How Search Firms Are Managing the Culture Game

August 11, 2019 – Culture fit is hardly a new concept. Well before the rise of various models and frameworks to evaluate organizational culture, companies recognized the risk of hiring a cultural mismatch — such as the lone wolf in a company that values collaboration. New employees, especially leaders, who clash with the culture are often ineffective, and are likely to quickly depart for a friendlier environment.

“As appreciation has grown for the power of culture to influence individual, team and business performance, many leaders are looking for more systematic approaches to evaluating culture, personal fit and culture impact,” according to a report by Spencer Stuart. “With this insight, they can make better decisions about hiring and promoting, improve the success rate of leadership transitions and ensure that they develop future leaders who are able to positively influence culture.” The report was authored by veteran search consultants Alexander Hiller, Dimity Hodge and Jesse Price.

Culture analysis is a critical action for a company to take — and a complex one, as well. The Spencer Stuart culture approach is based on the insight that an organization’s culture is defined by where it falls on two dimensions: how the organization responds to change and how it views people.

Three Myths

“Organizations can range from highly individualistic to highly interdependent, placing greater value either on autonomy and individual action or on collaboration,” said the report. “Similarly, an organization can be more or less open to change — focused on maintaining consistency and predictability at one end of the spectrum or emphasizing flexibility and creativity at the other. We use this framework, which includes eight distinct cultural styles, to evaluate organizational culture and understand how an individual executive is likely to align with — and shape — that culture.”

Culture can feel elusive for companies. Absent a methodology or common language for evaluating their current culture and defining an aspirational culture, organizations can fall victim to a few common culture myths. “This can make it harder to select the right people or equip hires with the guidance and support they need to succeed in a new context,” Spencer Stuart said. “According to our research, a lack of culture fit (rather than lack of skills or experience) is responsible for 68 percent of newly hired executives failing within their first year.”

Spencer Stuart presented the three most common myths recruiters encounter when seeking the right candidate to fit an organization’s culture:

Myth No. 1: Someone “like me” will be a good fit

When considering candidates for a role, a common pitfall is confusing likeability or “sameness” with culture fit. In the absence of a framework for assessing how a person aligns with the culture, Spencer Stuart said that it can be tempting for interviewers to rely on considerations such as whether candidates share their interests or backgrounds. A manifestation of this is the so-called ‘airport test’: Could I pass hours stranded in an airport with this person?

On its face, the idea of personally liking a new hire to a team seems logical; leaders want to interact with people who are going to make their jobs easier — or less onerous, at least. But likeability and personal interests are not the same as culture style. “Assessing culture fit and impact requires a deeper look at the person’s style and how it compares with the current organizational or team culture,” the Spencer Stuart report said. “It’s essential to evaluate the fit relative to where the culture stands, as well as where it should be in order to achieve the intended strategic and operational plans.”

The report said that recruiters should ask themselves these questions: Does the individual prefer highly stable environments, or does he thrive in more flexible and open environments? Is the leader collaborative, or does she prefer to work independently? “Without assessing these factors, a company can end up saddled with an affable leader who simply isn’t up to the job,” Spencer Stuart said. “Or worse, the new hire doesn’t fit in with the company’s culture despite the hiring team’s personal affinity for the leader.”

The Spencer Stuart report also said that organizations undergoing change will want to hire or promote leaders who will draw the best out of the current culture while aligning with future aspirations.

Myth No. 2: We know a candidate’s style because we know the work history

Certain companies, and business units, have a reputation for being hard-driving or collaborative or hierarchical, while others are associated with attributes like creativity or analytical rigor. “It’s tempting to conflate these attributes and assume that all individuals who work at these companies or in these functions will have the same personal style,” Spencer Stuart said. “These assumptions can keep organizations from accurately assessing how individuals might fit with the current or target culture when hiring or moving them into new roles, or exploring other skills that could be harvested or utilized.”

“There can be a sense that an individual’s culture preferences are hardwired by their current organizational culture and they can’t adapt to a new organization,” one client told Spencer Stuart. “So, someone from GE will be hardwired to drive results, for instance. It’s easy to think, ‘That’s who they are, and that’s how they’ll always be.’” Similarly, she noted, a candidate with a great deal of technical experience might be seen as myopic and “not viewed as a change agent because they can’t look end-to-end across the organization, when that might simply not be true.”

It’s important to separate what truly motivates and drives a person from how they adapted to navigate a particular culture at work, the Spencer Stuart report said. “A person might exhibit a certain style in one environment in order to succeed, even if that style doesn’t come naturally,” the report said. “Having a more nuanced and data-based view of candidates opens up more possibilities, allowing companies to make better decisions and support the leaders they hire, as well as provide input on which natural qualities they could tap into to drive performance or change.”

Myth No. 3: A new leader will change everything

When a company wants to transform its culture, it’s only logical to believe a new leader will help achieve this goal. However, Spencer Stuart said that for companies without a clear and explicit understanding of their culture, bringing in a new leader to drive change can be like “tapping in the dark.”

Some companies, for example, try to take a “shortcut” to evolving culture by bringing in someone from a radically different organization that represents the direction key stakeholders have in mind — such as a company eager to achieve a digital transformation hiring an executive from Google or Amazon.

“Rather than taking the longer, and more difficult, path of in-depth analysis and gradual change of their business model and processes, the hope is to reinvent the company in one fell swoop with one person singlehandedly leading the way,” the Spencer Stuart report said. “Unfortunately, a quick fix is rarely an effective one, and the prevailing culture almost always wins when there is a mismatch.”

Search Firms Stepping Up

With culture shaping now seen as one of the most important drivers to achieve competitive advantage among companies, many search firms – including the global leaders as well as the boutiques – now offer some variation of it. It includes human capital management, business transformation strategy, leader engagement, talent optimization, organizational development, HR transformation, and leadership and talent management.

To bolster its leadership in the space, Spencer Stuart recently reached a definitive agreement with global professional services firm Aon to acquire certain businesses within its talent practice, specifically its culture and engagement, leadership development and advisory, and related products and services. This led to the creation of a distinct entity known as Kincentric: A Spencer Stuart Company.

“This is a further step on our journey to extend our leadership advisory capabilities for our clients,” said Ben Williams, CEO of Spencer Stuart. “As leaders increasingly focus on leadership, culture and engagement to drive change and positive outcomes in their organizations, together Spencer Stuart and Kincentric are uniquely positioned to engage with boards and the C-Suite more deeply on these critical levers.”

Meanwhile, Egon Zehnder formalized an agreement to purchase a minority stake in Zurich, Switzerland-based Sinequanon (SQN), a firm that uses AI and advanced analytics to improve workplace culture and performance. The investment in SQN signals Egon Zehnder’s intent to build on its 55 years of experience shaping leadership and culture through SQN’s combination of advanced technology and a human approach to leadership. The companies will work together to disseminate SQN’s “Living Analytics” platform and “Flow Operating System.”

“We hear consistently from clients that culture change is one of the most challenging aspects of leadership,” said Jill Ader, chairwoman of Egon Zehnder. “In SQN we have found an innovative partner to deliver integrated services to our clients by marrying both human leadership insights and pioneering technology. We strongly believe the best consulting services we can offer our clients combine technology and humanity.”

Talent Industry Predictions…

Larry Shoemaker, President Cornerstone International Group

Executive recruiting firms are recognizing that success in one organization will not guarantee success in another. This helps to account for the findings of some surveys that up to 60 percent of new hires are gone by 18 months. We are among those who see the most likely cause being poor alignment of an individual’s expectations with the culture and vision of the company. That’s why, after skills and experience, we view culture fit as the primary go/no-go evaluation. It used to be we spent 80 percent of the search effort in locating the most suitable person.

John Doyle, Executive Vice President Slayton Search Partners

Corporate culture is defined as encompassing core values, beliefs, and principles. It is very difficult, if not impossible, to transfer from one company to another. It is built over time and cultivated purposefully. For years, companies have used various assessment tools to predict which candidates are the best ‘culture fits,’ but the results are far from perfect. The tools aren’t always the problem. Oftentimes, it’s an inability to accurately describe the existing culture within the company. Even within the same industry, cultures vary widely from company to company. One reason culture fit is more important now than ever is the expectations of millennials in the workforce.

Michael Morell, Founder and Managing Partner Riviera Partners

Culture alignment and fit has always been significant, but has received more focus in the past few years, due to the fierce war for talent. Culture is core to everyone and aligns groups around values, motivations, interests and passions. Cultural alignment allows everyone the ability to feel connected, understand perspectives and develop meaningful relationships. Culture ensures alignment to successfully achieve a common vision and purpose with the least amount of friction – and companies WIN when people are aligned.

Dale Jones, CEO – Diversified Search

‘Culture fit’ has become the latest catch phrase in executive search. Companies big and small are figuring out that the new wave of executives reaching management are from generations that view their careers through a lens of personal reward much more so than prior ones have; if they don’t like the culture, they leave. Companies have become much more attuned to unearthing the ‘bad apple’ in the interview process, weeding out those who do not exhibit the spirit of a collaborative and congenial culture. Behavior that was either tolerated or ignored 25 years ago is now completely forbidden, which has been one of the biggest drivers of increased loyalty and productivity in American business.

David Windley, CEO – IQTalent Partners, Inc.

Recruiting and hiring for culture fit has become more significant because corporate culture is becoming more important in the modern organization. More and more companies are realizing that a purposeful corporate culture that aligns with their business model or way in which they compete can provide them with a competitive advantage. In the modern networked organization, corporate culture is the glue that shapes behavior across the enterprise.

Tom Wilson, VP of Executive Search Frederickson Partners

Search firms and internal recruiters have had increasing capabilities to source, identify, and reach qualified candidates for some time now. Having more candidates to choose from does not make an executive recruiter’s job easier, though we can pretty much assume we will find a qualified candidate for most roles. Therefore, the importance of understanding – and specifically selecting for – an organization’s culture becomes extremely important. The best recruiters will be the ones that are most adept at selecting not only for the skills that a role requires, but also on how someone will fit into a new culture.

Peter Polachi, Partner – Polachi

Cultural fit has become more important than ever for successful companies. Gone are the days of renegade leaders who are tolerated but not embraced. In this age of digital transformation and the much-belated recognition of the need for inclusivity, companies are utilizing behavioral assessment tools to assure cultural fit. Many companies are using sophisticated researched based methodologies like The Predictive Index to assure cultural fit success. These tools are applied for all new hires from entry level to the corner office.

Bob Damon, Partner – Ventura Partners

Culture fit has always trumped the resume for success in any role. However, culture fit is even more critical today for a couple of reasons. One is that organizational structures have morphed from traditional lines of authority with clear “chains of command” to matrixed organizations where influencing skills are significantly more important than title. The second reason is related to the changing demographics of the workforce. The millennial generation doesn’t like to be “told” anything, so influencing skills become the number one factor in guiding that generation to embrace the business strategy.

Steve Potter, CEO – Odgers Berndtson US

A toxic culture leads to unhappy employees and high turnover. For a services business that is in the business of relationships – with clients, contacts, and colleagues – a toxic culture can signal the death knell of a firm since it can ultimately lead to low profitability and growth rates. Inversely, a positive corporate culture can result in a stronger brand with more satisfied, creative, and productive employees.

Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media

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