Research: What is the key criterion when selecting a new manager?

Selection of candidates for any position is bringing the right people at the right place. When a management position is at stake this is a high risk move because any variation in a new employee’s performance brings either competitive advantage or stagnation to the team at least. Selection of candidates is a process of fitting the needs of organizations with the skills and education of those who apply. Therefore effective selection is achieved only when there is an effective fit. By selecting the best candidate for a managerial position an organisation gets not only good performance from that individual but also good performance from the entire team under his/her supervision what certainly creates at least tactical competitive advantage for the whole company.

The success in performance of managerial duties is essentially determined by the ability of individual in that position and her willingness to exert extra effort in the execution of work. Therefore, effective selection boils down to maximizing the probability that a new employee possesses the required knowledge, skills and willingness to do the job for which she is employed as a critical component of any successful organisation. Selection of candidates is one of two ways (along with orientation and training) to ensure that a new employee truly has and/or develops those abilities which are essential for her good performance in new job.

When selecting a manager for our company we must first compile a list of necessary job requirements – necessary knowledge, skills and abilities – as expressed in our specification of desired education, training, work experience, specific industries, projects, specific skills and capabilities as well as many other conditions. Care must be taken that this specification relates only to true job tasks and responsibilities and don’t include requirements that have no direct connection with the post which helps in avoiding discrimination against some candidates.

Among other (specific) personal and professional characteristics of a person applying for a managerial position in your company, each candidate should be assessed and evaluated against the following features that are essential for any successful manager:

• Communication skills,
• Self motivation,
• Work standards – self and others,
• Influence on others – selling own ideas and self,
• Leadership skills and their potential
• Ability to make decisions,
• Ability to analyse problems and reasoning,
• General business knowledge and administrative skills,
• Ability to manage.

Interviews with candidates are still the most popular selection tool regardless of increased interest in other techniques. This is because selecting candidates through a well-prepared interview procedure helps in avoiding mistakes and at the same time allows candidates to learn more about the organisation for which they apply.

In principle there are three models for the interview:

1. Biographical interview to investigate candidate’s prior accomplishments.
2. Structured behavioural interview – past work situations. Here we determine how a candidate behaved in certain situations in the past. This technique focuses on candidate’s experience, his knowledge and past behaviour by assuming that this past behaviour and performance of a candidate will most likely determine his performance and behaviour in the future. This testing style will require the candidate to describe how he actually behaved in certain situations and not how he thinks he should. An example is “Tell me about when you are faced with an angry and disappointed client.” Similar questions would have to be based on specific criteria for a given job.
3. Structured behavioural interview – hypothetical work situations. Questions are based on preliminary analysis of potential challenges in a particular job. Candidate has to answer how he would react in a described business situation.

I recently conducted a survey among my LinkedIn colleagues from the former Yugoslavia (May 2012) asking for the main criterion when selecting candidates for managerial positions in their companies. I received close to 30 responses. In fact, I did a similar survey a year ago in South Africa (February 2011) asking my former Johannesburg consulting firm’s clients to vote on the same issue. Number of responses was similar and I will present both findings here.

Based on my previous research and experience on this issue I first made a short list of the most common criteria used when selecting managers. Finally I decided on a list of six plus a blank space for those who felt some other criterion was prevalent. Each respondent had to choose only one answer that is the most prevalent criterion for a decision when selecting the best candidate. The survey question is displayed below (It had the same wording in Serbian language):

What is your key criterion when selecting candidates for a managerial position in your organisation?

1. Previous experience from your particular industry
2. Impression from the interview
3. Relevant qualifications
4. Confirmed references from past employers
5. Previous experience in similar management roles
6. Testing results (psychometric, problem solving etc)
7. Other criterion (please write it down).

Results from both surveys are summarised in the table below. Both groups agreed on the top three criteria which relate to past experience and impression from interview. Therefore, we can conclude that criteria relating to qualifications of candidates, their references and results of special tests including problem solving are less relevant both in Southeast Europe and South Africa.

What differs between the two groups is the order of top three criteria. In Southeast Europe previous experience in a similar managerial position is by far the most important criterion as opposed to South Africa where industry experience appears to be the prevailing factor. Southeast Europeans will choose a candidate who did it before running a similar size organisation, having similar powers and responsibilities no matter what industry she comes from as this criterion is only rated in the third place. On the other hand, South Africans believe that previous experience from the same industry will be crucial for good managerial decisions in future. This difference probably comes from the fact that a South African pool of managers in search of jobs is matured, bigger and already segmented what make these people easier to find. This is probably why the search is for industry expertise – understanding of the industry’s value chain and a good portfolio of relevant business contacts. At the other hand, Balkan countries have only recently gone through political and economic transition (some are still struggling) and western style – performance focused – managers are scarce resource as only a few generations of new managers have come to market. Therefore the experience in a western style management becomes most in demand i.e. more important than experience from a specific industry as employers count on later orientation and training of a new manager which can be easily provided by other employees.

In both surveys the criterion “general impression from the interview” came as second what convincingly demonstrates to me how important the pre-acceptance from would-be superiors and peers is.

However, one thing worries me. In today’s fast changing world economy which is still in crisis (and will be there for quite some time), I wonder how much someone’s knowledge of past business solutions is of an assistance when solving completely new and genuine business situations. Let me rephrase: should we base future decisions on the analyses of past situations? For me, “copy and paste” mentality and practice which is actually wide-spread especially in the western world (just remember numerous case studies regularly used as the strongest argument) will only deepen the economic crisis as this approach actually suffocates innovative people. This is why I would rather take a candidate who can demonstrate genuine and efficient approach to problem solving which will probably be based on common sense. It would make me much more confident when sailing in unknown waters.

So the results from both surveys came disappointing to me from this point of view. It looks that results from testing candidates on their actual abilities, being it psychometric or problem solving, won’t affect appointment decisions much. In Southeast Europe this criterion dominated at only 6.90% of survey respondents and in South Africa 5.00%. Probably the motto of those who are in place to select a new fellow manager is: “We are bringing someone who has already done that before, even better if this happened at our fiercest competitor who is going to lose by our decision, because we don’t want surprises or uncertainty in our future.” One must understand that today’s high rate of change in both society and the economy dictates the transition of our minds from rating uncertain as high risk to rating it as manageable opportunity with medium or low risk.

More than a decade ago I witnessed a selection process for a mid-level management position at South African branch of US bank Capital One. After initial filtering of candidates based on their CVs, Capital One proceeded as follows:

1. Written test on candidate’s skills and psychometric characteristics.
2. A hypothetical business problem solving in an interview. A person who ran the interview explained to a candidate first business situation and asked what steps should be taken to resolve it. A candidate was given 15 minutes to think; then she/he presented own assessment and solution, answered few additional questions and then the process repeated with another two problems in identical way. No discussion outside those case studies was conducted with candidates. After this step, the selection committee drew the line and decided on a short list to proceed to the next step.
3. “Traditional” interview with a candidate when talks about past experience and behaviour in real situations were conducted. At this stage a candidate received more information about specific team and work environment of the employer.

My conclusion is that the Americans were looking for a new manager who could lift the company’s operations in South Africa in an innovative and effective way by screening the environment and designing new products and services to suit the changing society and market. They didn’t put a weight on past experience as it wasn’t so relevant for designing products and services for newly created market segments.

Isn’t our current socio-economic environment dictating similar assumptions?