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What the Board Members need to know about selecting Company Executives

What the Board Members need to know about selecting Company Executives

Despite the mounting scientific evidence that some employee selection methods have a very week or have no predictive power, some companies still continue to use them. No wonder why such companies continue to struggle. When you use selection methods with high predictive power you are likely to outperform your competitors and experience high productivity.

I have noted that Board members either due to ignorance or lack of proper advice continue to use the unreliable and basically useless selection methods.  I have not seen anyone succeeding after going against evidence generated over 100 years in the field of occupational psychology.  If you are struggling as a business before you blame the environment and others for your misfortunes check on how you bring new employees into your organisation. If there is no science in how the employees are selected you will never win. Any win you may have or have had could be down to pure luck.

I have observed that a number of Boards struggle to get the right executives for a number of reasons and I will outline some of them here. I will offer solutions to some of the challenges based on what works in practice. It is important that the select team of Board members be involved in the selection of senior executives. This should not be limited to the HR Committee members alone. For different roles involve different teams from the board. Here are the top 7 problems and suggested remedies.

Poorly structured selection process – The first challenge in the recruitment and selection of executives and other employees is that the process is often done in reverse. You normally find that advertisements are placed in newspapers or candidates are sourced from employment agencies.  Straight after this, the candidates are shortlisted for interviews. The correct process is that once candidates have been selected on the basis of the initial recruitment criteria notably qualification and experience you need to assess the candidates through psychometric tests and assessment centers first before going for the interviews. In practice, most companies start with interviews and then shortlist a few people for psychometric tests. The problem with this process is that the interview method as a selection process is unreliable especially if the interview is unstructured. The results are that you end up with a candidate who will fail to perform to the required standard.

Interviews can be faked.I am surprised at the level of trust Board members place on the interview alone as a selection method. Considering that the interview method is unreliable why are Board members so excited about this selection method. The answer could be that with the interview it gives the panel some form of control.  In most cases you will find that those who are presentable and speak well can come up tops in interviews but if they lack the cognitive capacity for the level of job they are targeted for they will fail.

The illusion of the portability of talent– There is a general illusion that talent and performance are transferable from one organisation to the other. At a higher level, it’s even more risk to assume that because an individual succeeded in one organisation they will carry success to your organisation. As a result of this erroneous assumption, good candidates with the right cognitive ability level and critical thinking skills are rejected on the basis that they do not have the experience in a specific industry. At a higher level, your technical skills are less important. What matters most at this level is the ability of the candidate to mobilise resources and employees to rally around a compelling vision for the organisation. Highly technical people tend to lack the people skills needed to lead at a higher level. I have also noted that engineering companies tend to prefer engineers to be CEOs, if not they would rather get an accountant. It’s a big mistake to go this route. Open the top post to all fields. What is required is their level of cognitive ability and their people skills and not what they studied.

Do not involve executives in some of the selection– If you allow your executives too much power to select other executives there are two things that are likely to happen. If they are loyalty driven they are likely to bring people they have worked with before which always does not work. It breeds groupthink. The same individuals will not question when the CEO makes the wrong decisions. You need a team with diverse views, who can challenge the CEO professionally. If you are lucky they may be a formidable team but it’s very rare.

Here are the juicy facts about various selection methods. 

  • When selecting employees with no prior experience e.g. trainees and other entry-level jobs the top predictor of job performance is the general mental ability (i.e. intelligence or general cognitive ability). This can be assessed through properly validated psychometric tests administered by registered Psychologists.  If you add other measures such as integrity and personality tests (conscientiousness), structured interviews the predictive power goes up significantly.
  • Holding other things constant here the are the predictive powers of each of the common selection criteria used by organisation; General Mental Ability(intelligence/cognitive ability) explains 44%, integrity tests  explain 21%, structured interviews(these are standardized interviews) explain 34%,personality tests- conscientiousness explains 5%, reference checks explain 7%, biographical data explains 12%, job experience 6%, situational judgment tests explain 7%, assessment centers explain13%, years of education explain1%, ability-based emotional intelligence explains 5%, personality-based emotional intelligence explain3%, 16%,  work sample tests explain 11%, job knowledge test explain 23% and age explains 0%of the variation in performance.{source: Validity and utility of section methods in personnel psychology: practical and theoretical implications of 100 years of research findings- Schmidt et al 2016) 

Just check how educational level (measured by the number of years of education), experience and age (although illegal to use age as a criterion) have such low predictive power. Why then are organisations using these methods against ample scientific evidence indicating otherwise?

Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant – Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. https://www.linkedin.com/in/memorynguwi/ Phone 481946-48/481950/2900276/2900966 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com

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