How has technology changed the assessment of candidates and what opportunities do these innovations create?
The dramatic rise of technology over the last decade has equipped executive search and leadership consulting firms to serve their clients in new and increasingly transformative ways – fusing new tools and techniques with the traditional foundations of the profession. It’s not too long ago that an executive search consultant’s little black book was their biggest asset. But the technological developments of the last decade have codified what executive search consultants have always known about leadership into useful identification and assessment tools.
The more senior the search, the more nuanced it becomes. Unsuccessful hires at the executive level aren’t down to the core competencies of an individual; they are down to what up until recently were considered to be intangible metrics. Understanding soft skills, cultural fit, leadership development potential and emotional intelligence is the modus operandi for any major executive search and there are now a whole range of techniques to identify these traits.
Experts working with experts
Executive-level assessments come in many different forms: in-person interviews, psychometric tests, cultural assessments, and simulated case studies, to name just a few. Over the last five years in particular, we have seen an increase in the number of AESC members acquiring or partnering with external assessment companies. In the last 18 months alone Korn Ferry has acquired Hay Group and Pivot Leadership, Heidrick & Struggles has acquired Senn Delaney, Philosophy IB and Co Company, Russell Reynolds has formalized its partnership with Hogan, Caldwell Partners has built a relationship with Caliper Assessments and Alder Koten has acquired OCE Consulting. Beyond this, many AESC members are partnering with external firms to provide their clients with talent analytics at a level of sophistication we have never seen before.
By acquiring, partnering with or licensing the products of established consulting firms and assessment providers, executive search firms are furthering their commitment to high standards by aligning themselves with experts in their field. This is not simply a case of taking tools that are used for middle managers and slightly tweaking them; these partnerships lead to quality work that is consistent with the trusted service that the best executive search firms have been providing for decades.
Blending art and science
Ian Cameron (USA), Managing Director at The McQuaig Institute – which has been providing psychometric testing solutions for 50 years – explains how recent developments provide opportunities for executive search firms to have even more valuable in-person interviews: “We can ask the client organization to prioritize a series of statements that relate to the ideal candidate they would like to appoint,” Cameron says. “Their answers generate a job profile that can sit alongside their initial outline for the assignment, and is compatible with the results of the candidates’ psychometric testing. The end product is a customized behavioral interview guide so that the consultant can know where to dig deeper.”
This provides a great example of how the science behind the scenes has improved and has enabled deeper and more targeted in-person interviews, elevating the art of the profession, as Elan Pratzer, Managing Partner at Caldwell Partners in Canada, explains in relation to his firm’s new partnership with the assessment firm Caliper. “Caliper comes at the process with a scientific methodology. Caldwell Partners comes at the process with thousands of hours of time spent with clients and candidates.”
Similarly, cultural fit is an area that is increasingly acknowledged as absolutely crucial in the success or failure of an executive appointment. Jim Hart (USA), Chief Executive Officer at Senn Delaney, a Heidrick & Struggles company, explains: “If there is a cultural mismatch between an organization and a new executive, the culture will act as antibodies. This is particularly pertinent when a board is looking for a CEO to lead organizational change. You have to identify the cultural landscape that an executive is entering and help them to see the cultural landmines that they may step on. Otherwise, that executive will be as successful as a parent telling a teenager to clean their room.”
In his book Good to Great, Jim Collins explains that organizations with a well-aligned culture are six times more successful than their competitors. Similarly, in Spencer Stuart’s article ‘Leading with Culture’ they suggest that lack of culture fit is responsible for as many as 68% of executive new hire failures.
A third assessment technique that is used by select AESC members is simulated case studies. By replicating a real-life business scenario that would be relevant to the client organization, executive search firms are able to get insight into how a candidate would respond. Henrik Brabrand, CEO and Partner at TRANSEARCH Copenhagen, explains: “About 25% of the candidates we assess say they would respond one way and then act different in the simulated business environment. It’s not that people are trying to intentionally mislead us. It’s just that their best intellectual answer is not the truest answer roughly one in four times.”
The greatest trends for the profession
In Executive Talent 2020 we asked AESC Members to identify the greatest trends in the executive profession over the next five years. Three of the top four answers were: adapting to new executive search technology, emerging industries and new executive roles, and expanding leadership advisory services.
Through the different assessment techniques outlined in this article, executive search firms are amassing powerful data sets on specific leadership profiles. Jeremiah Lee (USA), Leadership Advisory Consultant at Spencer Stuart, explains that data-supplemented executive search can be especially powerful when new executive roles emerge that are still evolving. “When the candidate pools are not that deep and you have to get more creative, technology can see connections and adjacencies that individuals may not have intuitively come up with,” he says. “Technology is very good at identifying subtle differences. For example, a lot of candidates will talk about how they are creative and capable of thinking outside of the box. But we now know that if we’re looking for candidates to be disruptive, notions like curiosity are more powerful and less frequently mentioned.”
This data, and the partnerships with assessment firms that yield some of the data, creates a platform on which executive search firms can expand into new services. In Executive Talent 2020, we also asked clients whether they would be open to working with executive search firms on a broader range of services in the next five years. Of the nine services we listed, seven of them had a 66% or higher positive or neutral response rate – including succession planning, board advisory services, internal talent assessment, executive coaching, interim management, leadership effectiveness studies and compensation studies.
One of the hallmarks of executive search, as enshrined in AESC’s Code of Professional Practice, is objectivity, and Stephan Juhl Nielsen (Norway), Managing Partner at KingBird Executive Search / AltoPartners, explains how this can also be extremely useful when using assessment techniques outside of a search assignment. “We recently did a management audit for a large company in the financial sector and they wanted to go from five managers to three managers,” he says. “We did personality tests and then, in discussion with the managers themselves, one of them explained that they didn’t feel comfortable in a management position and would like to focus on product development, as they had done up until that point in their career.”
The value of the hybrid between art & science becomes cyclical: as the art gets better, the algorithms behind the science can be improved; as the science gets better, the art can be more specific & targeted.
Ultimately, assessment technologies are a useful resource in the executive search and leadership consultant’s toolkit. It can provide fascinating insights about individuals, organizations, and entire populations of executives. But, as ever, the true value comes in its use and interpretation by people. Jason Baumgarten, Partner at Spencer Stuart, says: “The risk is that if you focus too much on just assessment data, you can lose sight of the bigger picture. We see people amassing huge portfolios of psychometric data and then not knowing how to use it to help them make a decision. It’s like finding out that someone is the best athlete in the world and forgetting to ask what sport they play.”
Even the world’s best algorithms, used by consumer technology companies like Google, Amazon and Facebook, get it wrong sometimes, so human insight is a crucial filter. Ultimately, the value of the hybrid between art and science becomes cyclical: as the art gets better, the algorithms behind the science can be improved; as the science gets better, the art can be more specific and targeted.