The Missing Ingredient for Corporate Recovery

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Business leadership is in crisis: that is the implication of a series of studies highlighting the latest trends in post-recession recruitment. HM Revenue and Customs has revealed British businesses spent £4.4billion on redundancy payouts in the previous year alone, at an average cost of £9,362 per employee, dwarfing the estimated £4,000 per head spent on recruitment.

But, more worryingly, the level of departures near the top of the company hierarchy, and their associated cost, is even bigger. Studies show that the average organisation faces an imminent 7% loss in productivity due to departing top talent and under-managed recruitment pipelines.

Recent research indicates 40% of all new board level executives fail within 18 months, which is having a devastating effect on employee morale, whilst businesses are paying failed executives excessive redundancy packages to smooth their departure and avoid damaging tribunals. The scale of the problem is vividly illustrated by Brad Smart, who estimates that a single “mishire” costs UK PLC between four and fourteen times base salary.

The figures also offer little solace to those businesses that are successfully retaining their leaders, with research sponsored by Ros Taylor Ltd, a firm of Chartered Psychologists, finding that 90% of employees are expressing strong dissatisfaction with their manager’s methods.

Yet the stakes have never been so high: as we emerge from a recession, attracting and retaining a strong performing team is crucial to securing future growth. Successfully integrating leaders into new divisions or companies is proven to add as much as 10% to the bottom line with business leadership essential in streamlining processes, inspiring stakeholder investment, raising staff morale and generating strong returns.

It appears migrating executives may be the only ones doing well out of this corporate merry-go-round. Deloitte’s 2010 Shift Index found executive turnover is set to rise as companies, pressured by discontented shareholders, seek to make leadership changes, and an estimated four out of ten executives look for new opportunities elsewhere.

Understanding the root causes of this failure to retain top-tier talent has never been more critical for business, and key to this is recognising there is something wrong with leader recruitment in many organisations today.

Most business recruitment processes focus entirely on IQ, relevant skills and creating lucrative packages aimed solely at luring top talent. But, as a ground-breaking 1998 Harvard Business Review article by Daniel Goleman explained, the secret ingredient to successful business leadership is not IQ but emotional intelligence, the skill of an individual in managing the emotions of themselves and others within their specific organisation.

The Global Leadership Forecast found that one of the main reasons new leaders fail in the role, was the quality of their communication skills, attributes which cannot be gleaned from a standard CV, or often even during the interview process. If companies continue to maintain a narrow focus on skills and experience during executive recruitment without appreciating the impact of interpersonal skills, new hires will continue to fail.

HR managers need to ensure prospective candidates not only have the requisite skills on their CV but also that they fit with the organisation’s corporate culture, to ensure smooth executive transplants. If a person does not align with a company’s core values it is hard for that person to develop effective relationships within the organisation.

It is understandable that HR managers wish to hire people from related businesses or industries purely for the skills they bring: that may make sense from a human-capital perspective: but we also need to ask what other positive or negative experiences they may be taking with them. Research has proven that companies which emphasise cultural fit when hiring, and align their goals and values throughout the selection, recruitment and retention process, attain greatest employee value, and are the best equipped to survive recessions and generate high turnover.

In order to understand how best to mould the recruitment and leadership training process to guarantee a “culture fit”, companies must turn to the cutting-edge techniques of modern recruitment science, to help them distill their unique “DNA”. Our understanding of the intangible set of values that bind and define an organisation has advanced somewhat since McKinsey’s timeless description of corporate culture as “how we do things around here”. Techniques currently in use, include in-depth psychological analysis and observation of everything from organisational “rituals”, rules and “mission statements”, to physical layout, and linguistic analysis of key “buzzwords”, acronyms and “narratives” which encapsulate core corporate traits.

Evidence demonstrates that companies can even examine their rewards and promotion systems to determine whether their culture is “individualistic” or “collectivistic”, and whether it rewards behaviour or tangible results. Advances in online psychometric tests now enable psychological techniques to be tailored to an organisation’s cultural values to explore “cultural synergy”, allowing companies to determine the degree of candidate-employee alignment long before the interview process. They can even predict future behaviour and key areas where prospective candidates may require training, in order to help them adapt, during the “onboarding” process. Adapting these sophisticated methods to the online world, will dramatically reduce the time spent sifting, interviewing or training unsuitable candidates.

HireMatch.me is an innovative new online “match-making for jobs” software solution which is set to revolutionise the way businesses select new talent, using pioneering new talent assessments and psychometric screening to develop in-depth character profiles which are matched to individual corporate culture, in order to find the elusive “perfect fit” between companies and their ideal candidates.

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