By Rich Wellins, Ph.D.
Last week I was on a flight from Atlanta to Pittsburgh, seated beside a sales manager leading a team tasked with selecting the company’s new Customer Relationship Management system. The team had been on it for six months. His PowerPoint® deck was over 70 strong. No lack of analysis here. The new CRM software had a hefty $5 million price tag.
The next morning I read an article from Chief Executive magazine “The Costs of CEO Failure”, discussing how CEO turnover is costing the U.S. economy $13.8 billion a year, not including lost shareholder value, caused by mistakes, failed strategies and organizational upheaval. Imagine the cumulative cost of mistakes one or two management levels down where there are hundreds of senior managers in an organization.
So, reflecting on our CRM story, many companies devote less than 1/2 of 1% of the time and resources in making senior manager selection or promotion decisions as the CRM team spent making their new platform decision. We run into companies that use the nine-box method (a matrix to assess performance and potential) for their high po’s. The problem is that the boxes are filled with light-weight, fluffy Styrofoam peanuts, not real, solid data. In making any internal or external senior leadership promotion decision, it is just plain malfeasance not to use more due diligence. Some things to consider:
- Are you stacking your candidates (internal or external) based on both current performance, and their ability to handle new responsibilities?
- Are you using multiple sources of data—like performance appraisals and ‘personality’ instruments—as well as management opinions?
- Is your process led by a talent management professional who can help guide you through these critical decisions as well as provide objective “second” opinions?
We sometimes hear that a process for senior leadership decisions is ‘too expensive.’ In the words of Edward Lawler, noted leadership guru at UCLA: “Decisions about people should be made with the same rigor, logic, and precision that are applied to decisions about capital investment, products, technology, and physical assets. To do anything less is to risk creating an organization that cannot perform effectively.”
Please share—how rigorous are your talent decisions?
Rich Wellins is senior vice president at Development Dimensions International (DDI).
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