Today we will unveil an emerging concept in executive recruiting that could help companies avoid costly executive mis-hires. I touched on this in yesterday’s blog post on johngself.com and LinkedIn, but today I want to take a deeper dive.
For more than 10 years, the numbers have remained essentially the same: more than 45 percent of the executives recruited to new companies are fired, pushed out, or resign within the first 18 months. In healthcare, the average hospital CEO’s tenure is about three years.
Healthcare organizations, as is the case with leaders in other industries, say they can no longer afford that kind of disruption.
For some hospitals, especially rural and community hospitals, a bad hiring decision at the CEO level can mean the end of the line for the organization — lost jobs, a body blow to a local economy, and a vacant building that will be expensive to repurpose. Many simply become eye sores, a sign of a community’s escalating decline.
The solution? Evidenced based executive recruiting. The preliminary indications are that this approach could dramatically improve the success rate for search firms and internal recruiters.
For healthcare organizations, the concept of evidenced-based care, while relative “new” is already revolutionizing how physicians and other members of the care team look after patients. Instead of relying solely on textbook knowledge, anecdotal experiences of other physicians, or gut instinct, evidence-based care is centered on research that produces standards of care that are improving outcomes.
Evidence-based care is the conscientious and judicious use of current best evidence in conjunction with clinical expertise and patient values to guide health care decisions. As more research is done in a specific area, the research findings — the evidence —are incorporated into the standards of care. In other words, to enhance the role that science plays in formulating care plans for specific patients based on their history and other known variables.
For some physicians, evidence-based care smacks of cookie-cutter medicine that removes a physician’s judgment from accepted standards of care. That is the way they were trained, but thus far the outcomes suggest that evidence-based medicine is here to stay if data on improving outcomes is any measure.
While some say that the practice of medicine is a scientific pursuit, executive recruiting is more like a black art – a process that is infiltrated, from beginning to end, with bias, prejudice, anecdotal conventional wisdom and gut instinct.
That approach certainly would explain the search industry’s dirty little secret: that the vast majority of recruiters fail in finding long-term leadership solutions more than 40 percent of the time. Many healthcare executives say that given the incredible cost of a mis-hire, there must be a better way.
There is a better way and it is all about the details. The devil, after all, is in the details. The other question is whether large established firms, notorious for little or no innovation and large problematic “No Contact Lists” — clients from whom they cannot recruit — virtually guarantees that current customers probably will not see the best candidates because, more than likely, those potential candidates work for an organization that is on the DO NOT CONTACT list.
This opens the door for smaller boutique firms which can gain access to top candidates that the larger recruiting companies cannot touch.
And it is in this group of search firms where the real innovation is emerging. From using video summaries of their interviews with recommended candidates, to behavior and values profiles and onboarding services built into the fee structure, these smaller firms with lower overhead, can deliver more for less.
Which brings me back to the emerging trend that I know will improve executive search. It has been around for a while, primarily in other industries like manufacturing, but you are now seeing formalized versions in healthcare: Structured evidenced-based recruiting.
Evidence-based recruiting as it is practiced in other industries, is based on cognitive testing and algorithms to grade candidates so that the individual with the highest score gets the job.
Yes, it is a system that attempts to push recruiting into the realm of science. While that might make sense when recruiting for lower levels in the organization — assembly line workers, supervisors and managers — it is hard to get senior executives to sit still for that sort of testing and grading process.
So what my company has done is to borrow the phrase and applied it to an data-based approach to executive recruiting that we have been using for years with remarkable success. How remarkable, you ask? Well, in 22 years we have never had a miss on a CEO search. The average tenure of JGS + P CEO placements is more than 6.5 years. Compare that with an industry average of only slightly more than 3 years.
What is our secret?
It begins with the understanding that it is all about the details. Remember? The devil is in the details and so, might I add, is the pathway to success in executive recruiting.
Our site due diligence visit is not about taking a job order from the client, but a deep dive into the following categories covering the selection criteria:
- Academic and professional credentials
- Requisite professional general experience
- Challenges, threats and opportunities facing the organization. Here we collect information related to operational performance from financial statements to operational statistics, and market penetration information, for example.
- Organization’s cultural DNA; the type of leadership styles that will work and those that will not
- Status of employee engagement and the team’s ability to produce the results to ensure sustainable success. We develop a profile on each direct report and in the case of CEO searches, the board.
- Performance deliverables, how the successful candidate will be evaluated.
- The community profile and the behavior and values profile of what it will take for someone to succeed versus someone who might struggle or even fail.
The immense amount of information — this data — is incorporated into a detailed Position Prospectus to be given to qualified candidates prior to their first screening interview. This is not some six to 12 page summary that many recruiters provide. No, this is a down in the weeds review of the entire array of issues by which all candidates must be evaluated for a particular search assignment. This form of evidence-based recruiting is not based on some mathematical or psychological formula, cognitive skills evaluation test, or psychological exam that some companies use. We do score candidates but it is based on how they perform in interviews, from beginning to end, not whether they can pass a test. We are interested in collecting relevant data to demonstrate their ability in the selection categories to get the job done, Is there subjectivity in the process? Absolutely, but I have found that biases and subjective assessments are just as much part of the hiring process during the interview phase as forging relationships once the successful candidate arrives for work. In-depth screening, based on comprehensive data sets for each selection category tend to keep people focused on the critical issues, and whether the candidate on the hot seat has a record of being successful with those issues.
So here is the step-by-step process — an algorithm if you will — on which we build our version of evidence-based recruiting. Some components are basic used by most firms while others are very complex and take in-depth research and time to execute.
First: We obtain academic and professional credential requirements.
Second: We collect the requisite experience requirements — years in the industry, years in management, years in senior leadership as well as prior experience in a similar position.
So far this is all standard, routine stuff that every recruiter asks.
Third: We dig into the challenges and opportunities facing the organization and construct experiential requirements for each issue. Typically in a CEO search there are between 20 to 35 detailed criteria covering the topic of relevant experience that are specific to the client’s needs. During the interview process, candidates must be able to explain his or her depth of experience with examples of outcomes for each of the criteria. We also ask for examples of successes, failures and lessons learned. Our questions are customized for each search engagement so that we cover in detail those issues that are critical in making a final decision. We spend time reviewing the performance deliverables, asking candidates for examples of prior experience and success in this critical category. We ask them to outline their approach to development action strategies based on the information in Position Prospectus.
Four: We focus more on the style of leadership that will work best, their philosophies regarding employee engagement, their views on CEO and governing board relationships in the case of a CEO search, or their style in working with their direct report as well as their colleagues in the C-suite in the case of a search for a member of the executive team.
We ask how they make decisions, how they relate with their team members and on their priorities in terms of personal advancement as well as the overall success of the organization. Using behavior and values questions, we look carefully into how their DISC profile aligns with their answers; are they telling us what they think we want to hear, or are their answers authentic, based on their DISC profile? Yes, there are some people who think they can beat or manipulate one of the nationally recognized behavior and values profile screen. I have met and worked with several who made that boastful statement. They were all wrong.
Five: We zero in on their decision-making processes as well as their ability to listen to others and do their homework in making decisions. In other words, we assess their team building skills and whether they will be a “developer” or an “enforcer” in terms of relationships and performance. I have interviewed numerous CEO candidates for hospitals as small as 12 beds to those with more than 1,000 beds who come to the table believing that they have been successful in the past doing things a certain way, leading with a certain style, so why deviate; “do not fix that which is not broken” seems to be their underlying belief. When I hear that statement, or some variation, the alarm bells begin to ring, the red flags begin to wave.
The central question then becomes: is this all about the candidates or the good of the organization and the community it serves? Not every organization is the same and it is a massive understatement to say that all organizational cultures are not the same. In this section we use questions to identify those candidates who have the ability to adapt to succeed, even in an environment that is radically different from the one they are leaving.
The question is whether the candidate can adapt. Changes in policy, market focus and culture may be made but if candidates lack the ability to work with the culture that is in place when they arrive, the chances for failure accelerate dramatically.
We expect candidates to be prepared to discuss their approach and share examples with results, where applicable.
Six: Our process shifts to candidate vetting. Candidates must provide four initial references who can speak specifically to the issues we are addressing. We require at least one of each of the following categories — a superior, a peer, and a subordinate. Candidates who submit references who repeatedly answer “I cannot speak to that” or “I don’t know” are jeopardizing their candidacy. I have written several blog posts on this subject and I encourage you to visit johngself.com for our robust archive of career management and leadership posts.
Seven: We select candidates from our panel who scored well on their ability to specifically meet the client’s needs. Our new candidate evaluation forms are based on the detailed data sets that we developed during the due diligence site visit. While the categories and some of the questions are similar, these, too, are customized to ensure this tool is valid and meaningful in assessing a candidate’s skills, relevant experience, values, and ability to adapt to the organization and the community.
Of course there is more to this system than just following steps. To be effective, and to maximize the value of this process, the people doing the recruiting and the evaluating phase must be well versed in the organization’s needs, their culture and the performance deliverables. This is about the detail and transparency.
This is evidence-based recruiting in a literal form because we are pressing the candidates to provide the evidence that they can succeed in a given situation.
Evidence-based recruiting is a process but it is not a one size fits all template. It must be adapted to the organization’s situation. This process takes a commitment of time and resources. Are there more profitable ways to recruit. Certainly. It is what many firms do now. It is called showing up and taking a job order. But as the healthcare industry evolves, as the business model is reformed, as the complexity of what is already a challenging enterprise evolves, the old ways will become, they already are becoming, less and less effective.
The conflict between the need for more data that is part of evidence-based recruiting versus the need by search firms for lower costs to sustain profits will pose some unique challenges for the large, high overhead operations.
You are already seeing some major healthcare consultancies see declines in their business because they are trying to work today using yesterday’s business model based on expensive prepackage solutions implemented by junior associates.
For recruiters, the outcome of what they do will take on greater importance. The answer is not to develop a closer relationship with the client with a business-as-usual mind-set. The answer is to innovate to meet the challenges of a rapidly changing landscape.
Like our health systems, hospitals and physicians, our successful future will be built around value, not volume.
I hope you will check out my blog post on Thursday. It is a collection of “Quotes of the Day.” I started this feature on social media and LinkedIn during the presidential primary campaign. I was dismayed at the turmoil and concerned about an absence of dynamic leadership. And so I began posting inspiring and funny quotes. At first, to be honest, this was more for my own amusement and mental health. But the reaction has been truly surprising. And I found that I truly enjoyed the process of selecting quotes from across the spectrum, from those which inspire us and motivate, to the wry observers of this American life and those who deliver essential truths about relationships and leadership.
And don’t forget that on Saturday we will release a new career management video. These videos are three to seven minutes in length. They are designed to help you navigate the rocky road to personal growth and career advancement.
If you have questions, or if you would like to suggest a topic, write to me at AsktheRecruiter@JohnGSelf.Com.