1926 was a big year. The future Queen Elizabeth was born in London. John Logie Baird demonstrated his first television. And Thorndike Deland founded the first executive search firm. Nearly 100 years later, many boards still default to using headhunters when they have a seat to fill. But the world has moved on, and to navigate the complex challenges of the 21st Century, organisations hiring new board members need to move on from traditional search.
Traditional search doesn’t identify the best people
Cornell University’s JR Keller is an expert in talent acquisition and management. He studied 11,000 internal hires at a Fortune 100 firm and found clear evidence that open hiring processes are more effective. Keller looked at roles that were filled through a company-wide advert inviting anyone to apply, and compared them to hires selected by managers in a closed process.The "open hire" candidates outperformed the "closed hire" candidates, “on nearly every conceivable dimension of quality.” They were also 20% less likely to quit or be fired.
Traditional search is very much a closed process. Role specs are drawn up behind closed doors and people deemed to fit the role are approached, which leads to a smaller, narrower set of candidates being considered.
Traditional search struggles with diversity
Closed processes lead to narrow talent pools, which are terrible for identifying diverse candidates. Almost every review into board diversity has pinpointed hiring as the problem and stressed the need for more openness and transparency. This goes against the tap-on-the-shoulder culture on which traditional search is built.
And this explains why increased pressure on search firms to diversify the candidates they put forward has had limited success – secrecy is baked into the process.
Traditional search overcomplicates things
As Ram Charan wrote in his 2005 book Boards That Deliver, “no executive recruiter can grasp the subtleties of a client's business as well as the client can.” But it’s not in a search consultant’s interest to keep the chain between client and candidate short.
In fact the opposite – consultants need to insert themselves into the process as an intermediary and prove their worth by adding value in between. Now the client’s needs are filtered through this intermediary, and the final shortlist will be defined by how the consultant understands the brief, and what elements they deem to be most important. (Conversely, a candidate led-process drives talented people towards the role, widening the talent pool considerably).
In this way, as a report by the UK’s Equality and Human Rights Commission (EHRC) explains, “the outcome of an appointment process may be significantly influenced by the preferences and biases of the search consultant.”
Traditional search is rife with bias
Traditional search processes are beset with bias, from the initial briefing conversations through to interviews. While some of this may be unconscious, it nonetheless compromises the quality of candidates that headhunters produce.
“Research shows that search consultants go around in their heads with an image of what they think the board is looking for,” psychologist and bias expert Dr Doyin Atewologun told a recent Nurole webinar.
This pre-fixed idea creates framing bias which means headhunters only contact people who fit that picture. Parameters are set, often arbitrarily, which immediately rule many people out. This not only restricts the breadth of the search – it has implications for diversity too.
Framing bias goes hand-in-hand with confirmation bias. This means that when candidates are assessed, the validity of those initial parameters are re-enforced. Let’s say a search consultant has decided a board needs an ex-banking CEO. Their process doesn’t allow for the fundamental premise to be questioned. Rather it becomes, “Which of these ex-banking CEOs should we present to the client?”
As part of the service, recruiters will interview a selection of candidates. But here likeability or “similar-to-me bias” can cloud the interviewer’s judgement. Search consultants assess a candidate’s suitability based on their skills – and which of these they deem to be the most important – and subjective judgements about their “fit.”
It’s hard to work out if someone will fit into a particular organisation.Research suggests that instead, the interview often becomes focussed on how well the headhunter and the candidate click. So “the “old boys network” is replaced by the”‘new boys network” which is run by executive search consultants,” according to the EHRC.
Traditional search lacks imagination
By acting as gatekeepers, search consultants have the power to define what a good candidate looks like. And the evidence shows this has been fixed in a very narrow way.
This gets compounded by the market forces of the headhunting industry. In his 2002 book Searching for a Corporate Saviour, Rakesh Khurana found that search consultants were under pressure to come up with “defensible” candidates. Rather than push the envelope and find fantastic people who could really transform an organisation, they wanted to present people whose presence on the shortlist they could easily explain. Safe and sellable wins the day.
In her 2010 study of a US search firm Who Gets Headhunted?, Monika Hamori drew similar conclusions. She found consultants focused more on a candidate’s job title than their achievements, and they also favoured people working at big, well-known organisations.
This produced competent but uncreative and risk-averse shortlists. Its consultants struggled to spot potential matches across different functions and roles, producing lists of people already doing the same sort of thing somewhere else. Boards shouldn’t make hiring decisions based on someone’s business card. They need to understand the candidate’s underlying competencies to really grasp how they can contribute.
Traditional search cuts corners
In their book Headhunters: Matchmaking in the Labor Market, James Coverdill and William Finlay produced, “a frank and sometimes unsettling portrait of the aims, attitudes, and tactics of practitioners.”
They found that headhunters were often driven by self-interest. They cut corners and filled positions based on what was easy, rather than what was right for their client. Of course it’s quicker and cheaper to recycle previous work, but that’s why the same names come up time and again and boards are struggling to diversify.
Traditional search is expensive
Firstly, five and six-figure fees exclude a range of organisations who can’t afford them. Secondly, what are you paying for? Some researchers' time? Access to a database? And how much of a consultant’s chargeable hours are spent on schmoozing, or time consuming legwork that smart technology could do in seconds?
Traditional search unearths mercenaries not missionaries
Research by LinkedInsuggests that people who are approached about a role (passive candidates) tend to be motivated by money. People who are looking for a new opportunity (active candidates) want to do better work, build their careers and make a difference.
So while traditional executive search firms pride themselves on knowing who to call, they may produce candidates who aren’t fully invested in your organisation. You may end up making one of the most common board hiring mistakes – bringing in what Patrick Dunne calls a “superstar candidate” based on their dazzling CV, who turns out to be too busy to make any meaningful contribution.
Traditional search doesn’t specialise in board hires
For most big search firms, traditional search is a loss-leader and most of their time and energy is spent on high-value executive roles. This makes sense as a business model, but it also means that big search firms often overlook the specific and often subtle differences you need to find fantastic non-executive leaders.
Best practice for board hiring
So how should a board that’s invested in finding the strongest, most diverse candidates approach their next hire? Research points to the following steps:
1. Create a well-defined brief (in which the hiring organisation is challenged).
2. Open up the hiring process to bring in a broader range of talent.
3. Design an assessment process which includes a cognitive ability test, a work sample test and a structured interview.
4. Take references that don’t just rubber-stamp your decision.
You can read more about this process here.
Nurole is changing the way organisations hire board-level talent. Our tech-driven process is the most efficient way to find high quality, diverse candidates. We have placed 1,000 people across a whole range of sectors, roles and territories, and we have transformed the boards of multinationals, start-ups, charities, government bodies, and everything in between. Contact us to discuss your next board hire.