Heidrick & Struggles Opens Its Kimono
July 29, 2010 by Harvey Wigder
In a recent article in the Financial Times, the new CEO of Heidrick & Struggles, one of the nation’s leading executive search firms, tells about changes resulting from a recent internal study of the results of 20,000 searches.
“We’ve found that 40 per cent of executives hired at the senior level are pushed out, fail or quit within 18 months.”
Some industry observers who saw that quote used it to bash the firm. For example, Staffing Advisor says “Astonishing. He’s describing a 40% failure rate by one of the most trusted and reputable brands in the executive search business. (If that statistic is true, I’m glad they didn’t build my house or service the breaks on my car.)”
Staffing Advisor was being disingenuous because they know that Kelly is only admitting what other observers have known for years. It is hard to find and integrate executives into a new company. Failure rates are high and the reason is cultural fit, not skills.
Kelly is a young CEO who earned his recent promotion because of his successes building revenue in the Heidrick regions he managed. He is using this research as a basis for introducing new services and income streams to the company. To continue quoting the Financial Times article: “The firm now offers companies everything from initial training and early feedback for their new recruits to regular assessments of current executives and succession planning and staff development programs.” The article then quotes a killer analogy. “Mr. Kelly likens the services to the work of an organ transplant team, which not only locate and attaches the new heart or liver but also follows up with the patient to make sure the transplant is not rejected. Such “leadership and advisory services” now account for 10 per cent of Heidrick’s revenue. Mr. Kelly hopes to push that number to 40 per cent over the next five years….”
I am sure these new services will be attractive to the Fortune 1000 firms who are most apt to use the services of Heidrick & Struggles and the other big brand search firms. This is the CYA mentality immortalized in the phrase, “You can’t go wrong with IBM!”
If Heidrick and the other big search firms had the courage to take a deeper look, they might take a Deming approach and consider the failure rate as having something to do with their processes and business model and tackle the question: What can we do to improve our processes?
At Fulcrum, we have recognized the problems in the big-company search model for years. We improved our processes several years ago and we provide a 100% satisfaction guarantee. We are happy to see that a giant like Heidrick and Struggles is beginning to get it, and is offering (for an additional fee) many of the services we already provide as part of our stand search package.
If you go to Heidrick’s website, you will see the array of services they offer and learn about the many experts who provide them. On the other hand, if you go to the Fulcrum web site, you will see a simple promise: a guarantee that we will get it right. Let the clients decide which firm gets it right.
What does the BP oil spill have to do with executive recruiting?
June 21, 2010 by Harvey Wigder
Every night on the evening news, we see oil soaked animals and witness interviews with unfortunate and hardworking people who can’t make their mortgage payments. Then we cut to the underwater camera which shows the continued rapid flow of oil and finally we switch to a map that shows us a bigger and bigger area of destruction. Recently, ABC Evening News superimposed a map of Nebraska over the Gulf. Maybe by now, they are showing Alaska. Last weekend, in acts of PR “genius” BP’s Chairman sympathized with the “little people” and its President attended a yacht race,
As this goes on we get angrier and feel more hopeless. We wonder how and why the parties could have done what they did, why we can’t fix it faster, and last, who exactly is responsible.
Assigning responsibility is tricky. Certainly BP underestimated risks and cut corners and deserves its current prominence for malfeasance. But, the responsibility is broader. The oil industry wasn’t prepared and this isn’t the first leaking rig. The government structure for regulation was in place, but the people who did the regulating didn’t act in the public interest. Despite the warning signs, our appetite for petroleum fuels remains unabated. The consequence seems to be riskier and riskier drilling. Should we hold successive administrations responsible for insufficiently dealing with this potential crisis?
Besides bail out, the solutions that are now being proposed address responsibility and punishment. The mechanisms are increased penalties and better regulation. Given the current malaise in Washington, the Congressional debate on how exactly what to enact will go on for years and will end with the public having little confidence in the final result.
Last week the news also brought the story of a Tylenol recall because bottles manufactured in Mexico gave off an offensive, and to some, sickening odor. Before BP took them off the top half of the page, Toyota also showed offensive irresponsibility. The problems caused by the Greek governments irresponsible stewardship of the country’s economy have also impacted us all. The sources of threat are everywhere! If you believe that global warming is in progress, that ups your level of concern about the fate of our earth.
Our ability to cope hasn’t kept up with our ability to manage global interdependency. National governments are now dealing with issues of international impact with agreement between nations almost impossible because of diverging interests.
Dealing with these issues will require systems thinking on an international scale with a corresponding recognition of the problems and a will to deal with them. The track record isn’t good so this is highly unlikely. I can only anticipate a long series of unanticipated disasters. These issues don’t have a single culprit or even a root cause. The problem is that we can’t manage a diverse system. Fortunately a company is a smaller entity than the world economy and some are managed very well.
Executive recruiting is more problematic than the search industry wants to publicize. Just to get you oriented, recent surveys have shown that 40% of newly hired CEOs don’t last 18 months. For more metrics that show how dismal executive retention rates are, click here.
When you are an owner who sees that a hiring mistake has been made, you are seeing an oil leak on a smaller scale as the business makes bad decisions, looses market credibility, experiences drops in profits and morale, and begins to lose its best people. The cause can be summarized by this phrase: people get hired based on their resumes and get fired because of their personalities and their failure to provide leadership in the right way in an organization with a specific culture.
A non-systems oriented search will list the skills and experience that the resume of the new executive should contain. On the other hand, a systems perspective would consider the culture of the organization, its strategic plan, the role a new executive can play in implementing it and the obstacles the new executive would have to overcome to be effective. The specification would go beyond the resume and consider personality, character and ability to fit into the culture while simultaneously being a change agent.
The systems view would then go broader still: It would consider that the organization and its current leadership need to collaborate for success and therefore will have as much or more responsibility for achieving the organizations goals as the new executive. That is follow up and integration is included as an important step for success. Both the organization and the new executive need feedback to ensure they stay on track to achieve the larger goals of the organization.
Conclusion
The time for limited, non-systems thinking has past. Those who are engaged in executive search can continue to make the mistake of seeing the responsibility for success as only being in the hands of the person hired (e.g. if that person doesn’t work out, we hired the wrong person) and begin to take a broader systems look at what the organization wants to achieve and the responsibility of the whole for achieving it.
Good to Great Advisors
May 6, 2010 by Harvey Wigder
In my view there are two essential characteristics of Great Advisors. The first is broad experience coupled with analytic skills, an understanding of how operations impact results and the ability to identify trends, opportunities and issues. Progress results when the right problems are solved. The second is the skill to work within the frame of reference of the client to help the client identify a solution that he or she believes in and will implement. I will discuss each of these characteristics below.
Scope of Knowledge and Wisdom to Select the Right Problem
Most advisors have been well trained as specialists in their disciplines. The good ones are on top of their profession and supply the contracted product and service with precision and at the state of the art. However there is also parochialism that comes with their training. What if they provide an excellent solution to a problem their client asked them to solve that was really the wrong problem for the client to expend resources on? That wastes resources. Worse, what happens if the advisor knows that this isn’t an essential issue but provides a solution in any case? Is that ethical?
Like a well trained advisor, an entrepreneur who has developed his or her business has been trained by success and has habitual ways of responding to business situations.
Most of the time, the good advisor will be solving the right problem and most of the time the owner’s solution to a problem will be the right one. It is at the margins where interesting situations occur. These margins occur at those moments that call for “out of the box” thinking. In those cases, wisdom involves stepping back and identifying the right problem as a precursor to solving it. The Great Advisor can stand back and identify critical issues.
An owner should look for an advisor who challenges him or her to find the right problems to solve. Advisors who meet that criteria might be ones who have run businesses or who belong to multi-discipline groups such as I have mentioned previously, Exit Planning Exchange or The Family Firm Institute. This exposure to other disciplines and ways of thinking helps train them to step back from the problem a client presents and help identify a deeper or more fundamental problem. This directs resource to solving problems that will benefit the business.
As good as this broad knowledge is, it not enough for Greatness. I think a second characteristic is needed for a person to qualify as Great Advisors.
Respect for and Acceptance of the Client
Because of the broad experience in dozens or even hundreds of companies a good advisor brings to any one client, that person will often see opportunities for improvement. It is very common for advisors to be frustrated because their client doesn’t get it! Why is he or she resisting good recommendation?
I am going to make my point by asking you to drawn on your own experience. Let’s say you have a problem bothering you and you talk to a few people about it. The first person doesn’t have the patience to let you “get it all out” and gives advice on how to solve the problem. How annoyed and frustrated are you? The second listens and asks a lot of questions. After awhile you solve the problem yourself (eureka) or are more open to discussing alternative solutions. Does that feel better to you, and are you more likely to go with the decision made in that situation?
The Great Advisor takes the time to explore, understand, and respect the psychological and cultural context and then works within that framework to get done what the person or system is capable of doing. The Great Advisor has developed skills as an active listener and has learned to understand and explore before jumping to action.
Trust
You will notice that a Great Advisor doesn’t always get great results. However, the Great Advisor does build relationships and acts in a trustworthy manner. They understand that they can be influential but in the end, the decision is with the client and that the client has the right to do “the wrong thing”. At the end of the day, The Great Advisor has the satisfaction of knowing that he or she worked in the client’s best interest, has not been self serving, has done no harm and hopefully has helped the client make progress. The Great Advisor stands ready to provide greater value when the client is ready to take a broader view.
The books I recommend are Dirty Rotten Strategies: How We Trick Ourselves and Others into Solving the Wrong Problems, Precisely by Ian I. Mitroff and Abraham Silvers, and Helping: How to Offer, Give, and Receive Help, by Edgar H. Schien.
The Advisor’s Dilemma
May 4, 2010 by Harvey Wigder
I belong to two professional associations that consist of seasoned advisors who consult to family and private businesses. To get the juices flowing, we sometimes discuss cases that highlight issues and make us think about common concerns and ways we can collaborate to provide the most value to our clients.
Let’s look at the structure of a typical case. The case starts with the history that resulted in the company’s origins and place in its market. Generally the cases present a company that is a going concern and has, at its core, a foundation for a good future. However, there are problems. It almost always is declining profits. Underlying and contributing to this are problems with funding, sales, marketing, customer service, and operations. There will also be further underlying concerns about family dynamics, the quality of owner leadership, and the quality of the management team.
The advisors who discuss these problems offer different perspectives:
- Those who are accounting oriented, analyze the content and nature of financial data to get to the issues that seem to most affect the bottom line.
- The M&A specialists talk about what has to improve to make it more attractive for buyers and fetch a higher price.
- The business and turnaround consultants focus on the strategies they implement to turn the company around.
- The lawyers offer up the legal tools to draw up buy sell terms and related succession plans, but usually need to hold off until other issues are resolved.
- Estate planners outline strategies to preserve and grow wealth.
- The money manages optimize security and investment income.
- The organizational development people will see problems with leadership and will propose programs or coaching to improve planning and communications to better link human resources together to better achieve the mission of the company.
- Insurance people think of how to provide a financial safety net for the owners.
- I, as a recruiter, see opportunities to strengthen the company by introducing new talent.
We come out of these discussions with two conclusions:
The first is that the situation is much too complex for any single discipline, and in an ideal world, several would collaborate to help the owners solve complex and interrelated problems.
The second is a desire for, what I will call, the Holy Grail. By this I mean each discipline knows it has an important role to play with a focused successful company. What we all seek is company leadership that has an intelligent, well implanted business plan which leads to growth along with leadership who has an exit or transition plan to ensure the continuity of the business for the long haul.
Result: This can lead to the ultimate win-win. The owner has the experience of meeting business and life goals and advisors have the satisfaction of providing valued support along the way.
As advisors, our thinking about the company is not limited by its culture, and we know all companies go through cycles and leadership strengths in earlier stages can be weaknesses in later stages. We understand there is strength in coming to grips with change and being open to new ways of thinking necessary for the company’s present reality. We also know the owner who plans for the future dramatically increases the odds of achieving the highest quality result.
Put another way, our client may benefit from a changed way of thinking but doesn’t see the need or resists taking the risks inherent in implementing change.
The dilemma is tantalizingly simple:
How hard (or perhaps, in what way) should a trusted advisor push the owner to take a broader perspective and engage the support of other advisors and coaches who will help incorporate new ways of thinking and a more planning oriented approach to the transition that is inevitable?
The best advisors put their clients first and are consistent advocates for what is best for their clients and their clients businesses – but how can they do this if the client simply does not see the forest because of the trees? What do you think?
Machiavelli’s Take on Advisors
May 4, 2010 by Harvey Wigder
The word Machiavellian is often regarded as synonymous with manipulation. But, is that really what Machiavelli was about?
I recently read The Prince and was taken with Machiavelli’s sensible and straightforward message. He showed how applying an understanding of human nature would allow a ruler to increase power and territory. The manipulation inherent in the concepts was based on strategies that increased the ruler’s power through providing influence and wealth to supporters.
When he classified states in terms of how they were governed, it was clear to Machiavelli that democratic states were more lasting than despotic ones. They found a way to balance extremes and give each class a piece of the action. Sooner or later, he observed, a ruler in a monarchy would get caught up in himself and forget to govern for the common good. This would alienate subjects, leading to revolution and vulnerability to ambitious rival regimes.
Leadership requires wisdom and knowledge and no one individual has a monopoly on it. As a result, Machiavelli understood how important it was for a Prince to have advisers who could help him stay grounded in reality. Sustained power required that policies and decisions spread rewards and minimize discontent.
He cautioned that the price of choosing advisors who were sycophants would sooner or later be high. Conversely, he documented that Princes who had the wisdom to use advisors with knowledge and skill and the backbone to be truthful had a better chance of survival and enhanced success.
These insights are as relevant today for a business owner as they were for a Prince in Machiavelli’s time. (Read more.)
The business owner whose advisors are cronies or dependent vendors and employees without the background and insight to provide needed advice or who have been trained not to offer it will lose out in the end. If you are an owner, it might meet certain human needs to have your judgment reinforced by yes men. (We will review the tale of the Emperor’s New Clothes on the right hand side bar.) However, it isn’t good business practice. Here are ways you can evaluate your advisors and your ability to benefit from good advice:
- Does the advisor have experience and success in an area where you need help and where you are seeking guidance? (This could be in domains as distinct as general management, whether to invest in new plant or technologies, or financial management.) You should seek people with the resume to provide guidance and bolster your strengths.
- When you ask for advice, are your views reinforced or are you challenged (respectfully) to see things in a new way, think out of the box, examine prejudices, or question past policies?
- If you take the risk of following advice and doing something that is out of your comfort zone, does following the advice lead to hoped for improvements?
- If yes, you are probably on the right track and have a valuable advisor and should followed his/her advice literally and in sprit. Treasure that person and your collaboration.
- If no, there is a problem. Then you need the wisdom to find out if the problem was the advice or the way you implemented it or something else. Whether the problem was with you or the advisor, the business will be preserved and enhanced if you show the courage to deal with reality.
Machiavelli remains pertinent today because human nature remains the same. We can get caught up in our technological world and forget the universal principles that tend to repeat themselves through recorded history. One universal principle is that self insight and the ability to learn and change behavior remains problematic. People are complicated.