Multiple disruptions are roiling business today–from the pandemic and social injustice to political polarization and climate change. Under these conditions, transformative leadership matters more than ever. But it’s also harder than ever, because C-suite roles are shape-shifting–requiring new skills to manage volatility. By understanding how roles are changing and upgrading their executive-hiring approach, CEOs and boards can improve their odds of putting the best talent into key value-creating roles.
A morphing C-suite
Some C-suite roles are morphing to help organizations overcome new challenges and capitalize on new opportunities. Take the role of Chief Executive Officer (CEO). Simon Freakley, CEO of AlixPartners recently noted, “The role of the chief executive is more demanding today than it’s ever been. There is the need to be transparent, the need to be authentic, the need to be communicator-in-chief–all while also being laser-focused on execution.” Arne Sorenson, President and CEO of Marriott International Inc., has also observed: “Business leaders . . . need to drive shareholder returns in a manner that also serves our employees, our customers, the communities where we do business . . .”
The Chief Human Resources Officer (CHRO) role is changing, too. These executives must continue fulfilling traditional responsibilities like designing compensation and benefits plans and implementing learning and development programs (to name just an important few). But now they also have to coach their peers to excel in their jobs—especially in addressing employees’ growing needs in the face of multiple disruptions.
Other C-suite roles are gaining prevalence to address newer demands. In a survey of 3,000 global CEOs released this year from IBM, Chief Technology Officer was rated the most critical role going forward, immediately after Chief Operating Officer and Chief Financial Officer. And in AlixPartners’ Sixth Annual Private Equity Survey, relatively new roles that investors and portfolio company leaders are increasingly hiring for included Chief Transformation Officer as well as roles centering on sustainability and on diversity, equity, and inclusion.
In this same survey, respondents agreed that portfolio companies’ CXOs must continually develop their leadership style to best navigate a highly disruptive business environment. Leaders, they concurred, also face heightened exposure during disruptive times. This points to their increased importance as culture carriers–embodiments of a company’s shared values, beliefs, and behaviors. The notion of culture carriers isn’t new, but with the increased expectations employees put on their leaders today, one misstep on an executive’s part can call into question an entire firm’s reputation. Further, the additional time and effort leaders have had to expend during the current period of disruption will likely continue unabated–underscoring the need to safeguard their physical and mental health.
These situations raise tough questions:
- How can companies screen for and select the right candidates?
- What new competencies and personal qualities are required for these demanding roles, especially in times of disruption?
Executive hiring mistakes can come with a high price tag. One study* noted that C-suite turnover can cost a whopping 213% of salary. More qualitative costs include organizational instability, erosion of morale, and reputational risk.
The upshot: It’s vital to get executive hiring right–the first time.
Wanted: Smarter executive hiring
How can companies design a more effective and lower-risk executive-hiring process? Apply rigorous discipline to otherwise familiar activities.
1. Clarify role requirements.
In defining requirements for relatively new C-suite roles, start with your strategy.
• Why is the role critical now and why will it be important to the company’s future?
We have created a framework we call the Role Accountability Matrix (RAM). A RAM identifies four factors that determine a role’s impact: the role it plays in supporting the company’s strategy, its key performance indicators, the essential leadership competencies, and its unique cultural impact (i.e., how the role will shape the organization’s culture in the future).
To tailor this step to today’s C-suite roles, be sure to first get broad input on a role’s changing requirements. For example, if you’re hiring a Chief Diversity Officer for the first time, survey or interview a wider constituency of stakeholders, including members of employee resource groups, to define the most important competencies required for future effectiveness in that role.
Hiring a first-time Chief Transformation Officer? Ask business and functional heads to help evaluate candidates’ operational and financial expertise, ability to drive change (persuading hearts as well as minds), and—perhaps most important—resilience. Share your RAM with all stakeholders. Many CTOs are selected solely for their operational skills, even though driving sustainable transformation is as much about having the right people on board and fully engaged.
2. Assess candidates’ personality traits and cognitive abilities.
Assessing each candidate’s personality traits and cognitive abilities is especially important now because so much of leadership entails adaptability, flexibility, and the capacity to work and communicate often remotely with a broad variety of employees. Emotional intelligence, including empathy, matters substantially to leaders’ credibility and relatability, as does the ability to live one’s personal values and embody the organization’s values.
Match the resulting profile to the role’s requirements spelled out in the RAM. In today’s C-suite, personality traits most important during times of heightened stress merit particularly close assessment. Examples include flexibility (cognitive and emotional), equanimity, and tolerance for ambiguity. By studying leadership during natural disasters, we’ve learned that the best leaders project a sense of equanimity, communicate frequently and with clarity, and drive strong engagement in their teams.
Developing a candidate’s personality and cognitive profile is usually best done with an outside firm. Thankfully, business leaders can turn to specialists who have numerous empirical and normative tools available to assess these traits. Comparing results against an executive norm group further helps them see where candidates fall on these dimensions relative to their peers.
3. Evaluate past behavior for insights into future behavior.
As new leadership roles emerge, analyzing candidates’ past behavior to gain insights into their possible future behavior has become even more important. Behavioral Event Interviews (BEIs) can help you catalogue major events–such as reaction to failure, loss of a job, or early promotion–throughout an executive’s entire career. Combined with the other data collected, you can gauge how a candidate might behave in the future. You can also make well-informed decisions that reduce turnover risk, and help leaders improve their effectiveness once they’re on the job. BEIs are essential for predicting cultural fit, too, and for understanding the often lasting impact a leader will exert on the rank and file.
By following the steps above, staying close to the findings, and discussing them at length with a few trusted colleagues, you can better manage your hiring risks and ensure that you are bringing in the best leader possible.