Archive for December 2013

Why Do CEOs Get Fired?

December 16, 2013

We’re all familiar the mantra: hire for hard skills but fire for soft skills.  This is true for CEOs too.

It’s a popular belief that CEOs get fired (or forced to resign or retire under pressure) because of poor financial performance. But that’s wrong, according to a four-year study by LeadershipIQ.com who interviewed 1,087 board members from 286 public, private, business and healthcare organizations that fired, or otherwise forced out, their chief executive. Below are the five reasons the CEOs were fired and the percentage of board members providing the reason:

  • Mismanaging Change – 31%
  • Ignoring Customers – 28%
  • Tolerating Low Performers – 27%
  • Denying Reality – 23%
  • Too Much Talk, Not Enough Action – 22%

Board members or other hiring managers can minimize mis-hires by focusing on screening for soft or healthy skills.  While it is easier to screen for hard skills, behavior based interview questions and workplace behavioral psychological assessments can provide insights regarding candidates’ likelihood of struggling with healthy skills.

Empower your selection team with the tools to screen for healthy skills and you’ll make successful hires.

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Use Premortems For Better Decisions

December 9, 2013

It’s a well know fact that 75% of business startups fail in the first year, over 80% fail in the first 5 years, and only 4% survive 10 years.  Given these overwhelming odds, why do so many entrepreneurs risk their life savings and start businesses?  When most people anticipate future events, their initial reaction is to be overly optimistic.

We’ve all sat in meetings where the high influencers in the group persuade the team with the optimistic vision.  The opinions of the quiet realists are often overlooked or stifled by the enthusiasm created by the energetic influencers. Good leaders recognize decisions can be highjacked by the overly optimistic vocal team members and go out of their way to extract the opinions of the less forceful deeper thinkers.

One approach is to challenge the team to conduct a premortem when making important decisions.  When the team has almost come to an important decision, have the team imagine they are a year into the future. They implemented the plan as it now exists. The outcome was a disaster.  Discuss what went wrong that created the disaster.  You’ll be amazed how engaged the introverted conscientious team members become and how better decisions are made.

Empower your decision makers to conduct premortems and they will make more successful decisions.

Use Success Factors to Rate Direct Reports

December 2, 2013

Microsoft announced recently they are abandoning their controversial “stack ranking” system for evaluating employees.  For years, Microsoft managers have been required to grade employees against one another and rank them on a scale of one to five.  Under this approach, some employees must receive an unfavorable review based on how they compared to their peers, regardless of the quality of their work or their accomplishments.  This created great angst for both managers and employees and is the primary factor for Microsoft’s poor morale.

Jack Welch similarly mandated a 20-70-10 differentiation process at GE.  Each GE department head was required to identify 20% of their superstars, 70% producers, and the 10% low performers needing to be terminated.  Even in an organization as large as GE, this approach was rejected by both managers and employees.

There is nothing wrong with differentiating your team – your superstars should be treated differently than your questionable contributors – but forced ranking is not the best approach.  The best differentiation models identify specific rigid criteria required to be identified as a superstar, producer, or questionable.  It doesn’t matter what percent of your team are superstars as long as they achieve the established challenging success factors (both achievement metrics and cultural/behavioral performance).  Similarly, those team members failing to meet their success factors and falling into the questionable category should be working on an exit plan, regardless what percent of the team this represents.

Empower your leaders to differentiate based on predetermined success factors instead of a forced ranking, and you’ll have a successful team.