Executive selection represents an important means of gaining competitive advantage for today’s organizations. However, such selection has not traditionally used the rich history of conceptual and empirical research on personnel selection that exists within the domain of industrial and organizational psychology. The high failure rate of today’s executives points to the need for more effective selection of top organizational leaders, and there has been a recent upsurge in research and development focused on sharpening knowledge and practices of executive selection.
In 2001, Ann Howard described four central topics reflect key issues in executive selection. The first issue refers to executive competencies that ought to guide the process of executive selection. These competencies are necessarily broader and more complex than those for lower- and middle-level organizational leaders. The second issue refers to the source of executive candidates, whether they come from within the organization or are recruited from external sources. The third issue pertains to the assessment strategies used to uncover levels of competencies in executive candidates. The final issue covers the actual selection decision, particularly who makes this decision and how the decision-making process reflects and influences organizational strategy.
Executive Competencies
Research has shown that performance requirements change significantly as leaders rise to the executive level. They need to attend to and interpret a vastly greater array of information. Their constituencies and stakeholders become more diverse, with more conflicting agendas. Although all leaders are responsible for monitoring and spanning the boundaries of their unit and the larger environment, leaders at the top must represent the organization to an external environment (and vice versa) that is increasingly complex, global, and dynamic. Thus, although all leaders in an organization are responsible for setting the direction and managing the operations of their units, these characteristics of executive work define some particular competencies for top organizational leaders that need to guide their selection.
The responsibility for leading a diverse organization and representing it within the industry suggests that executives need broad technological, financial, and professional knowledge, as well as an understanding of the industry and its operating environment. The high informational complexity of executive work means that they need to have the cognitive skills to make sense of and model this complexity for their subordinates. Executives also need high-level social competencies, including communication skills and the ability to develop broad social capital or a network of personal relationships that accrue trust, information exchange, normative expectations, and professional knowledge. Executives need to have the skill to develop these networks of social capital within and across organizational boundaries. Finally, given the highly dynamic industry environments of most organizations, executives also need an array of skills linked to an ability to manage change for themselves and for their organizations.
Executive Recruitment
Executive recruitment can focus exclusively within an organization or on external sources of executive candidates. In her 2001 review of executive selection research, Howard notes several advantages and disadvantages for both internal and external executive recruitment have advantages and disadvantages. Internal recruitment strategies link executive development with executive selection, providing a long-term growth perspective for lower-level managers. When executive development is systematic and tied to changing strategic considerations, the company can enhance its strategic flexibility and generate a pool of candidates particularly well suited to implement strategic changes. Internal candidates already have knowledge of the organization’s culture and structure and already have the established social capital to quickly implement new initiatives. Internal recruitment can also engender greater loyalty and commitment to the organization among its lower-level managers.
Howard has also noted that internal candidates may be too associated with organizational culture and norms to provide new and fresh approaches. External candidates can bring different experiences, new industry knowledge, and novel perspectives to the organization. Their evaluations of existing organizational policies, structure, and projects are likely to be more objective than those of internal candidates. Likewise, although external candidates will have less social capital within the company than their internal brethren, they may have broader capital outside the company, enhancing their ability to form industry alliances and networks.
The choice of an internal versus external candidate may rest on the prior performance of the company, its age and growth pattern, and the dynamism of the industry’s strategic environment. In larger companies, and Generally, internal candidates are likely to be favored when the organization is performing well, when the company is established and maintaining a slow but steady growth rate, and when the rate of change in the strategic environment is not fast enough to render skills and knowledge too quickly obsolete. Alternatively, external candidates are likely to be favored in companies that are performing poorly, in young companies experiencing a high rate of growth, and in organizations where greater numbers of external members sit on the board of directors. Preferences for external candidates also may occur when change rates in industry environments require rapid upgrading or refreshing of leader human capital. In typical instances, however, the circumstances of most organizations will suggest a varying mix of internal and external candidates for the range of executive positions.
External recruitment sources include executive search firms, electronic or Internet-based searches, and personal networking. In 1998 Daniel DeVries noted that executive search firms aid executive selection by facilitating the process for both potential candidates and hiring firms. Search firms will help companies define position responsibilities and corresponding candidate competencies. They will also recruit and identify candidates who best fit position characteristics. Executive search firms can help candidates understand the dynamics within the hiring company and coach them through several critical stages of the selection decision process. Many executive search firms, as well as human resource departments in major corporations, use the Internet as a source of executive recruitment. Although the canvassing of active candidates may occur through job boards, companies and search firms may use searches of company records and online directories to identify candidates who are not actively searching for new executive positions but may be approachable or persuaded to consider a position change. A third strategy of executive recruitment is for existing company executives to pursue their social networks and personal contacts for executive position candidates.
Internal executive recruitment generally rests on the succession planning and executive development programs established by companies to grow the pool of high-potential executives. If development programs are linked to the anticipated strategic considerations of the organization, they can produce a strong pool of potential candidates. Even when strategic concerns are likely to shift (as when the company operates within a dynamic organizational environment), executive development that emphasizes the ability to manage change and uses a breadth of developmental experiences can produce sizable numbers of suitable candidates.
Executive Assessment
Some strategies used to assess candidates for lower-level managerial positions have been extended to executive selection, although with limited success. For example, assessment centers, used with mixed effectiveness in lower-level managers, have been used less extensively with executives. However, research has shown ratings of managerial potential, established in part through assessment centers and structured interviews, have predicted long-term promotion levels, including to executive ranks. Executive assessment strategies have focused on identifying the candidate’s past performance effectiveness and the human capital and competencies a candidate can bring to the position. Some assessment approaches examine how well the candidate might handle simulated executive work situations.
Companies typically assess past performance effectiveness through biographical data (resumes), references, structured interviews, and, in some instances, multisource surveys and interviews (in which data come from peers, supervisors, subordinates, and self). Each of these strategies carries some strengths and weaknesses. Biographical data sources and references can exhibit a positive bias and achievement inflation. Interviews can also result in positive image management by the candidate. However, structured interviews that ask candidates to describe past critical incidents and key performance episodes have yielded more success in identifying the candidate’s displayed competencies. In her review Howard noted that multisource assessment can be more effective when source ratings are coupled with interviews conducted by executive coaches. Using measures of past displayed competencies can be problematic for executive selection, though, when strategic considerations argue for new or different sets of executive competencies.
Companies also use a range of individual difference measures to assess the personal qualities candidates possess at the time of recruitment. Measures of conceptual capacity, cognitive ability, and tacit knowledge have exhibited some success in predicting executive performance. Companies have also used personality measures in their executive assessment. Taken together, these measures can provide a significant although still limited prediction of likely executive success.
Another assessment strategy involves presenting executive candidates with simulated executive leadership scenarios and observing exhibited behavior and decisions. These simulations and work sample tests, typically organized as part of an assessment center, have the advantage of measuring present competencies and, if carefully structured, can provide an assessment of how executive candidates would respond to performance scenarios dictated by future or alternate strategic considerations.
Most companies use a combination of methods to assess executive candidates, although interviews and references remain the most prominent assessment strategies. Cognitive ability, personality, multisource assessment, and assessment centers are less widely used for executive selection. However, such assessments constitute a significant part of executive development programs used to produce succession pools of internal candidates.
Executive Selection Decisions
The capabilities of the executive candidate represent one factor in the selection decision. At higher organizational levels, an increasing number of contextual and strategic factors can influence such decisions. The decision makers, typically CEOs and boards of directors, have little knowledge of personnel selection procedures and somewhat limited experience in making executive selection decisions. However, some research shows that leaving executive selection, especially executive succession programs, primarily in the hands of human resource professionals can result in less effectiveness. In his review, DeVries noted that instances of successful executive selection, senior line managers, CEOs, and directors tend to take a more holistic and contextual approach to selection decisions.
Some researchers such as Rob Silzer in 2002 have argued that executive selection decisions should reflect the strategic and organizational context of the position. Different strategic challenges will require different mixes of executive competencies. For example, strategic change and innovation will require executives who have strong visioning and change management skills. Alternatively, executives who have strong industry knowledge, financial acumen, and social capital are likely to be more suitable for strategies that emphasize accruing the financial benefits of high organizational performance in a fairly stable environment.
The top management team (TMT) represents another contextual factor that influences executive decisions. The selected executive needs to display values and core beliefs that are similar to those of the CEO and other TMT members. Alternatively, executive selection decisions can rest on what talents and capabilities possessed by candidates are different from those in the existing TMT, thereby expanding the collective human capital at the top of the organization. The acceptance of new executives with ideas and strengths that differ from those of existing TMT members will depend, however, on the perception that they share the core values and long-term strategic goals of the TMT.
Summary
Effective executive selection decisions are most likely to emerge from a process and system that adapts best practices in personnel selection to the recruitment, assessment, and selection of executive candidates. Yet these best practices must also be applied with serious consideration of the strategic, cultural, and social context of the organization as a whole. The recent surge in research on executive selection within industrial and organizational psychology provides significant promise for uncovering these best practices and understanding the contextual factors that drive their utility.
References:
- DeVries, D. L. (1993). Executive selection: A look at what we know and what we need to know. Greensboro, NC: Center for Creative Leadership.
- Howard, A. (2001). Identifying, assessing, and selecting senior leaders. In S. J. Zaccaro & R. J. Klimoski (Eds.), The nature of organizational leadership: Understanding the performance imperatives confronting today’s leaders (pp. 306-346). San Francisco: Jossey-Bass.
- Sessa, V. I., Kaiser, R., Taylor, J. K., & Campbell, R. J. (1998). Executive selection: A research report on what works and what doesn’t. Greensboro, NC: Center for Creative Leadership.
- Silzer, R. (2002). Selecting leaders at the top: Exploring the complexity of executive fit. In R. Silzer (Ed.), The 21st century executive: Innovative practice for building leadership atthe top (pp. 77-113). San Francisco: Jossey-Bass.
- Snow, C. C., & Snell, S. A. (1992). Staffing as strategy. In N. Schmitt & W. C. Bomrna (Eds.), Personnel selection in organizations (pp. 305-346). San Francisco: Jossey-Bass.
- Zaccaro, S. J. (2001). The nature of executive leadership: A conceptual and empirical analysis of success. Washington, D.C.: American Psychological Association.