You have an important position to fill, perhaps the chief executive of the company, and you have an obligation to find the best person for the job. But knowing where to find the best candidates is not so simple.

Boards have an obligation to conduct due diligence when naming a new CEO, and an essential part of that process is comparing internal candidates to candidates on the outside. Even though research argues the right candidate is probably already at your company,  you need all the data on all candidates— internal and external—to make a fully informed selection.

Thankfully, technology has made external comparisons much easier. It can even be done rather quickly and inexpensively for positions other than CEO. For instance, if the chief executive of a small biotech has doubts about his CFO, and wants to see how he or she compares with CFOs at comparable companies, they can have that question answered with a couple clicks.

As you’ll see, knowing where to find the best candidates is all about collecting and following the data.

How the board of a $9-billion company selected a new CEO

Hormel had been extremely successful under its CEO, Jeff Ettinger. It had outperformed its peers on virtually every performance metric. When he announced his retirement, the board faced the daunting task of selecting a successor.

The board had four internal candidates it thought would perform well as CEO. Consultants interviewed each of them for two hours using a structured interview guide that is designed to reveal behaviors and attitudes associated with the highest performing CEOs. They followed up with more questions in a second interview of equal length. Each of the candidates also had to discuss a business case to demonstrate how they approached problems and opportunities.

The candidates each took two tests: the Watson-Glaser, which looks at problem-solving skills, and a version of the NEO personality test, for which norms exist for CEOs. (The highest performing CEOs tend to score very high in conscientiousness and very low in neuroticism. CEOs levels of extraversion, openness to experience, and agreeableness aren’t as impactful on performance.)

The consultants then conducted structured 360-degree interviews on each internal candidate, speaking with six references for each one, and then saw them present an at investor day.

External Search

While all this was going on, the board was looking externally, systematically identifying managers of P&Ls with revenues of more than $2 billion—Hormel’s competitors and peer companies—which turned out to be about 60 people.

The consultants applied algorithms to winnow the field down to 12 candidates who, statistically, appeared to be the most likely to succeed at Hormel. The board’s search committee discussed those candidates and further reduced the pool to six.

Using their knowledge from prior searches, the consultants then gathered all publicly available information about these six individuals and created detailed reports that mirrored those written on the internal candidates.

With all this data in hand, the board found one of the internal candidates, Jim Snee, most compelling and began to transition him to CEO.

Follow the data

More important than knowing where to find the best candidates is how you look for them, your approach to the search. You need to see what you have, what is out there and be ready to dispense with your preconceived notions about who seems right for the job. Technology makes this much, much easier to do.

Too many search firms focus only on getting bodies in the door, on closing their search. They focus on who is available as opposed to who is best for the position. They resort to ‘selling’ the candidate— convincing them to take the job. It’s why 40 percent of new hires placed by search firms leave or are fired within the first 18 months.

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