Are You Picking the Right Leaders?

CEOs and other top executives know that one of their most important jobs is management succession, and they are well aware that the process of identifying potential leaders is neither simple nor straightforward. They fully realize that leadership is a complex, multifaceted capability, with myriad nuances and subtleties and that the characteristics that can help a person succeed in one environment (turning around a losing division, for instance) may lead to failure in another situation (such as starting up a new business). Despite this awareness and the best of intentions, many senior executives make the costly and painful mistake of tapping the wrong person for a key position.

In our experience helping companies predict which people are most likely to succeed in roles of broader responsibility, we have found that CEOs, presidents, executive vice presidents, and other top-level people often fall into the trap of making decisions about candidates based on lopsided or distorted information. Frequently, they fall prey to the “halo effect”: overvaluing certain attributes while undervaluing others. They might, for instance, be drawn to a candidate’s operational proficiency and considerable experience in a broad range of assignments while overlooking his extreme aversion to risk. To make matters worse, many organizations do not have the right procedures in place to produce a complete and accurate picture of their top prospects. All too often, assessments are based on hearsay, gossip, casual observation, and insufficient information.

To help overcome these problems, we have developed an evaluation process in which a candidate is assessed by a group of people, including the individual’s manager and other executives, who have observed his or her behavior directly over time and in different circumstances. The process enables the group to probe a wide range of leadership criteria and obtain balanced and complete information. Think of it as an annual physical, which relies not just on a blood test for cholesterol but also on an EKG, an eye exam, a hearing check, and various other indicators to assess a person’s overall general health. Such thorough and systematic evaluations will help senior executives avoid the pitfall of promoting the wrong people.

The Leadership Trap

Since the 1980s, we have worked extensively with large corporations to improve their CEO succession, assessment of senior executives, and early identification of leadership talent. We have experience with a variety of businesses and corporate cultures, including manufacturing, consumer products, high technology, and financial services, and we have assessed thousands of senior executives, including many CEO candidates. (For confidentiality, we have altered some of the details of the executives described in the examples.) In some cases, companies have completely reversed their opinions of candidates based on the information that surfaced during our evaluations, and we believe that serious and very costly mistakes have been avoided.

To assess a candidate properly, senior executives must consider the full range of leadership criteria, including the various “soft” skills and characteristics, such as personal integrity, that are difficult to judge. Furthermore, decisions should be based on an integrated view of the candidate drawn from the various perspectives held by the people who have managed and worked with the individual throughout his or her career. The evaluation processes at many organizations, however, do not produce such complete and accurate information, leaving senior executives vulnerable to various pitfalls when assessing candidates. One of the most fundamental mistakes is that tendency to overvalue certain characteristics, attributes, and skills:

Being a Team Player.

People who manage by consensus often climb the corporate ladder quickly. Their bosses usually view them favorably because they make life easier by helping their divisions, departments, or groups run smoothly. After all, few senior executives enjoy spending their time playing peacekeeper or referee.

But we have found that such individuals do not make exceptional leaders. In fact, the best leaders are usually not team players; they feel little need to work in a group. They might prefer others to work as a team and will give lip service to teams, but when push comes to shove they do not have any compelling need to listen to people’s ideas fully before moving on. They are independent thinkers, and they don’t mind making decisions by themselves, decisions that set them apart from the pack.

By contrast, consensus managers have trouble making a decision unless everyone is in general agreement with it—and this trait can become their undoing. Consider the executive hired to head a publishing company because of his solid track record as CEO of a consumer services company. He was very collaborative and always solicited other people’s opinions and ideas. After he was hired at the publishing company, though, people became impatient with him because the organization seemed to lack a clear direction. In short, his vision—a key criterion for leadership—wasn’t really his. It was more a mushy amalgam of other people’s ideas, and he was slow in making decisions. An underlying reason for this hesitancy might have been an aversion to risk: He may have been afraid of moving forward without first building the consensus he thought was necessary. Not surprisingly, he was seen as indecisive, he couldn’t win people’s respect, and he consequently failed.

What’s more, consensus managers tend to assemble teams of people who are like themselves. Homogeneous groups often run more smoothly, but they usually lack the synergistic power of a diverse team of people with talents, skills, and characteristics that complement one another. Exceptional leaders are willing to take risks by picking people who are unlike them—and who may even have different leadership styles. They are also willing to take a chance on untested people if they size them up and conclude they have what it takes. Furthermore, such leaders do not feel threatened when they hire someone who is more skilled, better experienced, and smarter than they are.

Hands-on Coaching.

Another common misconception is that leaders actively try to develop others through close mentoring relationships. Many excellent leaders instead prefer to select strong people and delegate fully to them, providing them with various opportunities to grow through their own experiences and make their own fair share of mistakes. Good leaders do have an interest in developing others but not always through hands-on relationships.

Operational Proficiency.

CEOs and other senior executives often overvalue people who are good implementers and problem solvers. As we’ve said, people who make their bosses’ lives easy often do very well in an organization. Although good foot soldiers are an asset to any company, they often don’t make effective leaders.

Sometimes, proficient individuals rely too heavily on systems, policies, and procedures, rigidly expecting everyone to operate in that same style. Such people can succeed in an organization until they rise to very senior positions, where their need for regimentation tends to alienate others and stifle innovation.

Superior problem-solving capabilities can also mask a deficiency in long-range, conceptual, or strategic thinking. Consider the classic story of the lieutenant who, after his captain orders, “Take that hill,” promptly does so. But when the captain asks instead, “Of those seven hills out there, which one should we take?” the lieutenant has no idea. Being able to solve a problem is one thing; knowing which problem to solve—and then taking the initiative to solve it—is quite another.

Superior problem-solving capabilities can mask a deficiency in long-range, conceptual, or strategic thinking.

Many operational experts are good at tackling well-defined problems, say, how to increase a mature product’s profitability by 4%. But leaders must also be adept at handling problems that are nebulous or ambiguous, such as how to reposition that same product line (or even whether to kill it off) when a new competitor enters the market. The higher people rise in an organization, the fewer facts they typically have to inform their decisions. Thus, an ability to handle—and even thrive in—ill-defined and complex situations is critical. Many good operations managers become confused and hesitant in ambiguous circumstances, delaying their decisions until they have 99% of the available facts. Others are prematurely decisive when they ought to be more reflective. Exceptional leaders do neither: They are comfortable acting in gray areas and, in fact, are often able to exploit ill-defined and complicated situations to their advantage, seeing opportunity where others see only confusion. All too often, though, companies undervalue this crucial ability—if they consider it at all.

What’s more, results-oriented individuals who have superior operational skills can easily fail in top executive positions if they have major character flaws. For instance, one executive we evaluated was extremely effective in generating new business. He was an impressive rainmaker, responsible for a significant fraction of the total revenues for his organization, a large manufacturing company. But he didn’t share information with peers and was considered overly competitive and manipulative. Senior management tolerated his shortcomings because he ran a profitable operation. Eventually, though, his lack of integrity—and the fact that his peers didn’t trust him—prevented him from being considered for a top position.

Of course strong operational skills are invaluable, but the truth is that a person who is not experienced in all aspects of operations yet who excels at envisioning the future, taking prudent risks, and exploiting ambiguity can be a strong leader, particularly with the right support. We might recommend that such a candidate, if promoted, be paired with a number two person who has strong operational skills.

Dynamic Public Speaking.

We have found that senior executives tend to overvalue how people comport themselves in front of others. In particular, they tend to put great weight on stand-up presentation skills. While these skills are certainly important, they can be developed through extensive coaching, and we have found that a deficiency here is rarely the reason for an executive’s failure. A more difficult shortcoming to correct—and one that people sometimes minimize—is a lack of one-on-one social skills. Without the ability to engage, convince, and inspire others—not only large groups in public but also individuals in private settings—leaders will find it difficult to enlist the people they need to support their cause.

Raw Ambition.

A perceived lack of ambition has scuttled many a promotion. “I’m not sure how hungry she is” or “He seems to lack that fire in the belly” are common criticisms. Unfortunately, executives sometimes forget that a person’s ambition can be understated. Indeed, we have found that many exceptional leaders are modest and display little ambition, even though on the inside they are fiercely competitive. In fact, a high degree of personal humility is far more evident among exceptional leaders than is raw ambition.

Similarity and Familiarity.

Many top executives tend to favor those with backgrounds, experiences, and characteristics similar to their own. Sometimes promising candidates are overlooked because of differences in race, gender, or socioeconomic, cultural, academic, or geographic background or because they have never held a comparable position at a similar company. But remarks such as “He doesn’t fit in,” or “The chemistry isn’t quite there,” or “She’s not really part of our culture” should not automatically disqualify a candidate. They should instead prompt a probe for further details.

Even the most trivial factors sometimes come into play. At a Fortune 100 corporation, we were helping the chairman and CEO, who would soon both be retiring, to evaluate potential replacement candidates. Each had his own candidate in mind, but we instead recommended that they consider someone else for a combined role, a vice president who hadn’t been at the company that long but who we felt had great potential. Both the chairman and CEO commented on the vice president’s height, but we insisted they look beyond appearances. They eventually promoted him, and his track record at the helm was excellent. In another instance, a brilliant candidate was almost passed over because he was overweight and considered “disheveled.”

Peeling the Leadership Onion

Many companies fail to develop a rounded picture of their leadership candidates because the processes they employ are inherently flawed. Typically, management reviews tend to focus on the performance of certain tasks, relying on a checklist of competencies, and fail to investigate the behavioral characteristics of an individual. And even when such information is considered, the full range of leadership criteria—particularly soft skills such as the ability to inspire others—is often not probed adequately. Frequently, individuals with superior potential are impaled on a single mistake, while mediocre ones are sometimes raised to great heights because they once got lucky.

Frequently, individuals with superior potential are impaled on a single mistake, while mediocre ones are sometimes raised to great heights because they once got lucky.

To avoid the trap of overvaluing certain attributes while undervaluing others, we have developed an evaluation process that calls for a small group of people to get together and discuss the individual’s history. Including the candidate’s boss and other executives who have dealt directly with him or her over the years, the group examines a wide range of leadership criteria—everything from an ability to assemble a top-notch staff to the capacity for strategic thinking. Characteristics that are often taken for granted (a person’s integrity, for instance) are probed with specific questions (“Have you ever known him to shade, color, or distort information to his advantage?”). Directing this discussion is an internal executive or a consultant.

Through a set of such carefully crafted questions, patterns in observed behavior are uncovered. People often see a hint of something that doesn’t unduly bother them so they let it pass, or they have certain feelings that they haven’t quite been able to articulate or confirm with other people. But when they hear others talking about a similar experience with or feelings about the candidate, the issue crystallizes. For example, we were once discussing an individual’s integrity, and the person’s former manager said to his current boss, “I just came across some recent information that I’ll pass along to you later.” But we urged the manager to share that information with the group. Very reluctantly, he did. Soon, the other participants were telling a similar story, and what emerged from the discussion was a pattern showing that the candidate frequently manipulated people and situations for his own benefit.

Conversely, participants in the group can often have opinions—based, perhaps, on a hunch or gut feeling—that are unfounded. In such cases, the discussion leader must probe for specific examples as evidence. Only direct observations are considered; secondhand information, hearsay, and rumors are quickly discounted. The discussion leader encourages everyone to add information, question one another, agree when they’ve observed similar behavior, and disagree when they’ve observed something different. (Usually the disagreements arise because the candidate behaves differently in different situations.) In our experience, any distorted information contributed by people with axes to grind will usually be corrected by others—another important benefit of the group evaluation process. The result is a view of the candidate that is typically more accurate, balanced, and richer than could be gotten if the person had been evaluated by each participant individually.

The group evaluation also helps cut through unfounded assumptions that may be dogging someone’s career. For example, someone might say of one candidate, “She’s great at getting results, but I don’t believe that she can think strategically.” Then the discussion leader would ask whether the candidate has ever been in a situation that required her to exercise that skill. If the answer is no, participants might decide to test the person by including her in a task force that requires her to anticipate problems, trends, and opportunities. Similarly, if someone says, “I think she’ll be pretty good at strategic thinking” but is unable to provide direct evidence, then again the participants might decide to test the candidate in this area.

When an answer is vague (for example, “He’s pretty good at figuring out how to resolve problems”), the discussion leader probes for specificity (“What would he have to do for you to say that he is an exceptional problem solver?”). The process is like peeling away the layers of an onion, as each question delves deeper than the last.

The discussion leader also asks the participants a series of questions intended to predict how the candidate will perform in a position of greater responsibility. Without this element of prediction, the assessment process would not be all that useful for leadership development, but unfortunately, the review process at many organizations stops short of this step. In a group evaluation, the leader asks questions such as, “Based on how you’ve described this person and everything you’ve observed about her, how would you predict she will perform in a position of increased responsibility?” and “Specifically, if she were to fail, what would you predict might be the most likely reason or reasons?”

From this information, the group can determine development priorities for the candidate. If there’s no evidence that the individual can, say, manage a geographically dispersed organization, the group might develop a plan that expressly requires her to do so. Details of this plan should include a specific time frame for the test, the criteria that will be used to determine success, and a list of the early warning signs of potential failure. To encourage the participants to give their honest views of the candidate, the discussion leader should emphasize that the ultimate goal of the group evaluation is to develop the individual and that information will be kept confidential. Furthermore, the dynamics and structure of the group organization reinforce candor and confidentiality.

At many organizations, much leadership talent goes untapped. Top executives identify the wrong people as having high potential, often because they work with incomplete or inaccurate information that leads them to overvalue certain capabilities and qualities. Candidates are sometimes promoted to key positions just because they possess one remarkable characteristic, such as excellent communication skills that can persuade and inspire others. Superior individuals may be weeded out because they do not wear their ambition on their sleeves.

No wonder, then, that many companies are struggling with a leadership shortage. We believe that leadership talent is more available than people think. The trick is to identify it properly, and doing so requires sorting through the myriad nuances and subtleties of leadership. At a minimum, organizations need an evaluation process that yields a full, balanced, and accurate picture of candidates. Without such information, senior management will remain vulnerable to misidentifying its leadership talent, and the wrong people will continue to make their way up the corporate ladder.

Melvin Sorcher and James Brant

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