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You Need A Leader – Now What?

By James Citrin & Julie Hembrock Daum

(Crown Business, 238 pages, $30)

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***

William Perez was a successful chief executive officer at S.C. Johnson & Son – a private company that makes Johnson Wax, Windex and Drano – before being recruited to head Nike Inc. when founder Phil Knight decided to step back. But Mr. Perez was a failure at Nike. He was unable to usher in the sophisticated marketing practices that were second nature to him, and for which he had been courted, because that thrust was out-of-step with the prevailing culture.

Ousted from Nike in 2006, Mr. Perez was damaged goods and seemed unlikely to land a plum job, but ended up being brought in as CEO of William Wrigley Jr. Co. Within two years share price increased by 50 per cent thanks to growth in revenues and net income of 23 per cent and 29 per cent, respectively.

It is a fascinating story, used by Spencer Stuart consultants James Citrin and Julie Hembrock Daum at the start of their new book about recruiting to highlight just how shaky the hiring process can be when an individual can be a spectacular success in one company and a flop in another.

"It's not about selecting a great individual to do a job. It's about matching the right individual to the right situation and using the right process to get it done," they declare in You Need A Leader – Now What? ( Click here to read an excerpt.)

This contradicts the conventional wisdom used at most organizations. Instead of searching for a superstar you must find out what the organization needs, what kind of person fits your culture, and who has the right skill set and experience to fill the bill.

While this seems common sense, it isn't what companies instinctively do. The consultants say you must internalize the fact this is a different way of selecting the best person for important positions, keeping in mind three essential guiding truths:

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– Recruiting is not about finding a "great" individual; it's about solving an intricate and dynamic jigsaw puzzle.

– Once you have diagnosed the need, then you can get the very best person.

– Even the right choice can go wrong without the right process.

The authors add to this advice some lessons from their study of CEO transitions in U.S. and European companies as well as the top 30 research universities in the United States. They delve into the hot topic of whether it's best for companies to promote CEOs from within or reach outside. The pattern these days has settled on the superiority of going with the known quantity from within. But the authors' study found that at the aggregate level, there is almost no difference in performance.

Digging deeper, they found that the right person for the top post is highly dependent on the company situation at the time. When a company is healthy, insiders outperform outsiders. The data are overwhelming: Insider appointments at healthy companies were three times more likely than outsiders to have achieved top-quartile performance.

But when a company is significantly challenged or in a clear crisis, the opposite proved true: outsiders outperform insiders. The outsiders achieved top-quartile performance at twice the rate of insiders. "Outsiders brought in at challenged companies benefit from new eyes and fresh perspective and have few if any ties to the prior regime," the authors note. "Insiders, by contrast, are often captive of the culture that got the company into the crisis in the first place."

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Their study also unearthed some important red herrings to keep in mind as you search for senior executives. They found that at senior management levels, age has no correlation, let alone causality, to success. Thus, there is no reason to set a certain age as condition in a senior executive search.

The authors also found that experience doesn't count for much in one high-profile situation. Despite what we might instinctively believe, people who had previously held a CEO post and were chosen for the helm at another company did not outperform first-timers in that role. In fact, it was the reverse. The first timers did better.

Similarly, at elite U.S. research universities, sitting presidents hired from other large universities did not fare as well as presidents of smaller colleges, or provosts or department chairs from comparable universities. "First-time university presidents may be poised to outperform experienced presidents because of the all-consuming nature of those university leadership jobs today. A president who has proven herself in one institution often finds it challenging to perform at the same level in a new environment," they suggest.

You Need a Leader is more overview than manual, elaborating on the three essential truths without turning them into a step-by-step approach. It has some excellent stories that emphasize the main points and lots of interesting statistics from the authors' study, and should be of some value in clarifying the jigsaw puzzle for people who deal with high-level recruiting.

POSTSCRIPT

The premise of The Three Commitments of Leadership (McGraw-Hill, 193 pages, $24.95) by consultants Tom Endersbe, Jay Therrien, and Jon Wortmann is appealing: You can make three commitments and be effective as a leader. Commitments is a strong concept, and three an achievable number.

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And the specific three commitments are intriguing and somewhat different from the norm: create clarity, stability, and rhythm. But when the authors start elaborating on each of those commitments, it becomes a much longer laundry list of things to do, not much different from other leadership books, and the focus seems lost, even if the advice is still sensible.

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