The Future for Executive Recruitment

Have you ever wondered how organizations find their next leaders? In the June Harvard Business Review, Claudio Fernandez-Araoz discusses what he calls the new era of talent spotting. In this article, he provides his insight into how organizations need to be seeking top talent based on today’s amorphous nature of business.   In this post, we’ll provide a look at what companies are looking for today, which you’ll certainly want to know if you have plans to become an organizational leader. We’ll take a look at the various eras of development of talent spotting and make some predictions on what the future holds for you.

The Physical Era. The first era of talent spotting, according to Claudio, was purely visual. For thousands of years, work was comprised of tasks that required a lot of physical labor. Therefore, if you wanted to get it done faster, you would choose people who appeared to be big and strong. Even though these physical attributes aren’t as critical to the work we do today, some attributes are still considered to be valuable. For example, height is apparently important as the Fortune 500 leaders, as well as military leaders, are 2.5 inches taller than the average American.

The Intellectual Era. The next era of finding talent is the era that I’ve grown up in; that is, an era where education, experience and performance are important. These filters were required because work had become standardized and professionalized. Work was broken down into tasks that required certain skills. These skills were easily identified and could be assessed on a resume and during an interview. For up and coming leaders, it was easy to identify a career path and the credentials needed. You had to go to college and earn your degree. You had to engage in professional organizations and extracurricular activities to show you were well rounded. Then, you had to put your expertise to work and create some major accomplishments that organizations could verify. Your past performance was a predictor of future performance. Fortunately for professionals in this era, their credentials and accomplishments were valued in similar roles across a wide range of organizations, allowing a flexibility of movement from company to company. According to Claudio, this era is gone.

The Potential Era. Here’s where we are today. Corporations are amorphous, which is an intentional lack of structure that supposedly allows the company to change to meet market needs. The structure we knew in the previous era no longer exists. Claudio refers to this new environment as VUCA (volatile, uncertain, complex and ambiguous). Corporate strategy, once defined in a five year plan, now changes so frequently that such plans aren’t even created.  In this kind of environment, employees with fixed skill sets and expertise are useful for a short period of time. Employee value comes from an ability to move from one skill to the next in an efficient and effective manner. Today, companies will be looking for those superstar all-purpose players; that is, anyone who can do anything, anywhere, at any given time in and in any manner required (which explains the shortage in such talent).

So how do organizations go about finding such potential candidates? They measure ‘potential.’ Claudio suggests managers must learn to assess prospective employees on five factors. These factors are the right motivation, curiosity, insight, engagement, and determination. While Claudio admits to a method with 85% predictive accuracy, organizations are going to struggle with it, especially with new college graduates. But first, let’s consider the working professional.

Most companies don’t have any “high potential” programs to identify such talent in their existing workforce. Sure, the big companies do but the world isn’t full of big companies. It’s mostly small and medium enterprises (SME), who can’t afford to create such formal programs. (Personally I think SMEs will have more of these high potential people anyhow as you have to wear many hats in a small company). But, for entertainment purposes, let’s just consider the big companies.

Now, we know most of the big companies only hire the top talent from the best universities. My first question would be “do these top programs teach motivation, curiosity, insight, engagement and determination?” My initial thought is probably not. I didn’t want to ask any programs to respond to this question for fear of getting a canned response, so I thought it might be interesting to see what graduates and students of top programs would suggest.

Every couple of years, Business week surveys the best schools and invites students to provide open comments on their experiences. Here are some interesting comments from the class of 2012. At Columbia Business School, students complained about the lack of outreach by career services, the lack of university resources dedicated to the business school and the acceptance of too many ‘connected’ applicants. “Too many students are ‘sons of,’” claimed one MBA graduate. “They are plain dumb but got in because dad or mom wrote a big check to the school. This is not acceptable.”

At Duke, an MBA student asserted that the students could be “a little too party-oriented and immature” which sometimes led to mediocre classroom discussions. “Faculty and staff could hold students even more accountable for not taking the academic portion of school seriously enough,” stated another. “We should stop babying people and start really pushing people to be great.”

At the University of Michigan’s Ross School of Business, graduates thought that lax grading policies in classes led to a less-than-ideal learning environment.

In talking with a friend who graduated from Stanford, the grading policies were not very motivating for students. In short, the top 10% of the class got an ‘A’ and the bottom 10% got the door. So, everyone aimed for being better than the bottom 10% in what this graduate called a “quest for mediocrity.”

On and on this goes….NYU’s alumni network isn’t involved in the school, Wharton has poor quality in teaching, and INSEAD students felt the professors should take their own classes to see how bad things really are. Now, we must realize this was an open forum for complaining, but it still creates enough concern that even the top programs aren’t going to create potential leaders with the 5 great ingredients. I’m not just picking on the top programs but they do have a tendency to create many of the graduates that take top positions in big companies. So, do we really think these companies are selecting ‘potential’ employees based on these ingredients? No, but this might be part of Claudio’s strategy.

Ok, I took too long to say that I don’t think MBA programs will create a talent pool with such ‘potential.’ To make the situation even more difficult, I don’t think companies will be able to develop these ingredients either. Having spent many years working with MBAs, I haven’t seen anyone turn an underachiever into an overachiever. I’m not saying it doesn’t happen but it certainly isn’t the norm.

The Aura Era. This era is yet to arrive and is a prediction based on the current trends in finding top talent. The executive of the future will possess such extraordinary abilities that they can be detected only by those sensitive to such emanations. There have been many movies in the past and even in the present that have alluded to these abilities. More recently, the movie ‘Divergent’ depicted a society where people are divided into factions based on virtues, as determined by a unique serum-based aptitude test. The ‘divergents’ has values of all the factions, think independently and aren’t easily controlled by the government. One of my favorite movies that addresses the detection of extraordinary abilities in others is Star Wars. I imagine one day you’ll go into a job interview with Darth Vader. He’ll raise his hand towards you and will sense your JETI abilities. You know his famous words “The force is strong in this one.” For my UK fans, I imagine your future will be determined by a Harry Potter style sorting hat. You’ll simply walk in the room and they’ll place the hat on your head, which will declare you a leader or a follower. The interesting thing about these techniques is that they don’t consider any of the things we currently consider to be important. Is there a leader gene we can test for? The challenge for the professional is that we see organizations moving away from parameters that can be measured and verified easily, which can lead to many of the issues we see today (e.g. nepotism, favoritism). The good news is that your interviews won’t require any preparation time. In the future, you’ll either have it or you won’t.

At this point, I really hope that organizations don’t attempt to start hiring talent based on potential, as I think it will add an undue level of complexity to an already challenged process. In the end, it’s likely to do little to change how things really work. Potential isn’t something you just pick up at the grocery store. You probably have a history of indicators that show you can do great things. Seems like that should be sufficient, right? But if it isn’t, I’m in the running for big promotion as my skills are untapped! I suggest that organizations be a little more stringent on the performance of the people they hire. If you aren’t doing a good job, then you should be given an opportunity to improve before being released. If companies want to hire like professional sports programs, then they should also fire the same way. If a leader isn’t working, there’s no need to punish everyone for their shortcomings.

So what do you think? Will hiring managers adopt this practice? Will ‘potential’ become the new currency for career success?

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