This article was co-authored by Hogan CEO Tomas Chamorro-Premuzic and Russell Reynolds Associates CEO Clarke Murphy, and originally appeared in Harvard Business Review.
Over and over again, organizations are unable to appoint the right leaders. According to academic estimates, the baseline for effective corporate leadership is merely 30%, while in politics, approval ratings oscillate between 25% and 40%. In America, 75% of employees report that their direct line manager is the worst part of their job, and 65% would happily take a pay cut if they could replace their boss with someone better. A recent McKinsey report suggests that fewer than 30% of organizations are able to find the right C-suite leaders, and that newly appointed executives take too long to adapt.
Although there are many reasons for this bleak state of affairs – including over-reliance on intuition at the expense of scientifically valid selection tools – a common problem is organizations’ inability to predict whether leaders will fit in with their culture. Even when organizations are good at assessing leaders’ talents (e.g., their skills, expertise, and generic leadership capabilities), they forget that an essential element of effective leadership is the congruence between leaders’ values and those of the organization, including the leaders’ team. As a result, too many leaders are (correctly) hired on talent but subsequently fired due to poor culture fit.
In our view, there are three critical errors organizations must fix in order to upgrade their selection efforts, namely:
Decode leaders’ motives and values: While expertise and experience are central to leaders’ potential, they are insufficient to predict leadership performance. In fact, even generic personality characteristics, such as integrity, people skills, curiosity, and self-awareness will fail to predict a leader’s fit to the role or organization. A proper understanding of fit must take into account the leader’s motives and values, also known as the “inside” of personality. Motives and values operate as an inner compass, dictating what the leader will like and reward, the type of culture and climate they will strive to create in their teams, and the activities they will see as meaningful and fulfilling.
For example, leaders who value tradition will have a strong sense of what is right and wrong, will prefer hierarchical organizations, and will have little tolerance of disruption and innovation – put them in a creative environment and they will struggle. On the other hand, leaders who value affiliation will have a strong desire to get along with others, will focus on building and maintaining strong interpersonal relations, and on working collaboratively. This means they will not be engaged if their role is too isolated and the company culture is overly individualistic. Finally, altruistic leaders will strive to improve other people’s lives and drive progress in the world, so they will suffer if their organizations are purely driven by profits and disinterested in having a positive social impact.
Understand their own organizational culture: Knowing a leader’s motives and values is pointless unless organizations are also able to decode their own culture. Sadly, most organizations underestimate the importance of accurately profiling their culture so they end up relying on intuitive and unrealistic ideas that say more about what they would like to be than what they actually are. This is why a large number of companies today describe themselves as “entrepreneurial,” “innovative,” “results-oriented,” or “diverse,” even when their own employees perceive a very different type of culture. Well-designed climate surveys, which crowdsource people’s views and experiences of the organizational culture, are a much better indicator of a company’s true values than the aspirational competencies curated by senior executives.
Be realistic about the new leader’s ability to actually change the culture: Although senior leaders are the main shapers of organizational culture, it is hard for newly appointed leaders to reshape the existing culture. That is not to say that organizations should give up and only hire leaders who are a good fit. In fact, moderate misfits who are charismatic and visionary are a company’s best bet for driving top-down change – but the process will be slow and tedious, and these leaders will need to have a great deal of support in order to persist and prevail. The odds of success will be slim, and some leaders may be so disruptive in their intentions that they may harm morale and productivity, or end up disrupting themselves. As Sartre noted, “only the guy who isn’t rowing has time to rock the boat.”
Of course, some leaders manage to perform well in virtually any context. They are able to flex or span between a range of competing competencies, which makes them more adaptive and versatile, as Rob Kaiser’s compelling research shows – but they are an exception rather than the norm. In contrast, for most people, leadership potential will be somewhat context-dependent, so there is no guarantee that a person will lead effectively just because they have been effective in a previous role or organization. Past performance is a good predictor of future performance only when the context remains the same. When it doesn’t, the focus should be on potential and the future rather than performance and the past.