Recruitment Moneyball: How to stop hiring the wrong senior people
Why do so many senior hiring decisions later turn out badly? Although it's tempting to pin the failure on the candidate, it’s really our fault as hiring managers when we make the wrong senior hire. So where are we going wrong?
After product-market fit, the availability of leadership is the constraint that most governs the rate at which a business can grow effectively. In a fast-growing business, we always have more leadership needs than we have leaders who can fulfil them. There are only two ways to fill this leadership vacuum; either we develop our senior leaders from within the existing team or we hire experienced people into the business.
The correct approach is a blend of both. At any point in time, you should consider that at least half of your future leaders are already in your business and develop them as if that future depends on them (it does). It’s strikingly common to disregard this option, investing only a small fraction of what we spend upon external recruitment on internal leadership development programmes for upcoming leaders. As elsewhere in life, we tend to undervalue what we already have.
If you don’t think this describes your business then imagine that your emerging leaders left and then submitted their CVs under pseudonyms to your recruitment process. How much more would you be prepared to pay to hire people with those skills and experience than you pay them currently?
Of course, it’s equally important to infuse outside experience into the business, particularly from those who have successfully managed at the next levels of scale above where your business currently operates. Such appointments can completely transform a business, which might otherwise stagnate because no-one who is currently in the business knows the next-level playbook.
But as everyone involved in exec recruitment knows, the frequency with which a senior hire doesn't work out when in position is too high. An organisation unfortunate enough to find itself in this position typically loses up to a year of progress in the impacted area of the business, in first denying then recognising the issue, eventually facing up to it, managing an exit process, re-orienting the team and re-hiring.
So, out of respect for prospective senior candidates, and for the health of our businesses, how do we improve the likelihood of hiring the right senior people for our team?
Michael Lewis, in Moneyball: The Art of Winning an Unfair Game, documented the story of baseball coach Billy Beane and his team, The Oakland ‘A’s. Despite having a third of the salary bill of the much better-funded teams, Oakland consistently out-performed these teams over many years.
Beane achieved such astonishing performance in two ways. First, he ignored the subjective assessments of scouts, such as whether a player “looked” like a batter. Second, through rigorous statistical analysis, he found that the plausible conventional metrics used for judging the performance of upcoming lower-league players (such as batting averages) didn’t correlate well to actual performance in Major League baseball.
Instead, Beane and his team painstakingly developed a set of metrics that did correspond. Armed with these metrics (for example, on-base percentage and slugging percentage), the Oakland ‘A’s were able to pick up future great players who were highly undervalued in the recruitment market at that point. It was the first time that data-science was properly brought to bear on the recruitment industry, and to dramatic effect.
When hiring for our own teams, we don’t have the luxury of the mass of prior-performance data available to those who hire baseball players. Nor, for senior leaders, can we as easily apply objective testing in the way that we do with engineers and coding proficiency tests, for example.
However, although we may not be able to define a highly reliable set of positive-hiring metrics, we can still learn from the Moneyball analogy. We can at least be more conscious of those conventional wisdoms and plausible metrics that tend to influence our hiring decisions but that don’t correlate with senior leadership performance.
Here are five examples to illustrate the principle. In each case below, a candidate that conforms to the metric may be a great leadership hire for your business, but equally may well not be. These attributes do not illuminate the best hires for your business and may even distract us from them. Become conscious of non-indicators such as these, and you’ll be more alert as to when to dig deeper and more widely with a candidate than you might otherwise have done.
1. Senator, you’re no Jack Kennedy
Let’s first briefly deal with the most basic and most common error that we make when assessing senior hires. Ask yourself whether you are pre-disposed to those candidates that “look like leaders.” For example, what if a male candidate is tall, broad-shouldered and speaks with a deep voice? He might well be a good business leader, but this is coincidental to his skeletal dimensions. Remember that just because Dan Quayle looked like JFK, it didn’t mean that he could lead like him (or, indeed, spell like him).
False Leadership Indicator: Physical dimensions. There are as many broad-shouldered, dumb presidents as there are great ones.
2. Currently works at Google/Facebook/Amazon, so will be great for our business
We set ourselves many traps when interviewing senior people from companies much bigger than ours, especially from highly-regarded, famous companies. If you are a founder, you risk self-flattery when someone from a company you admire wants to join the business that you created. It’s a validation of how much you’ve achieved, and now you finally feel that you’re getting somewhere when you can attract such people. You are highly disposed towards making the hire, right out of the interview starting gate.
Often, when the management team of a small company interviews a director from Google or a similar organisation, its members feel a pressure to justify their own roles and demonstrate their own knowledge to the candidate rather than the other way around. This is driven by an underlying fear of professional inadequacy in the presence of someone senior from a “proper company”. With the interview clock running down, it often results in relatively little being found out about the candidate, but interviewers still report that it was a “good interview” (because the interviewers feel that they themselves passed the test).
Fundamentally, we mustn’t forget why we’re interviewing the candidate in the first place. For example, if you have a business of 200 people that’s growing fast, you need a director who can take people on a significant change journey, who can define structures and processes that work for the next scale of your business and who can persuade people as to the value of these new ways of working.
Senior people in large companies are, of course, well aware of how their companies work, but are often sorely lacking in such change management experience. They have operated best practice, but they have rarely had to implement it because the company evolved its business processes and structures before they joined. By then, the company was too big for them to personally experience driving meaningful change. Their roles often instead become more centred on administration. But implementation knowledge and change management may be the very thing that you need in your smaller, growing business right now. When these mismatches exist, senior candidates frequently pass the interview but fail in the job.
False Leadership Indicator: Was a director at a big company you’ve heard of and admire. This could well mean that the candidate is great for you, but only if you deeply explore the candidate’s experience against your needs. Don’t stop at the company name and the candidate’s title.
3. Candidates Who Gump
One of the things I loved about Forrest Gump was how they edited him into the footage of all those famous events in recent American history. The filmmakers did this so well that the practice earned a special name; it came to be known as Gumping.
“…and then I led the Google machine learning team...”
Then, later in my career when I started interviewing senior people, I began to realise that many candidates practice Gumping too. They edit themselves into important moments in a large company’s history. So now, not only are you interviewing an exec from one of the world’s best internet companies, you have managed to attract one of the key people from that organisation to your company!
Gumping is highly seductive. The typical internal monologue of the afflicted hiring manager goes like this: “I have someone from Amazon interviewing at my small company AND he was the co-principal designer on AWS! We must be better than we thought! And: we gotta hire this guy…”
Of course, someone, somewhere was the lead designer of AWS, the principal engineer on Skype or the Product Director of OpenGraph. But statistically, most of the people who imply that they were, weren’t. Consider how unlikely it is that their previous employer let this person just walk of out of the door despite that pedigree AND that this same person is attracted to the idea of leaving the Silicon Valley's stock-riches behind to experience what it’s like to work on an industrial estate somewhere near Slough, England. It’s all certainly possible, it will happen sometimes and it’s great when it does, but just be careful.
False Leadership Indicator: Apparently led the development of stuff you use every day. Again, it could well be true, but critically dig into such claims. Often, it is just a wild exaggeration.
4. I’m So Bad I’m Good or "Once a VP, Always a VP"
Internet economy companies make senior hiring mistakes too. All of them strive to “hire only from the top 5%” - and there are lots of books to read about how they try to do that. But it doesn’t quite always work, just like it doesn’t for the rest of the industry. There are poor executives in every company just as there are many good ones and some great ones.
The problem for prospective employers is that we place great weight on a CV with Google, Amazon or Apple on it and so do Google, Amazon and Apple. So, Amazon may hire an exec who left Google, for example. And when that exec leaves Amazon, Apple may pick him up thanks to his CV now being even stronger.
But what if the exec is incompetent or one of life’s assholes? It’s quite common for him to bounce in and out of pedigree companies, first hired based on his CV then fired after a year based on his performance. The compromise agreement that’s put in place each time obscures the gaps between roles, so it appears that he’s worked in these companies for two years at a time.
Eventually, he is sitting in front of you at an interview in your company. He speaks convincingly of his experience, perhaps throws in a bit of Gumping for good measure and as for that CV…well, he’s worked at all the companies we admire, and was a VP in all of them!
False Leadership Indicator: Leadership positions at lots of companies you admire for less than two years per company. Could be that the candidate has been compromised out of all of them, and that you’re next.
5. You know that the CEO really wants to make the hire
This is most debilitating metric of all to successful senior hiring. If CEOs make their views very clear on a candidate early in the interview de-brief, enough other interviewers will align to that view to invalidate the rest of the interview process. So, if the CEO has fallen for one of the false indicators above then everyone has, by extension.
False Leadership Indicator: You know that the CEO loves the candidate. Of course, the opinion is completely valid in itself, but early knowledge of the CEO’s enthusiastic opinion held by other interviewers invalidates the interview process, due to the huge gravitational power of the CEO's views.
The above list is clearly not exhaustive and serves only to illustrate the importance of striving to develop a collective consciousness in your interviewing teams of our biases and our plausible-but-false indicators of senior hiring success. None of them are positive reasons not to hire, but none of them - on their own - are positive reasons to hire either.