Here is a guest blog from leadership consultant Nat Stoddard and author Claire Wyckoff. Both have co-written a book called The Right Leader: Selecting Executives Who Fit.
In the midst of financial turmoil it’s often easy to lose sight of what’s truly important—namely those things within our reach that we can change to make our organizations function better. Between the daily barrage of media gloom and our own personal stakes in today’s economic quagmire, it’s easy for our attention to be drawn to issues over which we have little direct influence as opposed to remaining focused on important matters that we can actually affect.
One such area where changes can—and, frankly, must be made—is in the manner in which we go about selecting our business leaders. The existing selection process is significantly flawed as evidenced by the data:
o As far back as the last recession in 2001–2002, the turnover rate of CEOs (the group for whom data is most readily available) was already around 10%—twice the rate it had averaged during the previous decade
o In 2005 it jumped to the 14–15% range, where it has been for the past four years.
o Today, the tenure (time in the job) for sitting CEOs has dropped from nearly 10 years just a decade ago to less than 5 years at the outset of this recession.
o Even more startling is that 64% of CEOs—nearly two-thirds—will never make their fourth anniversary in the job and a whopping 40% of them will be gone within 18 months of their appointment.
Clearly, there are fundamental problems with the way in which we select leaders that belie such poor performance. If not addressed, today’s approach will only keep the revolving door at the top of U.S. corporations spinning. Based on research conducted by Crenshaw Associates, a New York consulting firm specializing in leadership transitions, what’s missing is a clear-cut understanding of the company’s cultures through which the new leader must bring about desired results along with a purposeful examination of the extent to which the new leader will fit into it. A scientific approach to understanding culture and a closer look at how each candidate’s character aligns with those cultures will yield greater success, less turnover, and greater leadership tenure for our post-recessionary leaders.
It’s time that we change the things we can to improve the ways we select tomorrow’s leaders—leaders whose values align with those of the organization’s cultures, not by chance but by design.
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