Access to Information Raises Stakes, and Heat, On Leaders

Companies are under the gun to make the right leadership decisions – the first time around. They are demanding more from their search providers as well. We look into how recruiters have responded.

June 21, 2017 – These are exceptionally high-pressure days for corporate leadership. Choosing the right talent has always been serious business, but in today’s environment the consequences of a misfire loom larger than ever. Likewise, if a leader fails to deliver, the pain can be deeply felt throughout an organization and beyond.

Constantine Alexandrakis, U.S. region head for Russell Reynolds Associates, sees intertwining challenges in the macroeconomic forces that affect clients as well as in the new capabilities those clients now have access to. “Boards and executive teams are under more scrutiny than ever before,” he said in a recent interview with Hunt Scanlon Media, “whether from shareholders, armed with new visibility into leadership decisions, some driven by new regulations; institutional investors, armed with greater detail on governance decisions via proxy scoring or direct engagement; or even employees, armed with ability to view and voice dissent via tools such as Glassdoor.”

All this significantly raises the stakes for the talent that companies recruit and for meeting near-term performance expectations. “The risk associated with executive selection and hiring has always been high,” said Mr. Alexandrakis. “But, as executive roles have become more complex, the risk of making the wrong hiring decision has increased meaningfully. At the same time, the cost of executive failure has increased dramatically.”

Today, corporate leaders have greater access to knowledge about their talent, both through improvements in human capital development as well as highly advanced third-party talent-related tools. That can have an impact on search firms. “This has the effect of blurring the lines between what companies can do on their own and where executive search firms can help,” said Mr. Alexandrakis. “So we often compete as much against the status quo, or ‘do nothing,’ as anything else.”

Leadership & Succession

Mr. Alexandrakis, who is based in Chicago, is responsible for growing Russell Reynolds’ business in the U.S. He also leads the firm’s global leadership & succession practice. He has been with the firm for 13 years, as a consultant and, more recently, leading the Chicago and Minneapolis offices. He is also on the firm’s executive committee.

Russell Reynolds has more than 400 consultants in 47 offices around the world. The firm works closely with public, private and non-profit organizations across all industries and regions.

These days, CEOs and boards of directors want more than basic search services and strategies, said Mr. Alexandrakis. They want offerings that span the complete executive talent lifecycle. “Clients expect their search partners to offer thoughtful, consultative guidance and deep insight, from defining a role, to selecting a successful candidate, to planning for succession, driving business transformation through talent, and rebalancing culture,” he said.

How Predicting CEO Success Can Impact the Bottom Line
Companies relying on more advanced forms of CEO assessment may see significant gains as high — as 80 percent in market cap alone. Companies around the globe turning to more innovative, sophisticated methods for hiring their most valued — and typically highest paid — leader.

Clients are demanding deeper insights into their talent and how to keep those people on board. They want fewer surprises and more answers, and they want those answers backed up by evidence. “In many ways, we are as much in the retention business today as we are the search business,” said Mr. Alexandrakis. “Opportunity for us lies in helping to increase predictability, which in many ways really means ‘reducing risk.’ They look for us to bring specific advice and market insight, but they expect that insight to be supported by data and evidence. If you’re trying to compete on superior access to basic information, you’re going to lose every time. To win, you need to bring real insight to the table.”

The days of depending on one’s gut feeling to make a hire are history. The stakes are too high and the price of failure is too great. But this affects more than clients alone. Russell Reynolds and other search firms are under pressure to find the right individuals for their own firms who can deliver the right services. “We believe that the rigor of executive selection, hiring, and development decisions should match the rigor applied to financial and operational decisions,” said Mr. Alexandrakis. “This presents an opportunity for us but also a factor that influences the type of people we bring into our own business. We spend a lot of time and dedicate focus to making sure the consultants we bring into the business are of the right caliber to exceed client expectations and bring diverse experiences to allow for well-rounded advice in client settings.”

That, in turn, influences the types of services firms like Russell Reynolds provide. “One recent initiative you may have seen in the news is a partnership we entered into with Hogan, a true pioneer in the field of executive assessment,” said Mr. Alexandrakis. “The first stage of our work with Hogan is sharply focused on the creation of an assessment approach that is purpose-built to predict success, both short- and long-term, in senior executive roles. Our clients are selecting talent in an environment with many uncertain and uncontrollable circumstances that leaders will need to contend with.”

“It’s really important to ensure the people you pick remain highly durable and actually thrive even in volatile settings. But that requires thinking forward into the challenges executives will face tomorrow, not just today, and helping to identify those best fit for leading the charge. We aim to provide market-leading insight to clients on this front.”

Analytics are fine, as far as they go, said Mr. Alexandrakis, but nothing can replace the experience, insight and relationship one develops with a good search consultant. “The access we earn day in and day out provides a unique window into the talent challenges facing even the most progressive companies,” he said. “And those experiences give our team the credibility to offer advice at critical junctures as organizations make very big, market-moving decisions.”

“Trust is a word that is thrown around a lot. And admittedly, it sounds buzz-wordy. But trust for us translates to very regular contact with very senior decision makers. And through those personal conversations – hundreds of them every day – we pick up on nuances that no data aggregation service could ever learn on its own. Real insight for us means, in large part, interpreting that nuance and turning it into informed, actionable advice clients can use every day.”

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Chase Barbe, Managing Editor – Hunt Scanlon Media

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