Publications
Partners
It's Not the How or the What but the Who: Succeed by Surrounding Yourself with the Best, by Claudio Fernández-Aráoz
IN OCTOBER 2011, international executive search consultant Claudio Fernández-Aráoz addressed the World Business Forum, a group of 4 000 senior executives and middle managers in New York.
He asked his audience the question I pose to you too: “How many of you have made major mistakes while making crucial people choices?” All 4 000 people raised their hands.
I bring this very practical book to your attention because of the answer he received to the second question he asked the forum: “How many of you have studied how to assess people (for the purposes of employment)?”
If you are like those attending the forum, the answer is no. Less than half of 1% of attendees had studied how to select the right person for the job.
Fernández-Aráoz has been an executive search consultant for 28 years across all major industries in more than 40 countries. He concluded that “the key to outstanding performance… is the ability to surround oneself with outstanding people”.
Jack Welch, the former CEO of General Electric (GE), was widely regarded as one of the greatest managers of the 20th century. He reports that as a junior manager at GE 50% of his appointments were wrong. Thirty years later, as CEO, 20% were wrong.
If this legendary manager took 30 years to reduce his error rate by 20%, little wonder the rest of us have such trouble!
Combine this challenge with the limited talent pool we have available in South Africa. The best are in very short supply, and we need more of the very best to succeed against global competition.
The problem of employing the best is that people are not designed to make great people decisions. We are hardwired for unconscious biases and other decision impairing errors.
Fernández-Aráoz poses this hiring situation: “Mary graduated from an Ivy League university five years ago, and has since worked at an outstanding consumer goods company, where she has been promoted twice… Joe took twice as long as required to graduate and has worked for the last four years for quite an unprofessional family company, from which he was recently fired.”
You put Mary through an unchallenging interview and employ her. You throw Joe’s CV in the bin.
Mary, in fact, was only a C student, and was employed because of family connections. She is mean and abusive to colleagues. Joe worked night shifts to put himself through university, and was fired to make room for the owner’s son.
In Joe’s case, you prematurely rejected a good candidate.
Why are we so sure, but so wrong? A primary source of hiring error is the human tendency to take what we see as all there is, placing too much weight on the information in front of us.
CEO succession
A landmark Harvard Business School study investigated the impact of different types of CEO succession on operating returns in 200 organisations over 15 years.
The study considered four scenarios: (1) an insider promoted in a firm doing well; (2) an insider promoted in a firm doing poorly; (3) an outsider hired to a firm doing well; and (4) an outsider hired to a firm doing poorly.
One finding was that insiders did not change their company’s performance. The reason is not that similar people working in a similar way produce similar results. Rather, we simply do not work as hard to evaluate insiders as we do with people from the outside, especially when things are going well.
When we employ from outside, we are forced to write a proper job description, consider a larger pool of candidates, grill them in well-structured interviews, and conduct in-depth reference checks. We do not use the same rigour with internal appointments.
Companies should always look for opportunities to promote top internal candidates while also benchmarking against high-quality external ones. Research has consistently shown that the best appointments happen when you consider a wide pool of both insiders and outsiders.
For each position the company needs to fill, thorough background work must be done. I have seen this skipped even for external appointments.
Fernández-Aráoz suggests: “Map out your priorities, take a critical look at the people around you. Are you facing a demographics threat? What is the strength of your leadership bench? Are there looming vacancies you’ll need to fill?
"Who are your most strategic players? The most competent? The most critical? Who would competing teams, units, or companies be most likely to go after? How will you keep them instead? Perhaps most importantly - who are your rising stars? Who could take on a bigger or different role? What training will they need to do so?”
Does all this time-consuming effort matter? Consider these facts and then decide if the effort is worthwhile.
The difference between a typical performer and a highly productive one on an assembly line is about 40%. The difference grows exponentially with the complexity of the job. A top life insurance salesperson is 240% more productive than the average one, while exceptional software developers or consultants outperformed most peers by 1 200%.
We cannot rely on the typical interviews as these are usually “a conversation between two liars”. The company is lying about their attractiveness and the candidate about their competence.
We need thorough preparation and rigorous interviewing and by people with superior “hiring averages”. A hiring average is your score on the number of candidates you employed and their success after six months in the position.
If those responsible for employing in your company know they will ultimately be held accountable for their verdicts - with a hard number - interviews will change from chatting to real interviewing conversations.
With the right knowledge, training and practice, Fernández-Aráoz believes everyone can master the art of great “who” decisions. Correct selection also provides the best opportunities for success you will ever have.
No matter how good the strategy, or no matter how good the method, you cannot be an A-grade company with B-grade people.
A good place to start honing you skill would be by reading this outstanding book, the best I have ever read on this subject.
Readability: Light ---+- Serious
Insights: High +---- Low
Practical: High +---- Low
- Fin24
*Ian Mann of Gateways consults internationally on leadership and strategy and is the author of Strategy that Works. Views expressed are his own.
IN OCTOBER 2011, international executive search consultant Claudio Fernández-Aráoz addressed the World Business Forum, a group of 4 000 senior executives and middle managers in New York.
He asked his audience the question I pose to you too: “How many of you have made major mistakes while making crucial people choices?” All 4 000 people raised their hands.
I bring this very practical book to your attention because of the answer he received to the second question he asked the forum: “How many of you have studied how to assess people (for the purposes of employment)?”
If you are like those attending the forum, the answer is no. Less than half of 1% of attendees had studied how to select the right person for the job.
Fernández-Aráoz has been an executive search consultant for 28 years across all major industries in more than 40 countries. He concluded that “the key to outstanding performance… is the ability to surround oneself with outstanding people”.
Jack Welch, the former CEO of General Electric (GE), was widely regarded as one of the greatest managers of the 20th century. He reports that as a junior manager at GE 50% of his appointments were wrong. Thirty years later, as CEO, 20% were wrong.
If this legendary manager took 30 years to reduce his error rate by 20%, little wonder the rest of us have such trouble!
Combine this challenge with the limited talent pool we have available in South Africa. The best are in very short supply, and we need more of the very best to succeed against global competition.
The problem of employing the best is that people are not designed to make great people decisions. We are hardwired for unconscious biases and other decision impairing errors.
Fernández-Aráoz poses this hiring situation: “Mary graduated from an Ivy League university five years ago, and has since worked at an outstanding consumer goods company, where she has been promoted twice… Joe took twice as long as required to graduate and has worked for the last four years for quite an unprofessional family company, from which he was recently fired.”
You put Mary through an unchallenging interview and employ her. You throw Joe’s CV in the bin.
Mary, in fact, was only a C student, and was employed because of family connections. She is mean and abusive to colleagues. Joe worked night shifts to put himself through university, and was fired to make room for the owner’s son.
In Joe’s case, you prematurely rejected a good candidate.
Why are we so sure, but so wrong? A primary source of hiring error is the human tendency to take what we see as all there is, placing too much weight on the information in front of us.
CEO succession
A landmark Harvard Business School study investigated the impact of different types of CEO succession on operating returns in 200 organisations over 15 years.
The study considered four scenarios: (1) an insider promoted in a firm doing well; (2) an insider promoted in a firm doing poorly; (3) an outsider hired to a firm doing well; and (4) an outsider hired to a firm doing poorly.
One finding was that insiders did not change their company’s performance. The reason is not that similar people working in a similar way produce similar results. Rather, we simply do not work as hard to evaluate insiders as we do with people from the outside, especially when things are going well.
When we employ from outside, we are forced to write a proper job description, consider a larger pool of candidates, grill them in well-structured interviews, and conduct in-depth reference checks. We do not use the same rigour with internal appointments.
Companies should always look for opportunities to promote top internal candidates while also benchmarking against high-quality external ones. Research has consistently shown that the best appointments happen when you consider a wide pool of both insiders and outsiders.
For each position the company needs to fill, thorough background work must be done. I have seen this skipped even for external appointments.
Fernández-Aráoz suggests: “Map out your priorities, take a critical look at the people around you. Are you facing a demographics threat? What is the strength of your leadership bench? Are there looming vacancies you’ll need to fill?
"Who are your most strategic players? The most competent? The most critical? Who would competing teams, units, or companies be most likely to go after? How will you keep them instead? Perhaps most importantly - who are your rising stars? Who could take on a bigger or different role? What training will they need to do so?”
Does all this time-consuming effort matter? Consider these facts and then decide if the effort is worthwhile.
The difference between a typical performer and a highly productive one on an assembly line is about 40%. The difference grows exponentially with the complexity of the job. A top life insurance salesperson is 240% more productive than the average one, while exceptional software developers or consultants outperformed most peers by 1 200%.
We cannot rely on the typical interviews as these are usually “a conversation between two liars”. The company is lying about their attractiveness and the candidate about their competence.
We need thorough preparation and rigorous interviewing and by people with superior “hiring averages”. A hiring average is your score on the number of candidates you employed and their success after six months in the position.
If those responsible for employing in your company know they will ultimately be held accountable for their verdicts - with a hard number - interviews will change from chatting to real interviewing conversations.
With the right knowledge, training and practice, Fernández-Aráoz believes everyone can master the art of great “who” decisions. Correct selection also provides the best opportunities for success you will ever have.
No matter how good the strategy, or no matter how good the method, you cannot be an A-grade company with B-grade people.
A good place to start honing you skill would be by reading this outstanding book, the best I have ever read on this subject.
Readability: Light ---+- Serious
Insights: High +---- Low
Practical: High +---- Low
- Fin24
*Ian Mann of Gateways consults internationally on leadership and strategy and is the author of Strategy that Works. Views expressed are his own.
