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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Praise for Great People Decisions "Fernandez-Araoz has captured the essence of building great teams with a masterful and entirely practical study of what goes into getting people selection right." --JACK WELCH "Fernandez-Araoz does a great service with this wonderful book, teaching us how to accomplish the first task of any exceptional leader: get the right people on the bus, and into the right seats. His enduring passion, deep practical experience, and analytical methods make his approach refreshing and powerful." --JIM COLLINS, bestselling author of Good to Great "No matter your business or product, your service or strategy, it's all done with people. Great results only come when great people fill the right roles. In Great People Decisions, Fernandez-Araoz clears away the fog of myth and fad that has long clouded people decisions, bringing passion, sound experience, and wisdom to these all-important questions." --DANIEL GOLEMAN, bestselling author of Emotional Intelligence and Social Intelligence "Great People Decisions is a groundbreaking, myth-busting, and standard-setting work. To prepare yourself for the dramatic workforce changes that are expected in the next decade, the first thing you should do is read this book. The second thing you should do is put Fernandez-Araoz's advice into practice immediately." --JIM KOUZES, bestselling coauthor of The Leadership Challenge and A Leader's Legacy "Too many people say 'people are our most important assets' but then don't act on it. In this important and eloquent book, Fernandez-Araoz provides compelling evidence for why making great people decisions is essential for anyone who aspires to become a great leader or build a great company. If you follow the sage advice he offers in this book, you are sure to make great people decisions." --NITIN NOHRIA, Senior Associate Dean of Faculty Development, Harvard Business School, and coauthor of Paths to Power and In Their Time
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Veröffentlichungsjahr: 2010
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GREAT PEOPLE DECISIONS
Why They Matter So Much,Why They Are So Hard, andHow You Can Master Them
Claudio Fernandez Araoz
Copyright © 2007 by Claudio Fernández-Aráoz. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
Wiley Bicentennial Logo: Richard J. Pacifico.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
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Library of Congress Cataloging-in-Publication Data:
Fernández-Aráoz, Claudio.
Great people decisions : why they matter so much, why they are so hard, and how you can master them /
Claudio Fernández-Aráoz.
p. cm.
Includes bibliographical references.
ISBN 978-0-470-03726-3 (cloth)
1. Executives—Recruiting. 2. Executive ability—Evaluation. 3. Employee retention. 4. Organizational effectiveness. I. Title.
HF5549.5.R44F47 2007
658.4'07111—dc22
2006101040
To my beloved wife María, the greatest people decision I ever made
To our beloved children Ignacio, Inés, and Lucía, the greatest people decisions God could possibly have made for both of us
CONTENTS
Cover
Contents
Title Page
Copyright
Dedication
INTRODUCTION: The Make-or-Break Choice
It’s Vitally Important to
You
It’s Vitally Important to Your Organization
My Background
What You’ll Find Here
CHAPTER ONE: Great People Decisions: A Resource for You
The Success Formula
How to Get Honored by the Harvard Business School
What Successful Managers Look Like
Going Beyond the Obvious
Forget the Myth: You Can
Learn
These Skills
Amazing Experts!
Forget Delegation
Knowing What to Look For
Becoming Conversant
A Little Learning Can Take You a Long Way
A Life of Focus Will Make You a Star
The Great Paradox
From Success to Happiness
CHAPTER TWO: Great People Decisions: A Resource for Your Organization
What Makes for Success?
The Few Things That Matter
Consulting a Legend
The Road to Corporate Failure
Bad Batting Averages
Closer to the Top: Higher Risks, Higher Returns
Quantifying the Expected Return on Great People
People Decisions Around the World
From Startups to Acquisitions
From the Boardroom to the Shop Floor
Large or Small?
It Was Always Like This
The World’s Most Admired Company
Looking Ahead: The Human Resource in the Future
What I Have Learned
CHAPTER THREE: Why Great People Decisions Are So Hard
The Odds Are Against You
The Difficulty of Assessments
Psychological Biases and Emotional Traps
Wrong Incentives and Conflicts of Interest
CHAPTER FOUR: Knowing When a Change Is Needed
When Change Usually Happens
When and Why Change
Should
Happen
How Do You Know Where You Stand?
What Do You Do After You Know?
Forces that Fight Change
Staying Honest
Implementing Change
CHAPTER FIVE: What to Look For
Those Difficult Tradeoffs
Does IQ Matter?
Does Experience Matter?
What about “Personality”?
The Power of Emotional Intelligence
The Foundation: Competencies
The Essentials for Managers and Executives
Setting the Targets
Learning from My Own Failures
Dealing with Tradeoffs
Success and Failure in Different Cultures
Why Does Emotional Intelligence Matter?
The Bottom Line on Emotional Intelligence
The Development Dilemma
How to Look at Potential
What about Values?
What about Teams?
Putting It All Together
How to Get to the Answer
The Need to Prioritize
The Need to Be Clear
It’s All about Discipline
CHAPTER SIX: Where to Look: Inside and Out
Insiders or Outsiders?
The Problem with Averages
The Innovation Parallel
The Need to Benchmark
When to Stop Looking
But What about
Their
Choices?
Finding Internal Candidates
How People Find Jobs
The Strength of Weak Ties
Finding External Candidates
The Power of Sourcing in a Small World
Getting Good at Sourcing
It Takes Two Phone Calls
CHAPTER SEVEN: How to Appraise People
The Largest Opportunity
Appraisals in Practice
On Lies, Fraud, and Scandal
Snap Judgments at Lightning Speed
The Bad Interview
The Effective Interview
Imparting Interviewing Skills
Decoding Microexpressions
The Future of Assessment?
A Better Approach: HOT SHOT
Invaluable References
The Right Reference Check
Selecting Selectors
How Many Appraisals?
Too Many Cooks Spoil the Broth
Team Interviews
The Decision Team
Decision-Stage Best Practices
Dealing with Intuition
My Biggest Embarrassment
Building Organizational Strength
CHAPTER EIGHT: How to Attract and Motivate the Best People
Is This the Best for the Candidate?
Sharing Your Passion
Money Talks
Assessing Retention Priorities
The Problems with Incentives
Dealing with Risks and Incentives
It’s All About the Right People
A Matter of Courage
Getting the Right Kind of Help
Getting the Deal Done
CHAPTER NINE: How to Integrate the Best People
What Are the Integration Risks?
The Three Waves of Integration
Accelerated Transitions
The Six Deadly Integration Traps
Managing the Integration Process
From the Successful Candidate’s Perspective
The Human Element
How to Beat the Odds
CHAPTER TEN: The Bigger Picture
Every Day, All the Time
How about Yourself?
Making Others Happy
The Great Hidden Scandal
Educating for Great People Decisions
Looking to History
Bad Collective Processes; Bad Collective Results
Great People Decisions on the World Scale
APPENDIX A: The Value of Investing in People Decisions
Example
Further References and Background for This Formula
APPENDIX B: Selected Bibliography on Assessment Methods
1. Introductory Notes
2. Introductory Books
3. Advanced Book References
Notes
Acknowledgments
Index
End User License Agreement
List of Figures
CHAPTER ONE: Great People Decisions: A Resource for You
FIGURE 1.1 Impact on Career Success
CHAPTER TWO: Great People Decisions: A Resource for Your Organization
FIGURE 2.1 Distribution of Performance, Simple Job
FIGURE 2.2 Performance Spread as a Function of Job Complexity
FIGURE 2.3 Potential Rewards of Great People Decisions
CHAPTER THREE: Why Great People Decisions Are So Hard
FIGURE 3.1 It’s So Hard to Be Selective
FIGURE 3.2 Decreasing Performance of CEOs—Median Normalized Annual Return to Shareholders
FIGURE 3.3 Decreasing Performance of CEOs—Median Annual Return to Shareholders
FIGURE 3.4 Why Getting the Best People Is So Hard
CHAPTER FOUR: Knowing When a Change Is Needed
FIGURE 4.1 Short-Term Actions for Top Positions
FIGURE 4.2 Strategic Classification—Individual Distribution
FIGURE 4.3 Strategic Classification—Average by Functional Area
FIGURE 4.4 Management Appraisal Outcome and Actions
FIGURE 4.5 When Change Is Needed
CHAPTER FIVE: What to Look For
FIGURE 5.1 Choosing the CEO’s Successor, Part I Profiles of Six Internal Candidates
FIGURE 5.2 Frequent Competencies of Effective Leaders
FIGURE 5.3 Understand What You Need, Part I Example: From Scientist to Manager
FIGURE 5.4 Understand What You Need, Part II Example: From Scientist to Manager
FIGURE 5.5 Failure Rates for Various Profiles
FIGURE 5.6 One of the Two Most Salient Characteristics, Part I Profiles of Failures vs. Successful Managers
FIGURE 5.7 Combination of the Two Most Salient Characteristics Profiles of Failures vs. Successful Managers
FIGURE 5.8 Choosing the CEO’s Successor, Part II Profiles of Six Internal Candidates
FIGURE 5.9 One of the Two Most Salient Characteristics, Part II Profiles of Failures vs. Successful Managers, Three Different Cultures
FIGURE 5.10 What to Look For in a Candidate, Part I
FIGURE 5.11 What to Look For in a Candidate, Part II
CHAPTER SIX: Where to Look: Inside and Out
FIGURE 6.1 Performance Impact of CEO Turnover Change in Industry-Adjusted Operating Returns, Percentage Points
FIGURE 6.2 Range of Performance Impact of CEO Turnover Change in Industry-Adjusted Operating Returns, Percentage Points
FIGURE 6.3 Expected Value of the Maximum of a Standardized Normal Distribution
FIGURE 6.4 The Efficiency of Sourcing
FIGURE 6.5 Where to Look: Inside and Out
CHAPTER SEVEN: How to Appraise People
FIGURE 7.1 Sensitivity Analysis of Search Effort Change in Yearly Profits Assuming a 10% Improvement in Each Parameter (million $)
FIGURE 7.2 Predicting Performance from Competencies
FIGURE 7.3 Beyond Conversation: The Hard Work of a Structured Interview
FIGURE 7.4 The HOT SHOT Model for a Robust Assessment
FIGURE 7.5 Sequential Filters Model
FIGURE 7.6 Example of Three Sequential Independent Filters with Different Accuracy Levels of the Assessors
FIGURE 7.7 How to Appraise People
CHAPTER EIGHT: How to Attract and Motivate the Best People
FIGURE 8.1 Retention Priorities
FIGURE 8.2 Critically vs. Compensation
FIGURE 8.3 Retention Risk
FIGURE 8.4 Package Engineering
FIGURE 8.5 How to Attract and Motivate the Best People
CHAPTER NINE: How to Integrate the Best People
FIGURE 9.1 The Three-Wave Phenomenon
FIGURE 9.2 Activities in the First 100 Days of Biotech CEOs
FIGURE 9.3 Attention in the First 100 Days—Revisited
FIGURE 9.4 How to Integrate the Best People
Guide
Cover
Table of Contents
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INTRODUCTION The Make-or-Break Choice
Great People Decisions will help you improve your personal competence at hiring and promoting great people.
Literally, nothing is more important. For almost every manager, personal success grows directly out of the ability to choose the right people for his or her team.
But making key appointments is hard. Few people get any formal training in this all-important activity, and no comprehensive tools exist to make up for that lack of training.
Great People Decisions fills that gap.
As you’ve already discovered in your own career, organizations are all about people. It doesn’t matter how high-tech, stripped-down, decentralized, offshored, outsourced, or automated your organization is (or, more likely, thinks it is). At the end of the day, your organization is still all about people.
Managers lose sleep over lots of things: poor cash flow, impending lawsuits, a failing strategy, mergers and acquisitions gone awry, a competitor making a direct move against a profitable product line, and so on. What successful managers mostly lose sleep over, though, is people: How do I get the very best person in the right job?
People are the problem, and also the solution. How does a manager go about fixing a serious problem? Usually, he or she goes out in search of great people, whether inside or outside the organization.
Organizations that are skilled at solving the “people puzzle”— finding, recruiting, hiring, promoting, and retaining the very best people for the job—tend to thrive. (Jack Welch has told me that in his years with GE, he spent more than half his time getting the right people in the right positions.) Those that are bad at it tend to fail in the long run.
But the truth is that organizations don’t really solve puzzles. People solve puzzles. Within every organization, a surprisingly large number of individuals—probably including you—have to make crucial people choices.
You may be part of a Human Resources (HR) group, formally tasked with making these kinds of decisions on a daily basis. Or you may be a member of the board of directors, who—once or twice in your tenure on the board—will be asked to participate in choosing a new CEO or other senior executive. More likely, though, you’re part of a much bigger group in “the middle”—that is, the group of managers who are occasionally called upon to make a personnel-related decision for their division or functional area.
These are vitally important decisions. And by important, I mean two things.
It’s Vitally Important to You
First (and this is the main reason why I’ve written Great People Decisions), people decisions are important to you, the decision-maker. If you prove to be skilled at solving “people puzzles,” your career prospects will almost certainly get brighter. Conversely, if you repeatedly fail to get the right person in the job, your career prospects will suffer. Think about the experiences of people you’ve worked with. Do you agree that good peoplefinders move up, while others move out?
The problem is that very few people get any formal training in finding and choosing good people. Business schools, especially at the graduate level, tend to downgrade Human Resources Management (HRM) issues in general, or at best focus on HRM as just a minor one of a half-dozen functional areas; they rarely get down to the level of skillbuilding that is required.
Sometimes I use an investing analogy to make this point. Would you like to be as successful an investor as, say, Warren Buffett? I would, too! Would you like to get there without any relevant skills or experience? Me, too—but that seems like an unlikely goal. In order to become as good at people finding as Warren Buffett is at investing, you have to become an expert. You need the right tools.
Great People Decisions puts those tools in your hand. It is a comprehensive toolkit for managers who want to improve their personal competence at hiring and promoting people. This is not an art; it’s a craft that can be learned. And it’s important to you that you learn this craft.
It’s Vitally Important to Your Organization
My second point is that making great people decisions is vitally important to your organization. Getting the right CEO, for example, is of paramount importance. And yet, about a third of all CEOs who leave their positions are either fired or forced to resign. What are we doing wrong? The same holds true at other levels of the organization. According to one study in which I participated, where we looked at thousands of executives in leading companies around the world, roughly a third of the executives we assessed turned out to be in the bottom half of the competence curve with respect to their peers at other companies in their respective industries.
In other words, even at great companies, the wrong people wind up in the wrong jobs. Can’t we do better?
My Background
Before proceeding any further, you should probably ask what my own qualifications are. Who am I to be telling you what’s important?
I’ve been in the profession of finding great people—and growing great people—for two decades. I was trained as an industrial engineer at Argentine Catholic University in my native Argentina, where I graduated first in my class, and then earned an MBA at Stanford, also with honors. I worked for McKinsey & Co. in Madrid and Milan, and in 1986, I joined Egon Zehnder International (EZI), a leading global executive search firm. Today, I am a partner with this firm, and a member of its executive committee. While I live with my family in Buenos Aires, my role is global, and I constantly travel around the world.
Maybe the phrase executive search needs some elaboration at this point. Executive search includes what some people call “headhunting,” that is, hiring external candidates for senior positions both in for-profit and not-for-profit situations. I personally have led some 300 such searches, and actively participated in another 1,500 or so. These searches have comprised positions on the most senior levels (chairpersons, presidents, and CEOs) all the way down to first-time managers. I have served in this role for companies with billions of dollars in annual revenues as well as for very small ones, and for a range of nongovernmental organizations (NGOs), foundations, and not-for-profits. My personal success rate at hiring external candidates has been consistently above 90 percent, which is a very high percentage in light of the fact that external hires are typically made when times are particularly tough.
But executive search, broadly defined, also includes the activity of management appraisal, that is, assessing managers within a client’s organization. This can be critically important in certain situations. In the context of a merger or acquisition, for example, the company has to decide how to allocate its management resources (even to the point of deciding who should stay and who should go). Or, to cite another circumstance, when a new CEO arrives and wants a rapid, professional, accurate, and independent assessment of his or her team, people like myself are often called upon. Management appraisals can also be very useful when a company faces a new competitive scenario, or when technological or regulatory changes suddenly rewrite the rules of the game. In all of these cases, my colleagues and I assess not just competence (the current ability to do the current job) but also the individual’s potential to grow. We offer advice on promotions, assignments to new roles, development plans, and so on—all functions aimed mainly at internal candidates.
I led our Management Appraisal practice worldwide for some time. Recently, we went back and compared our assessments with the actual performance and evolution of the managers whom we had appraised. Again, our accuracy at predicting both performance and development potential has been on the order of 90 percent globally, while the accuracy of some of our client companies’ internal assessments that we have analyzed have ranged as low as 30 percent.
I say all of this not by way of boasting, but rather to underscore two things. First, I have extensive experience with people decisions. I know the landscape intimately. Second, the prescriptions contained in this book cover the entire gamut of hiring and promoting—from both outside and inside the company.
I should add that I have an intense intellectual commitment to my field. In 1994, in addition to my search work, I became responsible for the professional development of consultants in our global network. Currently, I lead the development of our firm’s intellectual capital for our network of 62 offices worldwide. In the 1990s, I led a major effort to upgrade our work methodology for our executive search practice, and have recently once again led a similar effort to become even better at helping our clients hire or promote the very best people in the world.
I have read literally thousands of books and articles pertaining to some aspect of people decisions. I’ve written articles for the Harvard Business Review and the MIT Sloan Management Review. I have also contributed a chapter to The Emotionally Intelligent Workplace, a book edited by Daniel Goleman and Cary Cherniss, and collaborated with Jack Welch on his book, Winning, and with Jim Kouzes on the latest edition of The Leadership Challenge.
And finally, I have a passion for helping others improve their hiring and promotion decisions. I honestly believe that the world would be a much better place if hiring and promotion decisions at all levels, from the shop floor to the boardroom, could be substantially improved. I believe they can be improved. I believe that I have the skills, and therefore the obligation, to contribute to that improvement.
What You’ll Find Here
In the first two chapters of Great People Decisions, I go into depth as to why great people decisions matter so much—both to you and your organization.
Next, in Chapter 3, I explain why great people decisions are so hard. Yes, part of the problem lies in the talent pool, but a bigger part lies in the “eye of the beholder.” All too often, the people who conduct searches make one or more in a series of tactical mistakes, all of which combine to make a successful outcome that much more elusive.
Chapters 4, 5, and 6 address the whens, whats, and wheres: when to look, what to look for, and where you’re likely to find what you’re looking for. Throughout these chapters (and elsewhere in the book), I’ll tell you how and when to engage outside help, and I’ll explain why (at least in most companies) the decision to look only inside is a bad idea.
Most of the book is naturally about the hows of great people decisions: how to appraise, attract, motivate, and integrate the best people. Chapter 7 is devoted to the specifics of appraising people. Many people think this is self-evident: You bring the candidate in, interview him, and check his references. But in my experience, each of these tasks is more difficult than may appear at first. For example: How do you check references in an environment in which people are afraid of getting sued if they tell you the negative truth about a former employee? (The answer: Dig deeper. I’ll tell you how.) Should people “down the ladder” from the job for which a candidate is applying be allowed to appraise candidates? (The answer: as a rule, no.)
And as you’ve probably discovered on your own, it’s not enough to find a great person. You also have to successfully recruit that candidate, with the right package of incentives, and then integrate her into her new organizational context. Despite the profusion of recent books and articles on the subject of integration, many companies still make the mistake of expecting a candidate to “sink or swim.”
In the final chapter, I circle back to the question of why this is important. I believe high-performing organizations not only provide good employment and generate returns for their owners, they also make our society better. A great company—full of great people—raises our standard of living, raises our sights, broadens our horizons, and gives us hope for the future.
CHAPTER ONE Great People Decisions: A Resource for You
It was mid-1986, and I was about to attend a very important meeting in Zurich. Over the course of the previous four days, I had made stops in London, Paris, Copenhagen, and Brussels. In each city, I sat for interviews with consultants from Egon Zehnder International (EZI), the international executive search firm. I had already completed some 30 such conversations, including sessions with a great variety of partners in the firm as well as its full Executive Committee.
But now, here in Zurich, I was about to meet with Egon Zehnder himself—the firm’s founder, and at that time its chairman. I was keyed up, to say the least. (Even today, I can still summon up some of that long-ago nervousness.) I was well aware of the stature of the man in front of me who—having graduated from Harvard Business School the year that I was born—launched the executive search profession in Europe in 1959, and in 1964 started his own search firm, which he immediately began expanding internationally. He was, simply put, a legend.
I’m embarrassed to say that I don’t remember many of the questions he asked me that day. For some reason, though, I do remember some of the questions I asked him. In particular, I remember asking him a question that went something like this: Based on your experience of more than 25 years of executive search practice, meeting with both successful clients and candidates for high-level positions, what makes a person successful?
I guess I was expecting him to respond with an elaborate success theory. After all, he was enormously successful himself. Already, I could see that he was a man of strong convictions and great integrity. So what did the great man say, in response to my question?
“Luck!”
I admit it; I was taken aback—luck? He continued along these lines:
Of course, all the successful people I have met are highly intelligent. They are also hard workers. They believe in preparation. They relate very well to others. But if you ask me to point to the most important reason for their success, I believe it is luck. They were lucky to be born into certain families, and to be born in certain countries. They were lucky to have some unique gifts. They were lucky to be able to attend good schools and get a good education. They were lucky to work for good companies. They were lucky to stay healthy. They were lucky to have opportunities for promotions. So, in answer to your question, the number-one reason for individual success is luck.
If I had been a little quicker on my feet (and perhaps a little braver) I would have regrouped and asked him what the second most important reason was. But the moment passed, and we moved on to other topics.
Since that long-ago meeting, I’ve had countless opportunities to revisit my question, and Zehnder’s answer. Many times, I’ve had to grant the wisdom of our founder: Luck certainly played a role in lots of people’s careers, including my own. But I’ve also tried to find some more systematic answers that might help someone take action. (Telling someone to “be lucky” is not enough, obviously.) So, when interviewing great candidates for a search assignment, when meeting impressive clients, when having conversations with executives who want to choose a new career path, when giving speeches to students at Harvard Business School, when looking at my own children, I’ve continued to ask my question: What, exactly, accounts for compelling career success?
It’s now more than 20 years since that first meeting with Egon. In those intervening two decades, I have conducted close to 20,000 in-person interviews (about a thousand a year, or four per working day, throughout most of my career as an executive search consultant). I have traveled all over the world, whether to work on client assignments, train our colleagues, attend our executive committee or partners meetings, or give speeches. In the course of those travels, I have had thousands of personal, deep, touching conversations with managers and executives, discussing their careers, their lives, their glories, their dramas.
I have witnessed great success, but also dramatic pain. I got to know some outstanding examples of career and life management. Sadly, I also got to know a few wonderfully talented people who killed themselves— literally.
I admit that it’s become something of an obsession for me. Why do certain people succeed, and others fail? I think I have an answer.
The Success Formula
First, as noted earlier, I don’t disagree with Zehnder about luck. Luck can come to bear in all the ways he enumerated, and then some. In the extreme, bad luck can terminate your career, through death or other tragedies.
I believe, though, that the formula for career success includes at least four other factors. They are:
Genetics
Development
Career decisions
People decisions
I am convinced that these factors reinforce and build upon each other, and create a multiplier effect. I also believe that most of these factors have different weights at different stages of our life. The exception, of course, is your genetic inheritance, which, like your luck, remains relevant from birth to death. Development is also important throughout life, but it is particularly critical in the early stages. Career decisions become important when we reach our early twenties. Last (but not least) is what I call “people decisions.”
I’ll give you the punch line first: I am absolutely convinced that, once you have completed your formal education and embarked on your professional career, people decisions are the single most important contributor to your career success.
Now let’s run through each of the factors in a little more depth.
Genetics play a big and continuing role. Your genetic makeup explains (for example) why some things are easy for you to learn, while others are extremely difficult. Genetics set limits on you, even as they open doors for you. But they are not exactly static. While until quite recently genetics were assumed to be a constant in the success formula, current research is showing that even one’s genetic legacy can be considered dynamic. As Matt Ridley demonstrates in Nature Via Nurture, your day-to-day experience partially determines which genes switch on, which in turn determines which proteins are manufactured, which in turn shapes and reshapes the synapses between your brain cells.1 In the debate over nature versus nurture, it appears that both sides are right.
Development, which is my shorthand for the formal and informal learning that occurs over one’s lifetime, can be a powerful force for career success. Your ability to learn also depends in part on your career choices: What kinds of learning opportunities are put in front of you in the workplace? Do new things keep coming at you?
Obviously, a wise investment of time and effort in professional development can significantly enhance your level of competence, and therefore increase your chances of success. The best development experiences can have enormous impact.
But there are clear limits on the potential of development. As noted earlier, your ability to learn depends in part on your genetics. In addition, much as it pains me to say it, the ability to learn decreases with age.2 Yes, you can teach an old dog new tricks; it just takes longer, and maybe not the entire trick is retained. So the costs and benefits of training shift in subtle ways over the years.
I’ll let my friend Lyle Spencer summarize the potential of development, in his pithy way (he is a world authority both on selection and development): “You can train a turkey to climb a tree,” Spencer says, “but I would rather hire a squirrel.”
The impact of career choices on personal success should never be underestimated. For much of my working life, I’ve been struck by the dramatic differentials in the achievements of individuals who embark on their respective careers with roughly similar talents, but who choose very different work environments. My undergraduate classmates, for example, include a number of truly bright and talented people who made the mistake of joining unprofessional or intensely bureaucratic organizations; today, in professional terms, they are miles behind our similarly gifted classmates who took much better career paths and happened upon more enlightened employers. Simply put, good career choices multiply the fruits of your own development efforts, and therefore are a key factor for outstanding career success.
In her book, Career Imprints: Creating Leaders Across an Industry, Harvard Professor Monica Higgins tells how the “Baxter Boys” built the biotech industry in the United States.3 Based on her study of 300 biotechnology companies and 3,200 biotechnology executives, Higgins concluded that a single firm—Baxter Labs—was the breeding ground for an astonishing number of successful biotechnology spinoffs and startups. This phenomenon—of one organization spawning leaders across a whole sector—has also been seen in other industries, such as Hewlett-Packard and Apple in high-tech hardware, and Fairchild in the semiconductor field. Obviously, putting yourself in a hotbed of innovation is better than putting yourself in a backwater, in terms of long-term career success.
For most of us, people decisions become important sometime in our twenties. In our personal lives, we make lifelong friends—at college, in graduate schools, and in church and neighborhood settings. We meet and marry our life partners. And, in the workplace, we start making decisions about people. We start deciding things about colleagues, clients, and vendors.
Once you become a manager, you start working through others, and therefore your people decisions become essential for your own unit’s performance. As you take on larger responsibilities—from running the shop to running the ship—the stakes get higher, because the only way that you can exercise control is through the team of people you’ve put together. As you move from manager to senior executive and eventually to CEO or company chairperson, people decisions are both your highest challenge and your biggest opportunity.
Now I’ll restate my punch line: After 20 years of practice, research, and reflection, I am firmly convinced that the ability to make great people decisions is the most powerful contributor to career success, as illustrated in Figure 1.1. And note that the farther along you get in your career, and the higher up the organizational ladder you climb, the more important these kinds of decisions tend to become—both in absolute terms and in relation to all other factors.
FIGURE 1.1 Impact on Career Success
How to Get Honored by the Harvard Business School
Let’s look at an example of this “success formula” in action. I don’t think Egon Zehnder will mind if I scrutinize his own career in terms of this formula—even if I wind up suggesting that there was more than simple luck at work.4
In 2002, Zehnder received the Harvard Business School’s Alumni Achievement Award—one of its most important honors. Established in 1968, this award goes to a very small number of distinguished graduates (one or two a year) who, throughout their professional careers, “have contributed significantly to their companies and communities, while upholding the highest standards and values in everything they do.” According to then-Dean Kim Clark, the award winners “represent the best in [the School’s] alumni body. Exemplary role models, they inspire all those who aspire to have an impact on both business and society.”5
Exactly how did Egon Zehnder achieve this success? I think if you looked at the evidence, you’d have to conclude that genetics played their part. Zehnder has the genetic good luck of being tall, handsome, articulate, and intelligent in the traditional (IQ) sense. (In the sweepstakes of life, never underestimate the importance of a commanding physical presence!) At the same time, at least in my own experience of him, Zehnder is also a master of what is often referred to as emotional intelligence. (This concept will be expounded upon in Chapter 5.) Although one might debate which of these characteristics are determined in large part by genetics (I’d say many of them are), Zehnder is self-aware, full of integrity, and a man of amazing commitment, initiative, and optimism. He is a “natural-born leader,” with all the attendant genetic implications. And as highlighted by Jim Kouzes in The Leadership Challenge, he is also a master at encouraging the heart.6 I have no doubt that Zehnder’s genetic makeup is privileged.
Reinforcing his God-given talents, Zehnder has also worked hard on his own development, literally throughout his life. His formal education ended with an MBA from Harvard, but he has remained a constant learner. An avid reader, and an astute reader of people, he learns from all kinds of characters and situations.
Development is also about finding ways to put what you’ve learned to work—for your own benefit and for the benefit of the organization. Zehnder worked hard—always six long days a week—and prepared himself with amazing thoroughness for every single event, meeting, or speech on his busy schedule. Maybe a personal anecdote is in order here. Before delivering a speech, he would practice for endless hours in front of a mirror, tape record it, and time it. I remember asking him once how much time he really needed for his speech at one of our new consultants’ orientation sessions. The schedule allocated him one hour, but perhaps he wanted a little more time, or a little less. He looked at me in surprise. “I have one hour,” he replied, “so it will be one hour.” And it was one hour: not 59 minutes, not 61 minutes—it was exactly 60 minutes.
Let’s agree that genetics and personal development got Zehnder into the game, and helped keep him there. I’d also argue that his career choices allowed him to jump to the next level of the success curve—first when he decided to move from law to business, and then again when he moved from advertising into the executive-search arena. In fact, he personally introduced this profession into Europe, launching his firm with a unique vision, comprising both an original consulting approach and exacting levels of professionalism.
You could also make the case that some of Zehnder’s subsequent business decisions were also “career choices,” including the decision not to go public, as well as the creation of a unique form of equal partnership, collaboration, and compensation system. He summarized this approach, which is still the envy of many professional service firms globally, in a Harvard Business Review article entitled “A Simpler Way to Pay.”7
Yes, these were all wise (even brilliant) career choices. But (and you can guess where I’m going with this) the most important factor in Zehnder’s personal success has been his ability to make great people decisions. Simply put, he built a great firm by being personally involved in the hiring of every single consultant, all around the world, for the entire 36 years of his full-time work in the firm he founded. That’s why I was in Zurich, that nerve-wracking day in 1986. He was making a people decision, and to him, nothing was more important.
I was the rule, not the exception. In fact, Zehnder permitted no exceptions to the mandatory round of interviews by multiple people, in multiple countries. Even today, the firm requires that all consultant candidates be interviewed by dozens of colleagues from several different offices, in addition to the chairman, to make sure that they meet the firm’s exacting global standards and represent a good cultural fit.8
To recap, yes, Zehnder has been a lucky guy—luckier than most. His luck extended to his genetic inheritance. He built on his luck and genes through development and hard work. He made great career choices (and even got to invent his own career, which is nice work if you can get it). Most important, though, is that he turned himself into a master at making great people decisions.
Note the active voice: turned himself into a master. How did he make great people decisions? In part by inventing a structure that drew upon the smarts and experiences of many of the brightest people in his organization. Yes, he had innate gifts when it came to dealing with people, but he also came with techniques for leveraging those gifts.
Making great people decisions is a craft, and it can be taught and learned.
What Successful Managers Look Like
Let’s dig a little deeper into how individual success is defined.
In my view, one of the best analyses of individual success comes from researchers associated with the Greensboro, North Carolina-based Center for Creative Leadership.9 Having analyzed hundreds of executive selection situations, they concluded that executives are perceived as successful when they (1) deliver strong organizational performance, and (2) build good relationships, particularly with subordinates.
By this definition, at least, strong organizational performance (the subject of our next chapter) is a necessary component of personal success. But where does this strong organizational performance come from? It comes from people inside the organization having the ability to make great people decisions, one great person at a time. Yes, strategy counts for a lot, great products and services are key, and money in the bank is a great asset. But behind each of these assets—behind their creation and deployment—are great people.
What else can we learn from the management literature about what makes for great leaders and personal career success? One of the most significant studies of successful managers is summarized in First Break All the Rules, by Marcus Buckingham and Curt Coffman. Based on in-depth interviews by the Gallup organization of more than 80,000 managers in over 400 companies, this was one of the largest studies of its kind ever undertaken. One of the key conclusions of First Break All the Rules is that—contrary to our own opinions of ourselves—none of us has unlimited potential.10
What’s the logical extension of this insight? I argue that if you can’t count on personal development alone, then you have to hire and promote people who have the right stuff built in. You have to get the best people on board in the first place, and make sure that they are in positions where they can grow and develop, and then help them do so.
In his follow-up book, The One Thing You Need to Know . . . About Great Managing, Great Leading, and Sustained Individual Success, Marcus Buckingham discusses the four skills that you have to master if you are to succeed as a manager. He starts by emphasizing that managers must first select good people.11
After discussing the four basic skills of good management, Buckingham moves on to define the “one thing you need to know about great managing.” And what’s the single most important imperative in great management? In Buckingham’s words, it is Discover what is unique about each person and capitalize on it. In other words, first you hire great people, then you assign the right person to the right job—both fundamental kinds of people decisions.
Buckingham’s final prescription in this book concerns the “one thing you need to know about sustained individual success”: Discover what you don’t like doing, and stop doing it. Well, in order to stop doing what you don’t like to do, you have to be able to delegate, which means that you have to have good people in place around you. And let’s suppose that you have liked what you’ve been doing, but the years have gone by, and now you’re getting bored. How are you going to move up? Again, you have to have good people in place behind you, in order to move up. Developing good successors is, in many cases, a prerequisite for promotion. For this reason, too, you need to become a master at hiring and promoting the best people.
Going Beyond the Obvious
Great people decisions, therefore, are extremely important in large and traditionally minded hierarchies. But even in companies where professionals manage a very small staff (as has always been my own case), the impact of great people decisions on personal effectiveness can be spectacular.
About a year after I joined EZI, I started looking for a new assistant. I decided that since I was an executive search consultant myself, it made little sense to hire an executive assistant employment agency. I would do it myself.
My first step was to sit down and think very carefully about what I really needed, rather than just assuming that I needed someone similar to the person who had occupied the post previously. I also discussed with some experienced colleagues what the ideal assistant should look like, and modified my thinking based on that input. In the back of my mind, too, was the example of Egon Zehnder, who hired his wonderful assistant Brigitte Jentsch when he founded the firm 43 years ago, and still works with her today.
So I undertook a search for my new assistant as if it were my most important client assignment. I didn’t limit myself to people who were looking for a job. Instead, I investigated the best target companies and positions, and ended up considering close to 40 potential candidates, none of whom were looking for a change. I personally interviewed them, and secured references for the very best potential candidates from people I could trust. I agonized over the final decision, because I did not want to get it wrong—not only for myself, but also for the sake of the person whose life I would be disrupting in such a significant way.
As a result of this process, I hired Joanna Eden, who has been an outstanding assistant for the last 19 years, and has become a true corporate asset in our firm. She has dramatically improved my productivity and quality of life, while becoming at the same time a valued professional partner and a wonderful friend.
So literally every working day of my life, thanks to Joanna, I have been reminded that I have to focus with great discipline on the key people decisions. This has pertained not only to hiring from outside, but also to the internal deployment of resources. For example, whenever it fell to me to staff one of our internal teams, which in many cases are shortterm, project-based affiliations, I tried to think very carefully about the skills and complementarities that the project called for, to research my available options, and to interview and check references in depth.
It was the same thing when it came to assessing external partners, such as training organizations. It was the same thing, quite frankly, when it came to choosing which clients to work for.
And it was the same thing in the nonprofessional aspects of my life, as well. I have tried to choose nannies and gardeners just as systematically. (What people decision is more important than the nanny decision?) When asked, I help other people apply this same kind of discipline in their own lives. A friend of mine suffered unnecessary pain and anguish for almost a full decade due to bad medical care—inaccurate diagnosis, and therefore inappropriate treatment. I helped my friend find the right doctor, with the right skills, and she’s now on the road to recovery.
I like to think I’m good at this, but the truth is that I’ve simply learned a craft, over the years. You can learn it, too.
Forget the Myth: You Can Learn These Skills
“It’s all in here.”
I’ve heard this phrase far too many times, over the course of my career. Maybe you’ve heard it, too. It usually involves some self-satisfied person pointing at his or her stomach while he or she talks about people decisions. The implication, of course, is that great people decisions are based on one’s “gut” instincts.
Lots of people believe that the ability to determine whether someone is a good candidate for a position is an art: the result of an instinct, an intuition, a gut feeling; something that you can’t clearly explain; a talent that only some people possess, leaving the rest of us clueless. Curiously, lots of people who have no clear reason for believing in their gut still do so; that is, they think they are intuitive experts at making people decisions. I’m reminded of the fact that when surveyed, 65 percent of all drivers in the United States report themselves to have above-average skills.12 Even worse, studies of several hundred engineers at two high-tech companies found that 32 percent of the engineers in one company and 42 percent in the other rated their own performance in the top 5 percent!13 This is what’s known as “optimism bias.”
Besides this being a mathematical impossibility (4 out of 10 engineers can’t be in the top 5 percent), there are three things wrong with this thinking. First, there’s that notion that we are good at assessing. (We are not. For example, people’s beliefs about their ability to detect lying among others correlate only .04 with their performance.14) Second, there’s that notion that it’s instinctive. (It’s not.) Third, there’s that notion that you don’t have to work at it, because either you’ve got it or you don’t. (In fact, you do have to work at it.)
Let’s dig a little deeper.
Amazing Experts!
Wait a minute (you may be thinking)—aren’t there people who are really good at people decisions? Aren’t there people experts out there?
Yes, some people are truly expert at assessing people. Not surprisingly, some of them work in executive-search firms. Our firm offers a case in point. (Other search firms would point to similar data, I’m sure.) In a recent study of internal candidates who were promoted at a number of our client firms, we compared actual people outcomes with our predictions about those outcomes, and also with the company’s own predictions about those outcomes, where available. (In other words, we took our assessment of Internal Candidate A, the client company’s assessment of Internal Candidate A, and the data about Promoted Person A’s success or lack of success several years into his or her job, and compared the three sets of data.) It turned out that in those specific studies, the company’s ability to assess its own people in terms of managerial competence and potential for further development was in some cases as low as 30 percent, while our comparable rate was about 90 percent.
In other words, we were three times as likely to be correct in our assessments of the firm’s own people as they were, even though they had known them for years and they were dealing with them every day
Some people are much better than others at assessing candidates. While there is significant research on the accuracy of different assessment techniques (from astrology and graphology to different types of interviews, reference checking, assessment centers, testing, and other techniques that we will discuss in a later chapter), there is little research about the various levels of accuracy of different individuals applying the same technique. The limited research on this last point, however, suggests that some people are in fact significantly better than others even when applying the same assessment technique—and, of course, are much better when applying the best techniques. The Employment Interview Handbook, by Eder and Harris, looks at the question of whether some interviewers are better than others. Five out of the six studies reviewed confirm this hypothesis. In some of those studies, the best interviewers had predictive validities 10 times better than the worst interviewers.15
In fact, expert assessments (aimed at diagnosing present conditions or predicting future performance) are indispensable in countless dimensions of life and work. Choosing investments, diagnosing medical conditions, assessing legal risks, predicting candidates’ performances—these are just a few examples of the kinds of things that experts can and should weigh in on. In Blink: The Power of Thinking Without Thinking, Malcolm Gladwell writes about John Gottman, an expert in predicting the success or failure of a given marriage. If Gottman analyzes an hour of conversation between a husband and a wife, according to Gladwell, he can predict with 95 percent accuracy whether that couple will still be married 15 years later. If Gottman observes a couple for only 15 minutes, his success rate is still around 90 percent. Sybil Carrère, a professor who works with Gottman, told Gladwell that if she and Gottman observed a couple interacting for as little as three minutes, they could still predict with fair accuracy who was going to get divorced, and who was going to make it!16
So, yes, there are experts; but no, they’re not simply acting “from the gut.” They are highly trained and deeply experienced people (more on this later).
Forget Delegation
You might be thinking, If these experts are so good, maybe the best strategy would be to simply delegate the job of assessing people to them. (Have a tough people decision to make? Call in the experts!)
There are two problems with this strategy. First, it is in our nature to judge and classify people, even in cases where we are unprepared, and where we may make bad “snap judgments.” It goes back to more than half of us being better-than-average drivers: When it comes to judging people, we want in. Most of us would hesitate to make a complex financial decision or a major technological investment based on inadequate data and without the right advice; but when it comes to people, we’re less humble. This is a reality that has to be recognized and dealt with.
Second, while many organizations boast people who are better prepared than others and more experienced in making people decisions (including many Human Resources managers), senior executives often want to be personally involved in these decisions. And rightly so: You shouldn’t delegate these key people choices any more than you should delegate your marriage choice. As Larry Bossidy and Ram Charan have stated it, “Having the right people in the right place is the job no leader should delegate.”17
In many cases, though, this means that those who have the knowledge don’t have the power to make people decisions, while those who have the power may not have the knowledge. That’s not a good formula!
Knowing What to Look For
For many years (longer than I’ve been in the field), human resource decisions have been considered a soft, elusive arena. This is closely allied with the notion of the “gut”—either you’ve got it, or you don’t.
This is simply wrong. People decisions, like many other assessments, can be systematically analyzed and greatly improved. To achieve his remarkable level of accuracy, for example, the abovementioned John Gottman (a psychologist by training, who also studied mathematics at MIT) has painstakingly analyzed in depth the predictors of marriage success or failure for three decades.
The first step is to focus on the relevant things to watch, which in Gottman’s case means what he calls the “Four Horsemen”: defensiveness, stonewalling, criticism, and contempt. And of those four emotions, he explains, contempt explains most of it: the higher the levels of contempt being expressed between man and woman, the lower the likelihood that the marriage can succeed.
Malcolm Gladwell also tells the story of Brendan Reilly, who in 1996 was the chairman of the Chicago-based Cook County Hospital’s Department of Medicine. One big issue that Reilly had to deal with was improving the hospital’s ability to diagnose whether a patient was actually having a heart attack, or merely exhibiting (or reporting) troubling symptoms. This, of course, can be a matter of life and death, and a medical staff can err in either direction. According to Gladwell, between 2 percent and 8 percent of the time, a patient having a genuine heart attack in a U.S. hospital gets sent home.
There are also cases in which a patient appears to be having a heart attack, but isn’t—a less life-threatening problem, but still troubling, since it ties up vital resources. Meanwhile, according to Gladwell, the threat of malpractice has made doctors less and less willing to take chances with a patient, with the result that only about 10 percent of those people admitted to a hospital on suspicion of having a heart attack are actually having a heart attack.
Faced with this situation, Reilly made an effort to isolate the few indicators on which the doctors should be focusing. This actually meant analyzing less information—but focusing more intensely on the most useful information—than they had in the past.
According to Gladwell, Reilly concluded that doctors ought to combine the evidence of the ECG with only three urgent risk factors (pain felt, fluid in the lungs, and systolic blood pressure). This simpler decision rule significantly reduced both types of errors: sending home those with a heart attack, or admitting those who were not having a heart attack.18
The point should be clear: These experts aren’t checking their guts; they’re identifying and checking the key indicators
