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Thursday 18 September 2014

Decisions, decisions – plenty to ponder on executive recruitment

Published 27/06/2013 | 05:00

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When an executive-level opening exists, the first step in the hiring process is to determine whether the organisation is best served by redeploying someone internally or recruiting externally.

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The case for bringing in leadership talent from outside an organisation is a strong one, particularly where knowledge gaps exist in the current leadership team or where a step-change is needed in terms of the organisation's focus or performance.

New appointees can bring fresh thinking to the organisation and be positively disruptive on arrival to make sure the right decisions are made quickly by unemotionally evaluating both the existing strategic plan and leadership team.

However, even if a company is of the view that suitable talent does not exist internally, internal candidates should, in most cases, be given the opportunity to compete for the position.

Otherwise, the organisation is creating its own glass ceiling which can be de-motivating for employees who are seeking a real career path.

Depending on the complexity and the circumstances of the specific role, organisations should run a concurrent process to benchmark the external market with their internal employees.

Our role is to identify, target and screen all candidates and make our recommendations on candidates who are best suited to the role.

We do not differentiate or discriminate against internal or external candidates.

The trend towards hiring new CEOs from outside an organisation has grown in recent years and is often seen by shareholders as a 'quick fix' for a company's woes.

However, there are some potential drawbacks. In the US, a new CEO generally has three years to deliver for shareholders.

In Europe, it tends to be five years.

This is a relatively short period of time and an internal appointee will have an advantage in understanding the workings of the organisation and can hit the ground running.

They will also have established relationships that are an essential part of getting work done, whereas, a new CEO may have to invest considerable time during their first year familiarising themselves with the organisation, establishing co-conspirators from within the leadership team and building relationships.

Employers can unwittingly be biased against internal applicants purely on the basis that they are a known entity and employers are under the illusion that a new face in the organisation will bring fresh thinking.

We previously advised a Fortune 100 company that their internal home-grown candidates were underpaid and undervalued when benchmarked against candidates that were being brought in from outside the organisation.

The organisation itself had provided a very good environment for employees to develop during a sustained period of rapid growth and, when available talent internally did not satisfy the aggressive business growth agenda needs, the company bought in the talent from outside and was happy to pay a premium for it.

Of course, if this becomes a regular occurrence, it can have the undesired outcome of disenfranchising some high calibre home-grown employees who may subsequently leave the organisation to achieve promotion or a broader remit elsewhere.

A third option for organisations and one that often proves to be effective is to re-hire a high-calibre executive who had gone on to pursue other interests.

This is a low risk strategy as the candidate will be very much a known entity to the company.

One additional benefit is that it can also further demonstrate to the organisation's existing employee base that the company is a good place to work if high performers are happy to rejoin the company.

In recent weeks, Procter & Gamble brought back AG Lafley as its CEO with a view to re-kindling growth at the world's largest consumer products maker.

At 65 years of age and having worked at Procter & Gamble from 1977 until 2009, Mr Lafley said of his return that "duty called".

It can be challenging for companies to resist the allure of hiring fresh new talent when the answer may already exist from within their own walls.

To ensure that the best candidates are sought after for these crucial roles and the optimal appointment is made it is essential for organisations to use both an internal and external benchmarking process.

Ronan Colleran is MD of Accreate Executive Search

Irish Independent

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