Blog: Is culture the culprit when it comes to CEOs quitting?

Culture

Is culture the culprit when it comes to CEOs quitting?

While organisations realise the importance of culture fit, the tight labour market forces hiring managers to ignore it during recruitment process
Is culture the culprit when it comes to CEOs quitting?

What is it that connects Neil Mills, Alex Wilcox, Nigel Harwood, Graham Williamson or for that matter Edgardo Badiali? We have short-term memories most of the times these days and we need the help of Google to remember things. SpiceJet Chief Neil Mills is the latest in a string of CEOs who have quit the aviation industry at critical junctures, raising questions about the way organisations hire and even manage talent.

Experts argue that coming from a different work culture, expat CEOs (as in the above examples) have a different style of functioning. Most organisations (today, as in past) would dismiss such arguments as soft HR stuff. Perhaps they, and many others, need to be reminded of mavericks like Herb Kelleher, of Southwest Airlines, who credited culture and cultural alignment as the secret to their firm’s success especially in adverse economic times.

It does slyly imply that cultural alignment is an important aspect, but the more important question is whether organisations believe the same. Is it only job fit that matters the most or does organisation fit (an individual’s compatibility with an organization’s values and mode of operation – often referred to as a culture fit) matter?

Booz & Co’s research “Why Culture is Key” states that companies with unsupportive cultures and poor strategic alignment significantly underperform their competitors. The report further adds that companies with highly aligned cultures and innovation strategies have 30 per cent higher enterprise value growth and 17 per cent higher profit growth than companies with low degrees of alignment.

But are organisations hiring talent with culture fit in mind? DDI Australia’s research report “Recruiting for culture fit” has some interesting observation. It states, “While most respondents rate recruiting for cultural fit as very important to essential only 36 per cent of respondents indicated their organisations always recruit for cultural fit. While a further 30 per cent indicated they often recruit for cultural fit, more than a third of respondents indicated that they never recruit for cultural fit.”

What are the implications? About 89 per cent of hiring failures are due to poor cultural fit and a whopping 46 per cent of all new hires fail within the first 18 months, states a study conducted by Atlanta-based research and management consulting firm Leadership IQ. The study further states that 75 per cent of the new hires would succeed if they fit in with the organisational culture.

If organisations recognise the importance of culture fit, why do so many not assess it? Several researches, including that of DDI, highlight a number of factors that contribute to this situation. Organisations and hiring managers do not assess for culture fit because they don’t know the ‘how’ of it – suggesting a need for more training and education in recruitment practices such as behavioural interviewing. Hiring managers are often in too much of a hurry to adequately consider and assess for culture fit; they are under pressure to fill positions and therefore ignore culture fit; the tight labour market forces hiring managers to ignore culture fit during recruitment process.

While not all of the above reasons may be true in the Indian scenario, the frequency with which top talents hop their jobs (Mills, it is said will be soon joining an Asian airline) and the above eye-opening statistics, do have a few lessons in store.

What is it that can be done? Trade pundits have often argued that the key in hiring is not necessarily finding people who thrive in uncertainty but rather finding people who thrive in the kind of organisational culture the organization strives for. The hiring manager or the selection committee should resist the urge to hire people just because they share the same personality traits and background as theirs. In fact they should look for a fit with the organizational culture as assiduously as they sort for experience and skills.

Isn’t it true that when the organisation’s values are in sync with the potential CEO’s values, the CEO (or for that matter an employee) would feel a greater sense of harmony at work and thus a greater likelihood of staying with the organisation?

Topics: Culture

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