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A R T I C L E
Hiring Without Firing
y Claudio Fernández-Aráoz
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Hiring Without Firing
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Hiring Without Firing
page 1
The Idea in Brief The Idea in Practice
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Astonishingly, between 30% and 50% of all
executive hires end in firing or resignation.
Why is hiring particularly problematic—and
critical—today? Global hypercompetition,
the
eakneck pace of economic and tech-
nological change, and ever-shifting organi-
zational structures are key reasons.
Also, today’s work success depends increas-
ingly on intangible competencies—like
flexibility and cross-cultural literacy—rarely
found on résumés. And as demand for tal-
ent is sharply increasing, supply is steadily
shrinking.
Most companies make ten dangerous mis-
takes during the executive-search process,
including having unrealistic expectations,
elieving references, and conducting seat-
of-your-pants interviews.
Here’s how to systematically avoid these
traps.
TEN DEADLY TRAPS
1. Reacting:
hiring someone
too
different
from the problem person just fired.
2. Unrealistic expectations:
demanding
many contradictory qualities, like “high-
energy doe
and
thoughtful analyst.”
3. Evaluating people in absolute terms:
“Joe
is a good manager”—without clarifying that
he manages
processes
well, but not people.
4. Accepting people at face value:
not get-
ting the full story of a candidate’s background.
5. Believing references:
trusting references’
input without determining their credibility.
6. “Just like me” bias:
highly rating candidates
who are like you.
7. Delegation gaffes:
assigning critical steps
in the search process to ill-prepared staff.
8. Unstructured interviews:
no prepared
questions to reveal candidates’ competencies.
9. Ignoring emotional intelligence:
failing to
assess candidates’ self-awareness, motivation,
empathy, and social skills.
10. Political pressures:
inappropriate agen-
das, such as pressure to hire a VIP’s friend.
HIRING WELL
Successful—and systematic—hiring requires
these three steps:
1. Define the problem you need to solve
through hiring.
•
Clarify the position’s
cu
ent and future re-
quirements,
driven by your firm’s strategy.
Translate them into needed skills (e.g.,
comfort with uncertainty).
•
List
equired competencies
in behavioral
terms and get consensus on the list (e.g.,
“strategic vision” means the ability to in-
spire and guide others).
2. Creatively generate a candidate list.
•
Contact people who can recommend
sev-
eral
quality candidates (e.g., a major sup-
plier CEO to recommend sales leaders).
•
Consider unconventional candidate
sources. (One president hired a director
whom his predecessor had fired!)
3. Methodically evaluate the candidates.
•
Conduct
structured interviews
in which
you assess candidates’ competencies
through behavior-based questions (e.g.,
to measure team skills, ask, “Tell me
about a time you led a particularly chal-
lenging team project.”).
•
Meet with references in
person
if possi-
le. Describe the open job and ask
pointed questions (e.g., “How has the
candidate performed while facing similar
challenges?”).
Hiring Without Firing
y Claudio Fernández-Aráoz
harvard business review • july–august 1999 page 2
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Hitting the hiring bull’s-eye is one of an executive’s most important—
and most difficult—responsibilities. Ten common mistakes can get in
the way, but a pointed and systematic approach can virtually
guarantee success.
Hiring has never been easy. About two thou-
sand years ago, officials in the Han dynasty
tried to make a science of the process by creat-
ing a long and detailed job description for civil
servants. Archaeological records show that
those same officials were frustrated by the re-
sults of their efforts; few new hires worked out
as well as expected. Today business executives
trying to fill senior-level positions ca
y on the
unhappy tradition. Using interviews, refer-
ence checks, and sometimes even personality
tests, they try to infuse logic and predictability
into hiring. Still, success remains elusive. Sev-
eral recent surveys conducted by both busi-
ness academics and independent consulting
firms have found that between 30% and 50%
of all executive-level appointments end in fir-
ing or resignation.
If hiring has always been a daunting task, to-
day’s economy makes it more so. The global
scope of business has increased the demand fo
talented senior executives in the corporate
anks. Meanwhile, supply is shrinking as more
and more people—in particular, promising
M.B.A.’s—choose to work for startup ventures
or go into business for themselves. At the same
time, the nature of work itself is in flux. Until
the 1990s, jobs were pretty uniform. In the
classic, functional organization, everybody
knew the responsibilities of the CEO and othe
senior executives. Most organizational cultures
were relatively comparable, too—formal, hier-
archical, and based on individual achievement.
But with the advent of new organizational
forms such as joint ventures and strategic alli-
ances, and with the growing prevalence of
teams, free agents, and networking, finding the
ight person to fill a job has become more com-
plex. What competencies, after all, do these
new kinds of companies and cultures require?
Indeed, nowadays the CEOs of two companies
in the exact same industry may need entirely
different skills and personal styles to succeed.
For the past 13 years, I have conducted the
searches of about 200 senior executives—most
auspicious, some not—and have participated
in the hiring of about one thousand more. As
leader of professional development at Egon Ze-
Hiring Without Firing
harvard business review • july–august 1999 page 3
hnder International, I have learned about and
discussed the prescient details of several thou-
sand executive searches conducted by my col-
leagues around the world.
Our collective experience confirms what
the Han officials discovered in 207 B.C.: it is
impossible to turn hiring into a science. The
process is often undermined by ten common
mistakes, or “hiring traps.” But we have also
found that a systematic approach greatly im-
proves the chances of hiring the right person.
The approach, it should be said, requires time
and discipline. But then, most matters of con-
sequence do.
The Art of Hitting a Moving Target
Two recent cases illustrate the varied chal-
lenges of hiring in the new economy. The first
case is well known—in fact, it was front-page
news around the world. Last December, Franco
Bernabè was hired to run Telecom Italia, a
large, recently privatized conglomerate with a
poorly performing stock price and a history of
management turmoil. At the time, Bernabè ap-
peared to be the perfect choice for the job: be-
tween 1992 and 1998, he had led the transfor-
mation of one of the world’s largest energy
companies, ENI, into a highly respected and
profitable publicly traded business—and it, too,
had a legacy of extreme senior-level upheaval.
Bernabè’s skills were considered so appropriate
for his new position that Telecom Italia’s stock
ose 5% the day his appointment was an-
nounced—a multibillion dollar increase in
market value.
Only two months later, Bernabè’s jo
changed drastically when Telecom Italia be-
came the target of a hostile takeover attempt
y Olivetti Corporation. It became i
elevant,
for instance, that Bernabè excelled at leading
cultural change. To fend off Olivetti, he quickly
needed to improve short-term financial results;
apidly assess the value and synergy of core
and noncore business combinations; and al-
most instantly construct intricate investment
and business obstacles that might thwart a
takeover. In the end, it wasn’t enough. Olivetti
succeeded in its efforts, and Bernabè stepped
down only six months after he started.
The second case also concerns a telecommu-
nications company, this one based in the
United States. It was seeking a CEO for its new
division in Latin America. The division was not
a start-up, per se, but a joint venture between
two established local companies that had both
een purchased by the U.S. business. As often
happens, the former CEOs of the two acquired
companies were appointed to the board of the
joint venture and remained large shareholders.
The board agreed that the new CEO would cer-
tainly need expertise in strategy formulation.
The marketplace was getting crowded; it was
now or never for entrants to establish their po-
sitions. And because the new venture had no
marketing plan to speak of, the new CEO
would also need expertise in high-tech sales
and distribution. An international search was
launched.
Three months later, the board hired an in-
dustry veteran who appeared to be tailor-made
to run the new division. He had been ex-
tremely successful at the helm of a telecommu-
nications company in the same sector, al-
though in a different part of the world. He was
an effective strategist—some said
illiant—
and a proven marketing expert. He understood
the company’s technology, products, and cus-
tomers far better than any of the other nine
candidates.
But his run lasted less than a year and was
nothing short of a disaster. The simple reason
was that he lacked the two skills that the jo
eally required: negotiation and cross-cultural
sensitivity. This new CEO had to answer to
three bosses with different agendas. The U.S.
parent company wanted to use the new entity
to push its own products and services in a new
egion. One former CEO-shareholder was
more focused on the bottom line; he wanted
to maximize profits by increasing prices. And
the other former CEO-shareholder wanted to
cut prices; volume was the key to success, he
said. The new CEO was eager to make every-
one happy—which turned him into everyone’s
enemy.
The bickering was exace
ated by cultural
differences in communication styles. The
Americans were confrontational. The Latin
Americans were deferential, but only in public.
Behind the scenes, their anger and frustration
ought the company to a standstill. Senior ex-
ecutives, caught in the cross fire of wa
ing
osses, started leaving the company in droves.
Key distributors quickly picked up on the fric-
tion and abandoned the joint venture, seeking
its products from other sources. By the time
the CEO was fired, the company was close to
ankruptcy.
Claudio Fernández-Aráoz
is a partner
at the executive search firm Egon
Zehnder International in Buenos Aires,
Argentina, a member of its executive
committee, and the leader of profes-
sional development for consultants in
the organization’s 53 offices worldwide.
Hiring Without Firing
harvard business review • july–august 1999 page 4
But the next CEO had the company back on
track—even thriving—within six months.
While he had no experience in the telecommu-
nications industry, the new CEO was a native
of the Latin American country where the joint
venture was based, and he was known and re-
spected by its principals. He had also worked
for ten years in the United States, which gave
him special insight in understanding and deal-
ing with the parent company’s executives. His
idge-building skills quickly unified the new
venture under one strategy.
Like the story of Franco Bernabè, this case il-
lustrates the hazards of hiring in today’s busi-
ness environment. More and more, success de-
pends on competencies that are intangible and
arely found on a person’s résumé, such as flex-
ibility and cross-cultural literacy. Previous ex-
perience, once the “sacred cow” of successful
hiring, can be meaningless in an era when or-
ganizational forms are continually being in-
vented and reinvented and job responsibilities
sometimes change overnight. It’s no wonde
that a recent survey conducted by the Interna-
tional Association of Corporate and Profes-
sional Recruitment found that the main reason
some external searches weren’t completed, ac-
cording to clients and consultants, was that the
positions were either eliminated or redefined
in the