This spring, Neel Bhatia, CEO of Green Peak Partners, joined us at Mainsail’s Executive Summit to share recruiting best practices with leadership teams across Mainsail’s portfolio.  Based on the positive feedback we received from attendees, we thought it was worth sharing some of Neel’s insights and ideas with a larger audience.  Emily Azevedo, Mainsail’s Vice President of Talent, sat down with Neel for a short interview.<

Emily: Neel, it’s good to reconnect with you. How do you work with companies to accelerate talent?

Neel: At Green Peak, we think about talent acceleration in three buckets. The first is getting the right people on the bus by doing rigorous talent assessments of individuals that are getting hired. The second piece is around talent development; taking an individual leader and giving them some of the toughest feedback they have had in their lives sometimes, through a 360 process, and then working with them on executive coaching. We work with them to fundamentally change 1 or 2 core leadership behaviors that help them take their game to the next level.

And the third is more about helping companies and helping them scale. Questions we help a company answer are: what are the key things that are working really well in their culture, collaboration, and organizational structure; how will they use them to support and fuel that growth moving forward; and what are the things that need to be fixed or maybe haven’t mattered to date, but will matter as the company gets larger and scales?

Emily: Unsuccessful hiring can be costly. How much does a mis-hire typically cost?

Neel: A mis-hire is very expensive. Depending on the study you look at, including our own studies, the cost of a bad hire can be 15-20X the base salary. If you’re talking about a CEO, 15-20X of their base salary sounds just exorbitant and crazy. However, when you break it down, you see 3X of that are the direct costs. So, you probably have to pay them severance, then you pay to hire a search firm again to do the new search for the role. Maybe you paid them a one-time signing bonus that you don’t get back. Those are the direct costs which are straightforward to calculate.

The indirect costs are where it hurts. It’s the time you and your team spent to get this person onboard and up to speed. There’s also the emotional pain and suffering. On the more quantifiable side, B players hire B and C players. So, now you may have a whole team of people who aren’t very strong in your company. And, weak people will close bad deals, or they’ll take the company in the wrong direction. When you think about it just from an EBITDA perspective, and the impact that it can have on your company, that’s where you start to get these 15-20X multiples. What’s even scarier is the frequency with which people get it wrong. Depending on the study you look at, 52-58% of the time people are getting it wrong. That’s basically a coin toss.

Emily: Neel, what’s the number one hiring mistake you see?

Neel: If I had to boil it down to one, I would say it’s not getting enough data before making the decision to hire an executive. There’s this assumption that you can only get so much data from an interview process and that you need to get them in the role and then see how they perform to really get to know someone. And I think that’s just false. There are techniques and ways to probe more on both the strengths and the development areas during the interview process. In our experience, most interviewers on average get about 60% of the data they should be getting, pre-hire. Interviewers do a decent job of getting data on the strengths of the candidate, but they need to probe more on the strengths. Get beyond the fact that the candidate accomplished something and understand how they did it. Probe more on how they grew the business from X to Y. Spend more time in understanding how they were successful in the role, versus ten other individuals that could have been successful for different reasons in that role.

On the development side, more questions need to be asked about mistakes made. Challenge the candidate to be more introspective, and don’t be afraid to ask what got in the way.

We have a technique called TORC – threat of reference check. This is when you ask a candidate what their past bosses or peers would say about them. This approach will give you a solid read on the candidate’s self view of strengths and weaknesses in addition to their level of introspection. Ultimately you want to do the ARC – actual reference check to validate what the candidate tells you.

Emily: Which characteristics do you believe predict success for executives?

Neel: We’ve done about 2,000 executive assessments across our firm and looked back at the data and the internal surveys to determine what actually drives success. There’s really two key things we have identified that help predict success.

First, by far the highest correlator with success is introspection and awareness: How well a candidate knows themselves, both strengths and development areas. The more introspective someone is, the more likely they are to identify the mistakes they are making, correct them and even buffer some of their weaknesses. A CEO who may not be great at finance will want to make sure they hire a strong CFO, or they work on that weakness and get an executive coach.

Number two, is the ability to inspire followership in others. Can they get people to follow their lead? And there’s a combination of things that go into that. Two of the key components for inspiring followership are having a clear vision for the company and empathy for the team responsible for getting the company there. Employees are more likely to respect leaders who have clearly laid out a plan for the company and have an appreciation for their point of view and the role each person has in helping the company to achieve that vision.

Emily: Are there any tools that you’ve seen be particularly helpful in the recruitment process?

Neel: The number one tool is the scorecard. I’m a big proponent of it. What I mean by scorecard is that you have to get clear on what you want the person you are hiring to do and accomplish in the role. I’m not talking about a job description that might say something like “we need someone who can lead a team, or can grow the business from X to Y.” That’s fine for a job description, but, your scorecard really needs to get to the how. It starts with defining your needs for the role. Do you have a very weak team in place requiring a candidate who will need to make significant changes, or are there huge obstacles in their way that they’re going to have to overcome?

The scorecard is a set of 8-10 accountabilities, things you need this person to do on a forward-looking basis. What do you need them to accomplish in the next 24 to 36 months to be successful in the role, and how do they need to do those things? Every role that you’re hiring for should have some type of scorecard—before you start interviewing or even start looking you should sit down and scope it out.

I find it surprising that there are many interview processes where you’re looking for a candidate, but there isn’t clarity up-front on what the expectations are for the role. The scorecard helps create alignment so your team is filtering on the same criteria, which can help in selecting the right candidates to meet with and ultimately make the decision on your finalist.

Below is an example of a scorecard:

Emily: How do you determine whether or not someone should be developed or moved out of a role?

Neel: My view is, if you’re thinking of whether or not you should you fire this person, it’s highly likely that you should be firing them. There are a couple of things you can look for to help you make that decision. One is, how open are they to developing and learning? Do they want to be coached and developed? Sometimes you see people who are forced into coaching and feel like they need to do this to stay in their job. Those people are not going to get a lot out of it.

Second, what are the characteristics that you’re helping them to focus on and are they “coachable”? There are characteristics (or skillsets) that are not coachable. For example, you may need them to be far more strategic than they are, or they’re not smart enough for the role. These are things that you simply cannot coach. And the last thing to remember is to ask yourself, how many things are you trying to coach a person on? What I found, in my experience, is that you can coach someone on a max of 1-2 things. That is, you can move behaviors on a max of 1-2 characteristics or dimensions that fall into that coachable category. If you start getting to 3, 4, or 5 things you believe this person needs to change to be successful, then they’re probably not a good fit for the role.

Emily: Thanks for the time Neel. To finish up, are there any books or reading material that you would recommend for executives as management teams are looking to improve their hiring success?

Neel: There are a lot of great books out there. If you’re looking specifically at hiring, I like one called The Rare Find: Spotting Exceptional Talent Before Everyone Else by George Anders. And another one related to team building that I really like is called The Five Dysfunctions of a Team: A Leadership Fable by Patrick Lencioni.

For more information on Green Peak Partners, feel free to visit their website: www.greenpeakpartners.com.