A typical job interview is a conversation between two liars: Fernandez-Araoz
An expert on hiring at Egon Zehnder,
Claudio Fernandez-Araoz says looking at potential is essential R. Sukumar
New Delhi: Claudio Fernandez-Araoz, global expert on
hiring at executive search firm Egon Zehnder, has interviewed more than 20,000
executives in more than 40 countries. The author of books like It’s not the How
or the What but the Who, Great People Decisions, Hiring Without Firing, and How
to Hang on to your High Potentials, he is a frequent lecturer at Harvard
Business School. In an interview with Mint, he speaks about succession planning
and leadership assessment. Edited excerpts:
You must have hired a lot of people. How many?
I would have interviewed 20,000 people and hired about
400. That translates to nearly four interviews per day over 20 years. The more
I interview, the more cautious I get to complement my interviews with reference
checking, because even after 20,000 interviews, I still trust more in what
people working close to the candidate can tell me about the person.
What can we learn from this?
A typical interview is a conversation between two liars.
The hirer will tell the candidate that come and join us in paradise...it is a
spectacular place, look at the integrity...we change the world, society... And
the candidate who is desperate to get the job would say that the day I join you
it will be like walking in paradise. A lot of people ask questions in an
interview which are absolutely useless. A typical question is: tell me about
your strengths and weaknesses. What would you expect from a question like that?
It is like a glorified lie where you show something that you hope the other
person will interpret it as a strength which you tried to disguise as a
weakness. The right interviews are interviews where you really focus on what
needs to be done and you check that the person in the past has been able to do
something similar that requires similar skills under similar circumstances. For
example, if you are looking for a project manager that needs to work on a
strict deadline and a very strict budget, then you should ask the person if he
has been in a situation where he had to manage a situation with a very tight
deadline and a strict budget. Ask what was the situation like, what was his
role, how did he do it, what were the circumstances and consequences. And then
you need to complement or confirm that the person is telling you the truth.
Technically, these are called behavioural type of interviews, where the person
demonstrates that he/she has the right kind of skills to successfully perform
in the job.
This is great at mid- and senior-level hiring. But when
a company is recruiting tens of thousands of people at the entry level, what is
a good model to have because it is not easy to have face-to-face interviews?
This is related to one of the things that fascinates me
about India because Indians are blessed by an Anglo-Saxon mind. It is part
because of the logical mind and part because of the huge growth and dearth of
talent that India is a hotbed of innovation for people precisely at the mass
level. You probably are familiar with the case of TCS (Tata Consultancy
Services Ltd). I met Subramanian Ramadorai and I asked him how many people was
he hiring this year. He said 50,000. This is what they have been doing for more
than a decade. They hire graduates from colleges, universities. For each one
they hire, they calculate the rate of return. Then they divide the productivity
of each programmer by their salary board and then they calculate the average rate
of return of each hire of each university they are coming from. Then they go to
the universities with the highest yields and make a blanket offer to the entire
graduating class without interviewing anybody. So you spend zero time and money
interviewing and you still manage to hire. When you yield massively you have a
lot of data about what makes for success in that type of world and you can do
all sorts of analytics. India is most advanced in applying this massive matrix
to all type of decisions but for some reason has not applied it to managing
talent.
In one of your books, you have said we should move away
from hiring on the basis of competencies which everyone is obsessed with and
focus more on hiring for potential. But isn’t potential nebulous and difficult
to measure?
The answer is no.
In order to assess the potential right, the first thing is to know what to look
for... The first indicator is curiosity, and it is obvious looking at children
as to how they move from doing nothing to achieving things because they are
curious. They start playing, experimenting, they learn from their mistakes.
Then you need insights…the ability to connect the dots and the ability to
separate the signal from noise and to see new possibilities. The third element
is engagement; you have to do all this in this tough world, with all the crises
and difficulties. Fourth condition for high potential is determination. So if
you look at all these four indicators—determination, curiosity, engagement and
insights—then you are going to achieve a very good accuracy of about 85% that
can help you identify potential in your own organization.
Can potential be developed?
Yes, out of these elements, determination is a result of
an early upbringing and doesn’t change that much, though it can through a
life-transforming experience. But the other three, curiously, develop through
habit. So, for example, if you look at some management consultants, they spend
so much time looking at decision creation and analysis that you become, by
exercising this, more insightful. We’ve all been in this programme of
influencing skills. All of these can be developed through training. Having said
this, the brain is much more plastic in the early years; and if you look at a
senior executive, you don’t want to run the risk of trying to develop the
potential—it takes time and is very costly (the opportunity cost is huge), so
you rather make sure that you assess high potential when making a senior
appointment. Looking at potential is essential for three things—the world has
become more volatile and, by definition, if it is more volatile, your work
itself changes. For instance, a person who has perfect competence for a job,
his job will change rapidly and if the person doesn’t have the ability to adapt
to the change... The second reason why potential is important is because for a
series of reasons, I’m convinced that there will be a major scarcity of
qualified people. India is blessed with a wide range of demographic dividend,
but all the European countries, for instance, or North America and, soon, even
China and Russia, are not so blessed with demographics. You will soon have
lesser young people. In the programme where I teach, we found that the pipeline
that serves qualified successors is the lowest we saw in many years…
Could you elaborate on the pipeline of successors?
Pipeline means the number of qualified successors that
you will have for senior leadership positions.
Does it indicate a failure of higher education or on
part of the companies that hire them? At the senior level, mostly, failure in
the development process.
The main reason for the failure we’ve identified at
Harvard Business School is that companies are not very good at the process for
developing people, such as proper job rotations. A child initially grows and
learns so much is because he is exposed to so many things—first is walking and
speaking, then thinking and communicating, and so on. So the way to develop
high potential is to expose people from time to time to new challenges. Some
organizations do this beautifully, such as ANZ Bank. Every time they spot high
potential, every two-three years they assign them to a new responsibility,
moving from one service to another to another country. The main reasons why
organizations have poor successors is because they didn’t manage well their job
rotation. Everything you’ve said about potential is skewed towards young
people. No; so I will give you a dramatic example. I’m a Catholic. Last year,
when pope Benedict resigned, I said this is the chance of my life, how can I
influence this decision? So I wrote a letter to the electing cardinals where I
tried to suggest to them criteria to appraise which of the electing cardinals
had the highest potential to become a pope. You have to predict who has the
highest potential. I made three recommendations, one central recommendation was
to take a look at the indicators of potential; we use this criteria for CEO
succession, for electing directors and boards. Recently, for example, in
London, we hired two directors for John Lewis Partnership, and the main
criteria for appraising them was, where CEOs were joining the board part-time
as directors, was potential and, particularly, curiosity. Jack Welch retired
from his CEO role and remained a curious person and eager to learn. Look, for
example, at the CEO level. Twenty years ago, the average tenure of the CEO was
20 years; now, it’s five years; that’s because jobs change so much so if
someone was a good potential, say, five years ago, he’s not any more; but if
they have potential, they will be able to adjust, even at a high level in the
future with a more complex job.
