve my odds. And as we all learned from Moneyball, in a competitive marketplace, we aren’t seeking perfection, but merely to generate a few more wins each season.  

More importantly – to me and my colleagues at least – these tools have the ability to improve work itself. That means more people, from more backgrounds, getting into the right roles more often. The flip side of the cost of a than-less-ideal hire is that there is tremendous deadweight loss in the company and the economy. The measurement of which is usually expressed in one-sided terms: the cost to the company. All too often, we ignore the cost to the team around them, or the cost to the person who is miscast. They lose valuable career time and likely suffer mounting frustration idling in the wrong role.

We don’t hope to fix it, but we know that driving adoption and proper usage of more science in the process will really help managers, candidates, company and the economy.