One of the biggest challenges for a corporate board or CEO contemplating a significant change in strategy is understanding whether the people who are in senior-level roles are equipped to lead the organisation through the change. Shifts in product direction or expansion into new geographic or product markets may require a range of skills and expertise not previously required by the organisation. But how do these leaders evaluate whether the current executive team has the newly required skills and market knowledge and determine whether additions to the senior-level management team are needed?
To ensure that they have the right talent in key leadership positions, some companies embarking on a strategy shift turn to third parties to help assess the capabilities and readiness of their senior leadership. Such assessments can provide an accurate understanding of the individual and collective strengths and weaknesses of the organisation’s senior leaders, in particular as they relate to the company’s future direction. Such evaluations also may suggest the need to provide additional developmental opportunities or training to specific leaders, or a need to make organisational changes or add executives to the team to address skill gaps.
In a recent example of how Spencer Stuart works with companies planning or undergoing a strategy shift, our consultants helped a client in the high-technology industry evaluate the capabilities of its management team as the board studied whether to adopt a focus strategy to better address different industry segments.
The leadership challenge
As its primary business in one of the segments was maturing, the company began building its capabilities in a second segment with different industry dynamics and longer product life cycles. In
addition to addressing two distinct markets, key processes for the two segments also differed. Because of these and other differences, the CEO and board were evaluating whether to split the two business units into separate companies in order to better serve the different client bases and grow both businesses more efficiently. Before the board made the decision, it wanted to understand whether the company possessed enough executive talent — with both the functional depth and sector knowledge — to lead two separate organisations and what leadership gaps, if any, existed.
The company chose Spencer Stuart to conduct the executive assessments because of our consultants’ deep expertise in both of the industry sectors the company serves and because of our unique assessment approach. This approach combines a thorough competency-based interview to assess an individual’s performance in current and past roles as well as a separate Executive Intelligence interview to evaluate an individual’s aptitudes in the practical, social and emotional aspects of intelligence — indicators of his or her future potential.
The results
Nine senior-level executives and high-potential managers were included in the evaluation process. A team of two senior Spencer Stuart consultants with in-depth industry and functional knowledge and rigorous assessment expertise met with each of the executives to evaluate their competencies in the specific requirements of their roles. In particular, these interviews looked at executives’ abilities in skill areas important to high technology companies, such as communication, people leadership, customer
orientation, performance management and driving change. A separate interview conducted by a highly trained expert in evaluating Executive Intelligence quantified and benchmarked individuals’ business judgment in multiple work situations.
Our evaluation found that the company did, for the most part, have the talent it needed to focus on two segments, but identified one area in which the company required additional depth. The assessment also produced comprehensive reports on each executive and an aggregate view of all the executives’ strengths in relation to the company’s strategy — information that was valuable both for the immediate strategic planning and longer term succession planning. In addition, consultants provided
development recommendations for each executive, which they also shared with each executive in one-on-one meetings.
A company’s strategy and the market conditions it faces change over time. Companies that periodically assess the capabilities of their senior-level talent in light of the challenges they face and the new strategies they adopt will be better positioned to respond successfully. Management assessments that include both competency-based evaluations and assessments of Executive Intelligence provide the most complete picture of an executive’s capabilities and potential.
Improving assessment effectiveness
Several factors contribute to the success of an assessment process. The following are some best practices drawn from our experience.
- Tie roles — and the corresponding skills and competencies required of executives — to strategic objectives. It is important to understand the organisational requirements for the roles based on the organisation’s strategy.
- Make no exceptions. The assessment process gains credibility among executives when there are no “sacred cows” who escape the process.
- Communicate the process and the reasons for the assessment. Communication about the assessments should come right from the top and include an explanation of the reasons for the assessment and how the information will be used. Without a good communication process, executives may be reluctant to
participate in the process.
- Be aware of and sensitive to cultural differences that could skew the results of the assessment process. If you ask the same question of executives in Switzerland and in China, you cannot expect to get the same answer. It may also be important to allow participants to be assessed in their native language. During interviews in a non-native language, some executives may focus too much on choosing the appropriate words rather than on the task itself. To get more accurate results, allow participants to
use their native language.
- Focus on interview logistics. To keep the assessments moving when managing multiple interviews with multiple executives, it is helpful to assign responsibility for scheduling interviews to a
single person.
- Share feedback from the assessments quickly. It is important for the acceptance of the program that people receive feedback from their assessments on a timely basis.