How Using an Executive Search Firm Can Safeguard Against Bad Decisions
/In 2009, Harvard Business Review published the article, “Why Good Leaders Make Bad Decisions,” by Andrew Campbell, Jo Whitehead, and Sydney Finkelstein. The article posits that “leaders make decisions largely through unconscious processes that neuroscientists call pattern recognition and emotional tagging. These processes usually make for quick, effective decisions, but they can be distorted by self-interest, emotional attachments, or misleading memories.”
To avoid making bad decisions, “Managers need to find systematic ways to recognize the sources of bias – what the authors call “red flag conditions” – and then design safeguards that introduce more analysis, greater debate, or stronger governance.” One of the ways to safeguard against bad decisions is to utilize an executive search firm.
Here are some examples of how not using an executive search firm led to a bad decision:
The CFO of a debit card company was weighing whether to continue using outside counsel or to hire either an in-house counsel or a chief compliance officer. The CFO mistakenly believed that making this hire would be expensive and elected to continue using outside resources. Had an executive search consultant been used, the company would have learned that there were many regulators who would be interested in such a job at a reasonable cost. Instead, the company was slapped with a $1 million fine by its regulator.
The board of directors of a bank sought to diversify its leadership team by hiring a diverse General Counsel. They left the hiring decision to the current General Counsel who hired a law partner from one of his go-to firms. While this partner met the diversity metric, the partner did not have prior bank experience. Had the bank used an executive search consultant, they would have learned that there is plenty of diverse talent with prior banking experience who would have been better suited for the role. Instead, the bank now has to defend this hiring decision to its regulators.
A venture fund had great success bringing in corporate law partners from its go-to firms to be the General Counsel for the start-ups it funded. This became the formula that it followed. The former corporate law partner did not have prior industry experience, did not bring tried and true processes and procedures but had to invent them on the fly, did not have experience with employment, IP or antitrust matters. The company ended up paying millions of dollars in outside legal expenses and lost substantial value when issues in these areas came to light. Had the venture fund used an executive search consultant, it would have learned that there was plenty of reasonably priced talent available who had prior experience in that industry and could have put processes into place that would have safeguarded against their problems.
The CEO of a Fortune 500 company did not like his current General Counsel so he fired him and promoted the General Counsel of one of its divisions. While the new General Counsel had the technical expertise to do the job, he did not possess the leadership skills to run the entire department. This lead to departures and employment litigation. Had the CEO brought in an executive search firm, the firm could have benchmarked his favored candidate against other internal and external candidates and identified a person with both the technical and leadership traits needed to be successful in that role.
A good executive search partner will help you navigate internal biases and raise your awareness about all of your options. They will help to guide you to making the very best hiring decision. As you can see from the examples given above, bad hiring decisions can be extremely costly. Using an executive search firm is a great way to systemize and safeguard against bad hiring decisions.
At Carrington, we are trusted advisors to our clients. We have a long track record of finding just the right talent for a role, which in turn, helps our clients succeed.
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Not sure if you have the right executive search firm? Check out: https://carringtonlegal.com/blog/2017/4/24/8-ways-your-executive-search-firm-can-make-you-look-like-a-hero