Leader selection is a debated topic – both because appointment of leaders is regarded as both important and difficult but also because the success rate of conventional leader recruitment is so low. Research repeatedly reports a success rate in conventional leader selection as close to a coin-flip outcome (see e.g., the interesting summary of such research by Kiefer, Martin & Hunt, 2022). The cost of failure is considerable. A failed executive appointment affects not only shorter-term business outcomes, it also undermines trust, momentum, team performance and organisational confidence. Consequences that extend beyond the failure of the individual.
The Nobel Prize winner Daniel Kahneman, commented on the reasons for this in his book written together with Olivier Sibony and Cass Sunstein (Kahneman, Sibony & Sunstein, 2021). They described two fundamental sources of error in human judgement: bias and noise.
Bias refers to systematic distortion — the tendency to favour certain types of people for the wrong reasons – while Noise refers to unwanted variation in judgement – e.g., that the same candidate is evaluated differently depending on when an assessment is done or depending on the mood of the person who conducts the interview.
Where one assessor may see strong leadership ability, another person might see risk. The difference is not always depending on available data but rather unexplainable variability in human judgement.
Kahneman and others have repeatedly witnessed that irrationality and inconsistency in judgement causes errors in leader selection. Too many appointments still rely heavily on intuition, chemistry or loosely defined impressions.
The cure to this is provided by research on expert judgement – a well-planned and well executed stepwise procedure when making judgements. The more well thought through and disciplined the assessment process is, the lower the risk that decisions are shaped by bias, noise or chance.
The Stepwise Procedure: Assessing the Right Things in the Right Order
The Stepwise Procedure follows a simple principle: assess the right things in the right order.
Rather than trying to make one broad judgement about a candidate all at once, the Stepwise Procedure means to divide the assessment into stages, each stage answering a distinct question. At the start the requirements for a specific leader position are set and at every following step a limited number of requirements are evaluated. Candidates who do not meet these criteria are filtered out. In success rate terms, those who remain after each selection step form a progressively stronger pool. By the final stage, the strongest candidates are being compared not with everyone, but only with other qualified candidates.
This matters because the quality of a decision depends not only on the quality of the information gathered, but also on the logic of the comparison. The Stepwise Procedure ensures this.
The initial stage — What data should be used in the assessment?
“Leadership” is not a generic task. Modern research has concluded that it is important to understand that “good leadership” and what will be concluded to be a “good leader” depends on the situation of an organisation and what this organisation needs to achieve (cf., Borman and Brush, 1993; Dokko, Wilk and Rothbard, 2009; Tett and Burnett, 2003; Sonnentag, Volmer and Spychala, 2008; Woods and Hinton, 2017). Therefore, the first step in The Stepwise Procedure for leadership assessment has to focus on the achievements and the organisational contribution (e.g., contributions to the organisations culture and way of operating besides specific KPIs) that are expected by a leader in this particular organisation.
It is important to recognise that the specification of expected achievements and the organisational contribution should emerge from a careful analysis of the organisation's actual situation and needs. This analysis must also account for the competitive pressures the organisation faces. Is the business operating in a stable market, or is it exposed to rapid shifts in customer behaviour, pricing pressure or new entrants? Is the leader expected to defend an established position or drive growth into new territory? And where does the organisation stand in its digital journey. Are core processes already transformed, or is the incoming leader expected to lead that transformation whilst simultaneously delivering on operational targets?
These are the actual conditions under which the leader will be judged to have succeeded or failed, and therefore it has to be the criteria used to assess candidates. Role-specific criteria that ignore organisational context produce assessments that are technically structured but practically misleading.
The ISO 10667 standard is a good support in this process. This standard requires that the purpose and context of an assessment are clearly defined before any assessment method is decided. It is imperative to understand the needs of the organisation on a level that is specific enough before initiating the process of evaluating candidates. Many poor selection processes and leader appointments begin with a surprisingly simple mistake: the expectations on the prospective leader was not defined precisely enough.
The first step in The Stepwise Procedure thus should result in a specification of which Experience, Knowledge, Skills and Personal Characteristics are required to fulfil the expected achievements and organisational contribution. In addition to such requirements, it is probably also expected that the leader has the potential to grow and be able to take on other tasks in the future.
Stage 2 — Is the candidate having the basic qualifications
Generally, individuals appointed to leader positions are expected to perform almost immediately. After an induction to the organisation and the role, they are normally not expected to have the need for basic education and training in their profession. A Finance Director is expected to be able to run accounting and controlling effectively and a Sales Director is expected to know how to lead, develop and build effective sales organisations.
Before evaluating Personal Characteristics, it is therefore necessary to evaluate the basic qualifications of the candidates. Such qualifications are not possible to evaluate based on a CV or LinkedIn profile. The data needed has to be collected also from other sources, e.g., investigating interviews and references. It is definitely not sufficient to know which high-profiled or similar company a candidate comes from or even which position they had in the previous organisation. Instead the basic qualifications are evaluated by making a fact-based evaluation of their previous career, what is the relevance of the positions they have had, and what relevant achievements may prove that the needed knowledge and skills are in place. Such judgements need to be made by experts knowing what is needed and being able to assess if the history of a candidate is enough.
In order to know if a candidate should be brought further in the process it is imperative that an effective evaluation of the basic qualifications of a candidate is made. That is, that enough proof is collected on experience, knowledge and skills to make a valid prediction of shorter-term success of the candidate with respect to the specific achievements that are expected. In order to know whether a candidate should be taken to the next step in the selection process such proof are needed.
Stage 3 — Is the candidate having the appropriate personal characteristics
Of course, the selection of leaders is not only about experience, knowledge and skills. It is also about behaviour, motivation and Personal Characteristics. However, if the required experience, knowledge, and skills are not in place, motivation, intelligence or personality will not help. In leader positions such aspects cannot compensate from knowledge and skills.
Therefore behavioural and personality related assessment should only be made when you know that the candidate has the basic qualifications – the needed experience, knowledge and skills. If the assessment of basic qualification is mixed up with assessment of Personal Characteristics The Stepwise Procedure is compromised and so is the possibility to make successful leader selection.
Why The Stepwise Procedure gives better outcomes
A candidate passing The Stepwise Procedure will be assessed towards the relevant requirements, will be experienced, knowledgeable and skilled enough and will fulfil the requirements related to behaviour and Personal Characteristics. This candidate will be equipped with what it takes to succeed.
If a selection procedure commits to The Stepwise Procedure the risk of failure in the leader appointment will be substantially reduced. The MU RI has made systematic follow-ups of leaders assessed this way by trained and skilled experts in the MU organisation. The data speak for themselves – instead of the coinflip outcome from conventional leader recruitments MU executing The Stepwise Procedure in a skilled way deliver a success rate well above 90%.