Why Companies Miss the Most Important Factor in Executive Hiring
July 18, 2023 – Surprisingly, the ability to make effective, timely decisions is often overlooked in leadership candidates. As companies search for new senior executives to navigate in these uncertain times, this skill is critical. In a new report, Kingsley Gate explains why this “missing piece” is so important in hiring strategy. The firm found that a quarter of senior executives say they were not asked about their decision making capabilities at interview stage and only around a third (36 percent) say that their decision making style aligns with that of their organization. There is also evidence to suggest that, even when asked about decision making, senior executives are not pressed to elaborate on their approaches to the process and thinking behind their decisions.
Kingsley Gate said that just 49 percent of the senior executives surveyed felt satisfied with their organization’s decision making process and ability to make decisions effectively. Over a quarter (29 percent) said they have considered resigning from a job because they were dissatisfied with the way the company made decisions, while more than a third (34 percent) said that they even took the decision to resign because of this. “When senior executives are dissatisfied with the way decisions are made, this leads to job dissatisfaction and, potentially, resignation, which could have a profoundly negative impact on an organization,” the report said. “As well as the morale and productivity impact of losing a senior executive, the cost of failing to empower your employees to make decisions can be damaging. It is estimated to cost six to nine months of an employee’s salary to replace them—so, to replace an employee making $600,000 a year, that would be $300,000-450,000.”
How can leaders avoid inflicting these negative impacts on both employee and organization? Kingsley Gate’s research reveals that those who are satisfied with decision making effectiveness in their organization are 3.6 times more likely to be satisfied with their jobs overall, compared to those who aren’t satisfied with decision making. This suggests that effective organizational decision making is a key driver of executive success and happiness. The findings also reveal that the decision making capabilities of individuals are, cumulatively, the main driver of improving decision making in the organization overall. When asked which factors play the biggest role in driving improvement in their organization’s decision making, senior executives cited company leadership as the most influential factor, followed closely by new employees’ making a direct improvement. Senior executives ranked these people-centric factors ahead of technology, processes, data-analysis tools and even their own personal, self-reported impact.
“This suggests that effective decision making has mutual benefit for the happiness of the individual and the success of the organization,” the Kingsley Gate report said. “So, how can companies ensure that this is achieved? Senior executives who are satisfied with decision making in their organization are 3.6 times more likely to be satisfied with their jobs overall, compared to those who aren’t satisfied with decision making. Senior executives who were asked about decision making in their interview are two times over more likely to be satisfied with the organization’s decision making, compared to those who weren’t asked.”
Kingsley Gate notes that recruiters should ensure that decision making is discussed with the candidate during the hiring process. “Assessing the candidate’s decision making ability and style will lead to the company’s hiring good decision makers, which, as the research shows, enhances decision making in the company overall,” the firm said. “Equally, candidates should have a good idea of the company’s decision making style before joining.”
The Kingsley Gate report found that senior executives who were asked about decision making in their interview are 1.4 times more likely to be satisfied with their jobs overall and are over twice as likely to be satisfied with the organization’s decision making process. However, the firm says that a quarter of senior executives say they were not asked about their decision making capabilities before starting a role and senior executives who were asked about decision making in their interview are 1.4 times more likely to be satisfied with their jobs overall, compared to those who weren’t asked.
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David Livermore, professor of global leadership at Questrom’s School of Business, Boston University, says that even when candidates are asked about decision making, the questions are often superficial. “It’s not typically a very sophisticated approach. It’s usually, ‘Tell me about a time when you made a tough decision.’ And it can be useful to hear that, but we don’t usually see those individuals pressed for the process that they used to arrive at that decision.”
“It’s asking about that point in time when they took that fork in the road,” said Umesh Ramakrishnan, CEO of Kingsley Gate. “What could have happened had they taken the opposite path? Was that path fraught with danger or was there potential for success? And what did they find more appealing about this path that caused them to take it? I’ve never seen that level of either interviewing for a new candidate or even for a promotion.”
Making the Right Human Capital Decisions
Change hits, sometimes suddenly and without warning. Value shifts. Money moves quickly to keep up. Talent gets redeployed slowly, lagging behind both money and value. In an era of slow, incremental change, this chain of events might not be a problem. Not so in today’s world of rapid and almost constant disruption, according to CEO.works, a consulting firm known for delivering results through precise, value-driven business transformations with a talent edge. To keep up with these value shifts, senior leaders move financial capital at lightning speed from points of lower return to points of higher return. Obviously, they also need to assemble the right talent at these “value hotspots” if their companies are to win. The problem? The traditional tools of HR are fixated on the talent side of the equation to the exclusion of the value. They can’t connect talent to value fast enough or dynamically enough.
As previously mentioned, Kingsley Gate’s research reveals that those who are satisfied with decision making effectiveness in their organization are 3.6 times more likely to be satisfied with their jobs overall. “This statistic is relatively on par with how other elements feed into employee satisfaction, such as compensation and benefits, workplace culture and career growth,” the firm said. “As well as ensuring that decision making is an integral part of the interview process, companies should regard it as a crucial element in employee satisfaction, alongside more widely recognized indicators.”
How Do Beliefs, Values, and Culture Drive Decision Making?
Senior executives told Kingsley Gate that their decisions are more rationale/data-driven than intuition-driven. However, nearly three-quarters (74 percent) of senior executives said that their personal values and beliefs often influence the way in which they make decisions.
“This ties in with the finding that people are the main driver of improvements in decision making, ahead of data and processes,” the report said. “This could suggest that, even when decision makers use data and processes, personal values and beliefs still come into play, and personal subjectivity is necessary to make decisions.” A report on personal values and decision making biases produced by Bournemouth University suggested that people are rarely completely rational in their decision making and, even when they endeavor to be, perceptions of risk, past experiences, cognitive biases, and personality all come into play.
The Kingsley Gate report says that this links in with the topical subject of AI and its role in decision making. “Whilst AI has evolved to compete with a human brain in many areas, other elements such as empathy, knowledge of the people involved and recognizing the many nuances of a real-world situation are not as advanced,” the firm said. “Human qualities, such as values and beliefs are, therefore, necessary components of decision making.”
Sixty percent of senior executives told Kingsley Gate that they frequently rely on intuition or “gut instinct” when making decisions; this rises to 76 percent for C-suite respondents. Mr. Ramakrishnan says that, for him, this is usually because he trusts that the analysis has already been done by others. “As a CEO, any decision that comes up to me has already been through a rigorous analysis. So, I am less interested in the data and more interested in who is saying what about the data,” he said. “I may ask questions about data, but that final yes or no is almost always [down to] gut instinct. If I didn’t have that level of trust in my employees, the decisions would take a long time to make.”
C-suite respondents are also the most likely to say their decision making style is unconventional or unique, which ties in with the finding that only a third (36 percent) of senior executives say their style of decision making aligns with their organization’s style.
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Seventy-four percent of senior executives say their personal values and beliefs influence the way they make decisions. “This prevalence of ‘unconventional’ or ‘unique’ decision making styles among the C-suite could relate to the fact that this group are more likely to rely on instinct when making decisions, in contrast with other employees who are perhaps more data- or process-driven,” the Kingsley Gate report said. “C-suite members could be said to offer a different approach or perspective. However, ensuring that this approach doesn’t differ wildly from the ethos of the company as a whole is crucial. Focusing on decision making styles during the interview process will ensure that C-suite employees bring a fresh perspective without causing friction.”
Why is Decision Making Effectiveness a Crucial Aspect of Assessing Leadership Candidates?
Kingsley Gate found that senior executives who discussed decision making before taking up their role are more likely to be satisfied:
• In their roles overall
• With their organization’s decision making process and ability to make decisions effectively.
• With the degree to which they are empowered to make decisions.
• With many elements of their roles, such as workplace culture and environment, opportunities for career growth and having a sense of purpose.
• Are also more likely to have seen an improvement in their organization’s decision making over time.
“This shows that decision making shouldn’t just be one element of the recruitment process; rather, it should play a central role in hiring senior executives,” the Kingsley Gate report said. “The first step is ensure that they have the education, experience and skills to make effective decisions in the role. Following this, decision making style should be discussed. Not only is establishing candidates’ decision making style and their level of compatibility with organizational style key to enabling them to thrive, but it could also be instrumental in improving the decision making of the organization once they join. As well as discussing decision making before a senior executive is hired, introducing it into performance reviews, lessons learnt sessions and other reflective milestones would feed into a virtuous upward spiral that would see improvement of decision making on both individual and organizational levels.”
To read the full Kingsley Gate report click here!
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media
