Topgrading

CEO heads are being chopped off as though it’s a version of the French Revolution, and the business world collectively shakes its head and wonders, “How do such incompetent people get hired by boards of directors?”

 The answer is as simple as it is appalling:  Crummy hiring practices! 

Boards have a Selection Committees that hires search firms that give the appearance of being thorough while concealing negatives and hyping positives of candidates.  (In my experience 10% of search executives are A players who really do a great job attracting and screening candidates).  When board members “interview” finalists it is  all very “professional,” with few tough questions asked over lunch.  And, there’s seldom an in-depth, hard-hitting, chronological Topgrading interview.  Reference checking is with people finalists choose.  What a lame process!

A few weeks ago I talked for 1 1/2 hours with one of the smartest guys on  Wall Street — a former CEO of one of the most prestigious companies.  As a board member he had interviewed a candidate for a top job and was thrilled with him … and amazed that my assessment was so negative.  The board member had asked a lot of philosophical (what are your beliefs?) and hypothetical questions (how would you handle this challenge) and the verbally adroit candidate had great responses.  But my interview nailed down a consistent record of MEDIOCRE PERFORMANCE.  The board member was very appreciative, thanking me for preventing a serious mis-hire, and for teaching him that the only really valid interview is one that scruitinizes every success, every failure, every key relationship, every key decision, and overall performance in every job.

There are now about 20 Topgrading professionals, and private equity firms use us all the time to assess management teams and candidates for top positions of companies they are considering buying or their portfolio companies.  But we rarely get calls from boards of public companies (probably because the board members have never heard of topgrading).

 Until boards of directors substitute the thoroughness and validity of topgrading for the shallow, deceptive, and non-valid approaches, the shareholders they represent will surely suffer.  This is a major flaw in our otherwise very solid economic system. But I’m preaching the choir, right?