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CEOs must take the scientific approach to win the regional talent war across all levels of the company — including their own boardroom.
Dubai’s World Expo 2020 success means a job creation bonanza — with more than 250,000 new jobs to be created, according to estimates. Even in 2014 alone, Tecom Business Parks is expecting around 11,000 new jobs to be created across its nine clusters.
Talent is in high demand and in relatively short supply and so companies have to compete strongly to find the right people. Very often, recruitment is seen rather as a numbers game; the number of positions to fill, the use of online recruiters to generate the required number of candidates; vague refinement through screening to interview the right number of candidates, and finally to the offer. It can be a hit-and-miss process and the dangers in getting it wrong are substantial.
You would expect that at the highest levels of an organisation that recruitment would be sophisticated, refined and powerful. It rarely is.
The boardroom is perhaps the most challenging recruitment patch in the corporate world. The board has to consider and deliver the talent strategy to attract, recruit, develop and retain the very best as well as consider diversity targets and succession plans.
If getting recruitment wrong is expensive and disruptive at middle and junior management levels you can imagine the impact of a mistake at the board level.
The estimated cost of a recruitment mistake is conservatively put at one year’s salary of the employee — this would obviously be very significant at board level and there are the added impact of negative publicity, damage to reputation, complications of extracting what might be an equity partner with all the associated costs/commitments of the company, and even the possibility of having to pay compensation. Then you have to start all over again, with all the costs that another recruitment drive brings with it. So what should we do?
The good news is that there is a science to finding talent, and there is a best practice to help guide the process. Some methods, can help but interviews, references, tests and presentations do not carry equal weight. Some help identify talent better than others.
And then you might ask, what are these recruitment tools designed to do and what sort of people are we trying to find? As we all know, it is not just about the skills and competencies of candidates, not just the cv, the professional persona — fundamentally, it’s about the personality. Getting the right person for the right role.
There are some personality traits that might be very important (and perhaps especially at the top of the company), but extremely hard to detect, such as creativity, attitudes to social responsibility, willingness and ability to collaborate, organisational citizenship, and so on. Too often I see mistakes in how organisations try to identify these vital traits.
There is also a role for the CEO and Top Team in the recruitment process. Ideally, talent management should be seen as a system that includes recruitment. In the ideal world, the same rigour and standards should be applied when recruiting for any position. In my experience of helping companies with psychometric profiling for CEOs and senior executives, the rules seem to go out of the window as soon as you reach the c-suite.
So, companies may be reasonably good at recruitment up to the boardroom, then completely ignore their own process once they approach the board.
Although recruitment is one part of the talent management system, there is the equally critical process of ‘onboarding’ and induction. A new director may have some very specific needs, such as coaching, specific skills development, team development with their new reports, hothousing experience to different parts of the business, for example.
Board members also have their own ongoing training and development needs and opportunities; to retain talent (especially for more recent generations) there is a need to provide opportunities for growth and autonomy to fulfil intrinsic motivations. The job or the pay is not enough in itself. They may want to network around their new peer group and study for an executive MBA from a top business school, if they don’t already have one.
With all of this hit-and-miss boardroom action, people will move on; some of them quite quickly and we can see the relatively high and increasingly fast turnover of the top management in high-profile public companies, especially. Generally, the more talented the executive, the harder it will be to retain them. Hence the importance of not only having the highest quality standards in recruitment, but also in the talent management tools of onboarding, coaching, development, succession-planning, etc.
The Conference Board CEO Succession Trends (2000-12) indicates that in 2012 more than one-quarter of the S&P 500 companies that replaced their CEO hired from outside the firm, up from 19 per cent in 2011. Internal promotions of executives to the CEO role fell by nearly one-half to 30 per cent of total successions in 2012 from 58 per cent at the end of the 1980s, and compared with 46 per cent in 1996.
Going external places even greater demands on the accuracy and power of the recruitment process — it is harder to ascertain the quality of an executive when they come from outside the firm.
So, succession-planning should arguably be the CEO’s top priority; he or she needs to manage the constant throughput of talent and ensure strength in depth for key positions throughout the company’s hierarchy. One method of doing this is to start to withdraw senior executives from front-line roles so that they can adopt a more strategic role, allowing the next in line to step-up to be more hands on operationally.
It sounds easy doesn’t it? But it really isn’t. Recruitment at every level is just the tip of the iceberg and the real challenge is to manage and promote human capital effectively.
And it takes a system to do this, scientifically. The regional companies that do it right will be more effective, productive and profitable. Those that don’t will suffer in the inevitable War for Talent.
Source: Dr. Mark Batey, Special to Gulf News
CREDIT: The writer is joint chair of the psychometrics at Work Research Group, Manchester Business School, and academic lead of the Manchester Leadership Programme.