Graduate Management News
Q & A

Five Questions on Personnel Decisions for … Claudio Fernández-Aráoz

Nothing is more important for career success than making great people decisions, and people skills can be learned and mastered, says Claudio Fernández-Aráoz, one of the top global experts on hiring and promotion. His book, Great People Decisions, is used by major organizations and incorporated in the curriculum at business schools.

 In great demand worldwide as a consultant, Fernández-Aráoz currently travels the globe as a senior adviser for the executive search firm Egon Zehnder International and is a frequent contributor to Harvard Business Review. The keynote speaker at GMAC’s 2012 Leadership Conference, February 1-3, 2012, in Coral Gables, Florida, he recently spoke with Graduate Management News.

Q. You believe that the most successful leaders are remarkably focused on people decisions. Why and how is this trait a marker for a good leader?

A. Jim Collins, one of the best thinkers in management today, found that the foundational condition for building lasting greatness in organizations was to have a great leader at the top who made great people decisions. In my 25 years of global practice as an executive search consultant, all the great leaders I have known have had that focus. They spend most of their time making people decisions—including hiring, promoting, coaching, retaining, or supporting staff development—and they have strong discipline when making those decisions. 

While this trait has always been critical, it has become even more important and urgent now in light of globalization, changing demographics, and an increasingly unpredictable and volatile world.

Q. What are some of the most common mistakes that hiring managers make?

A. Unconsciously, we tend to make people decisions using the same instincts that primitive man used in “fight or flight” situations. His implicit criteria were similarity, familiarity, and comfort. But those are dysfunctional criteria for building great teams, where we look for individuals with complementary skills—just the opposite of similarity and familiarity—and the ability to appropriately challenge each other, which is the opposite of comfort. 

On top of this, most of us have not studied how to make great people decisions. A few weeks ago I was giving a speech to an audience of some 4,000 managers and senior executives at the World Business Forum in New York. I asked how many had made poor people decisions, and everyone raised their hands. Then I asked how many had studied how to assess people, and only 20 raised their hands. Twenty out of 4,000! No wonder this is so hard. 

Q. How can managers improve their people-decision skills?

A. The good news is that, despite what most people think, making great people decisions is not an art, the result of a gut feeling or an intuition, or a capability some people naturally have and others don’t. Making great people decisions is a craft and a discipline that can be learned. Indeed, it should be learned for our career success, for the value of our organizations, and for building a better world. 

There is a proven process for mastering these decisions, all the way from deciding when a people change is needed, what to look for in a candidate, where and how to look for the best candidates, how to assess them, how to attract and motivate them, how to integrate them into a new job or new organization, and how to develop them. We should study the best practices, which are based on almost a century of sound research. We should develop our people-decision skills with the proper training. And we should provide the right incentives so that individuals can actually put the best practices to work. 

Q. Are there different strategies for hiring in lean times vs. boom times?

A. In difficult times most organizations freeze hiring. That is a huge mistake. We tend to think in “either-or” terms—you either hire or you downsize. Mastering the magic of the “and,” great leaders and great organizations don’t hesitate to do both things, actually taking advantage of the pools of talent that are available in bad times. There are wonderful examples of visionary leaders who followed that discipline. At the end of World War II, for example, HP had been through a downsizing but decided to hire all the great engineers that were streaming out of US military labs that were being shut down. At that time, people were asking Bill Hewlett and Dave Packard how they could afford to hire them. Their answer was, “How could we afford not to hire them!”  Years later, when asked what the greatest opportunity had been historically for HP, they responded that their greatest opportunity had not been the times, or technology, but rather hiring those outstanding engineers. Because crises come and go, in bad times you need to keep your long-term perspective.

Q. How can business schools make the best people decisions?

A. First, they should make sure to strengthen their admission processes, by making sure that they not only enroll great students but great future leaders.
Second, given that the difference between great teachers and average ones is huge, business schools should of course make sure to make great people decisions about faculty members. One special challenge universities have is to decide very carefully who should participate in the hiring of new professors, making sure to avoid the all-too-common error of rejecting the right candidate for the wrong reasons. Seeking great internal consensus, they tend to involve too many professors in hiring decisions. Some individuals who would make great professors might not win that kind of popularity contest. By giving everyone an equal voice and an equal vote, you can end up rejecting candidates who go on to become stars somewhere else. The dean of one of the top business schools in the world told me recently how that very thing had happened time and again at his great institution. 
There is much that business schools can do to educate their students about how to make people decisions. Making great people decisions is a job no manager should ever delegate, but in order to master them they need to follow a proven process. Much can be learned, for example, about typical emotional traps and biases that come into play while making these decisions, and about best practices for each step of a search. Training students through role playing for interviewing and reference checking can significantly increase the quality of their people decisions, both for promoting internal candidates and hiring staff from outside the organization. In the past, little was typically done in business schools in those areas. Now, though, some of the best schools are starting to incorporate these topics into their curricula.

Registration is closed for the 2012 Leadership Conference,  February 1-3 in Coral Gables, Florida. The conference for business school leaders is co-sponsored by the Graduate management Admission Council and MBA Roundtable.


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