THE BOSTON GLOBE ON HOW TO REDUCE THE RISKS OF CRITICAL LEADER MIS-HIRE.
Rather than risk the expense of having top executive recruits fail, some US companies are hiring coaches to ensure the success of new hires during the most critical period of their tenure: the first 90 to 100 days.
Known as assimilating or onboarding, the practice is being used at Fidelity Investments, Johnson & Johnson, State Farm Insurance Co., Cisco Systems Inc., and others to increase retention levels and help business leaders transition into new jobs faster, said Michael Watkins, a Harvard Business School professor who helped spearhead the trend.
In the wake of recent corporate scandals, many companies are keenly aware that the fallout from a bad hire can ripple across an organization and result in lost productivity and profits.
And turnover in the nation's top managerial ranks remains high. Challenger, Gray & Christmas, a Chicago retained search firm that tracks employment, reported last year that corporate officers have left US firms in unprecedented numbers over the past three years. In August 1999, when the company began tracking CEO departures, 32 resigned or were forced out. Today, chief executives step down at an average rate of 79 per month.
''Studies show that relatively high-level people coming into companies have a pretty high failure rate,'' said Watkins, author of a book due out this summer titled, ''The First 90 Days: Critical Success Strategies for New Leaders at All Levels. ''Typically, by the end of five years, two-thirds have failed. So, companies are interested in knowing how to reduce costs and get people up to speed quickly.''
This is especially true in a down economy, said Jeff Durocher, director of market development at RHR International, a team of 70 management psychologists who specialize in workplace and business consulting. ''Companies do not have time to let people fail anymore,'' he said. ''So, they are shortening the honeymoon period, which means people are expected to hit the ground running.''
To do that, an executive from outside a firm, or one promoted to a different division within, must learn to navigate the corporate culture or political climate fast. ''They also need to be in touch with key people, with support from the boss,'' Durocher said. ''And, they need to know which agendas to worry about and which ones to ignore.”
Watkins maintains executive recruits can maximize their success rates by learning how to build personal credibility and momentum during the first three months. ''Transitions are really critical times,'' he said. ''You are more vulnerable because you do not know the politics or culture of the new organization. At the same time, expectations are high that you will make something happen. So, to succeed you must develop a reputation for being a quick study and then make small symbolic changes.''
After learning that her
predecessor kept detailed files on everyone and everything that took place in
the office, one new executive carted the files away. To those around her, the
act was symbolic: ''It meant that she was ready to take on small issues that
might have been irritants, repair damaged relationships and that she wanted
to be perceived as decisive, thoughtful, fair, and willing to listen,''
STYBEL PEABODY LINCOLNSHIRE ROLE
Ronald Goodspeed, a physician and president of Southcoast Hospitals Group in southeastern Massachusetts, gave a newly hired vice president who reports directly to him an ''owner's manual,'' with key information about himself. In the one-page primer, Goodspeed spelled out his likes and dislikes, his expectations, and his goals. Goodspeed got the idea from Laurence Stybel, president of Stybel Peabody Lincolnshire, Boston.
''In the first six months, people are trying to get their bearings and figure out how to work with you,'' said Goodspeed. ''So, if you can cut the amount of time it takes to do that, the new person can spend more time on their assignment.''
To better compete in a down economy, both retained search firms and executive recruiters are adding assimilation or executive transition coaching to their menu of services. Executive recruiters started the practice many years ago but moved away from it in the mid-1990s when the pace and profits associated with executive hiring increased dramatically.
Gordon Curtis, founder of the eponymous Marblehead leadership and development firm, said search firms' participation in the practice raises critical issues. ''For recruiters, the service is like an extended warranty,'' he said. ''The company buys the search and the recruiter guarantees the new executive's first 12 months. That is one model for doing this. But corporations still have an arm's length relationship with their search partners and do not necessarily want them to dabble in their inner workings.''
Even so, the trend is picking up. Executive search firm Heidrick & Struggles includes assimilation coaching in its package of services. So does Korn/Ferry International. Right Management Consulting, the retained search firm, is offering a 90-day assimilation or onboarding coaching service.
Right Management's corporate clients pay between $10,000 and $20,000 for onboarding, said Andrea Eisenberg, managing principal of the New York region. ''When an executive lands a job, we go in and talk to the new company about its expectations and what it wants from the candidate,'' said Eisenberg. ''We call it KES - key executive service - and we do it around the world.''
In some cases, newly promoted executives contact coaches themselves. Shortly after Dr. Marylou Buyse became president of the Massachusetts Association of Health Plans last year, she hired Stybel. As the first medical doctor to run the HMO trade association, Buyse was faced with setting a new course for the group, whose eight members have 2.1 million health care clients in Greater Boston. She said she wanted to make an impression quickly and help the organization separate itself from the tarnished image HMOs had acquired in the press.
After consulting with Stybel, Buyse changed the group's name from the Massachusetts Association of HMOs to the current title. ''The change was symbolic in that it signaled a new administration with a new approach,'' she said. ''It was substantive because HMOs, rightly or wrongly, have gotten an unfavorable name.''
Stybel said that first actions such as this are crucial, and a new executive needs to know how to pick his or her battles.
Said Stybel, ''During the first 100 days people give you the benefit of the doubt. They learn about you by looking at how you respond to the inevitable pressures and stresses.'' He said that by winning the first battles, ''you establish a platform for other things. If you lose, someone is going to light a fire under that platform. You may not burn today or next week. But the fire is lit and you may not know it.''
Diane E. Lewis can be reached at firstname.lastname@example.org.