The Big Challenge

27 October 2009 Michael D Watkins

In an extract from Your Next Move, author Michael D Watkins considers the growth of 'onboarding' by companies looking to recruit senior executives.

The mandate David Jones had been given seemed clear enough: bring some discipline and focus to a relatively young and fast-growing company that designed and manufactured wind turbines. But just a few months into his new job as COO of Energix, David was wondering if he'd been set up to fail.

It had seemed like the perfect opportunity for an ambitious executive with such strong leadership skills. After majoring in finance in college, David had joined an iconic Fortune 100 manufacturing firm that was both global and diversified. First in the supply chain unit, and later in R&D, David had risen steadily through the ranks to become vice-president of new-product development for the company's electrical distribution division.

David learned to lead in a company that was renowned for its management ‘bench strength’ and its commitment to talent development. The culture leaned somewhat toward a command-and-control style of leadership, but people were still expected to speak their minds - and did. The company used state-of-the-art measurement systems to relentlessly weed out underperformers, but its reputation as a leadership factory made it relatively easy for the firm to recruit fresh talent. When the company needed to fill senior-level positions, it rarely hired from the outside. It didn't have to.

The company had long been a leader in the adoption and refinement of the top management methodologies, including total quality management, lean manufacturing, and six sigma. In fact, virtually everyone in the company had been trained in some elements of the latter; David was a black belt in six sigma. The result was an organisation where people truly believed that ‘you can't manage what you don't measure’. They had internalised process management as though it were religion.

David's superb quantitative skills and natural aptitude for systems thinking were important factors in his rapid ascent through the ranks-those and the aggressive nature he had honed as a linebacker for his high school and college football teams. He loved nothing more than tackling a problem and wrestling it to the ground. At well over 6ft, David intimidated some. At the same time, he had been able to engender a strong sense of loyalty among his people because of the intensity with which he upheld the company's commitment to leadership development.

Needless to say, the manufacturing company was fertile ground for corporate recruiters: personnel decisions tended to be of the ‘up or out’ variety, and typically there was a surplus of good candidates for relatively few senior jobs. So, like most executives at the firm, David got calls from headhunters regularly. Sometimes he listened to their pitches; it couldn't hurt to gauge his value in the outside job market, right? But he'd never really been tempted-until the opportunity to become chief operating officer of Energix came along.

Just six years old, Energix had been funded by Silicon Valley venture capitalists before going public. Capitalising on increasing energy prices, Energix had established a strong and fast-growing position in wind turbine design and manufacturing.

The company was doing well; it had weathered the typical start-up transitions of going from two people to 20 to 200 to 2,000 and was now poised to become a major corporation. As a result, the CEO had told David more than once during recruitment and his final round of interviews that things had to change. "We need to become more disciplined," the chief executive had said. "We've succeeded by staying focused and working as a team. We know each other, we trust each other, and we've come a long way together. But we need to be more systematic in how we do things, or we won't be able to capitalise on and sustain our new size."

"If new leaders are welcomed into a supportive environment - one that encourages them to realise personal and organisational aspirations - they'll produce much more quickly and are more likely to stay around for a while."

The decision to appoint a COO was itself a big step for Energix. The CEO had never appointed a number two executive before. Previously he had relied on tight working relationships with the CFO and the heads of R&D and operations, all of whom were members of the company's founding team. With the company's growth, though, had come more internal tensions--and at a time when the CEO needed to focus more of his time on external relationships.

David liked the COO opportunity - quite a bit. On the surface, it appeared to be a near-perfect match for his skills. He would be offered an attractive compensation package linked to the company's growth. He would have overall responsibility for internal operations, with broad scope to define his agenda. He understood that his first major task would be to identify, systematise, and improve the core processes of the organisation - essentially laying the foundation for sustained growth for the company.

So David took the plunge and joined Energix, digging into the new job with his usual gusto. In the weeks before he formally took the role, he absorbed every piece of data he could about the company and its operations. He also conducted in-depth fact-finding interviews with all the members of Energix's senior management committee (SMC) and other key people in new-product development, operations, and finance.

What emerged was a portrait of a company that had been run largely by the seat of its collective pants. Many important operational and financial processes were not well established; others weren't sufficiently controlled. In new-product development alone, there were dozens of projects with inadequate specifications or insufficiently precise milestones and deliverables.

The good news was that one critical project, Energix's next-generation large turbine, was probably going to market in the next few months, but it was nearly a year behind schedule and way over budget. David came away from his fact-finding exercise wondering just what or who had held Energix together - and feeling more convinced than ever that he could push this company to the next level.

The problems began soon after David's formal appointment. The SMC meetings started out frustrating and just got worse. The committee had decided that the CEO would continue to chair these meetings - just until David got established, they said. For his part, David, who was used to a high level of discipline in meetings, with clear agendas and actionable decisions made in tight time frames, found the committee members' elliptical discussions and consensus-driven process agonising. Particularly troubling to him was the lack of open discussion about pressing issues and the sense that commitments were being made through back channels. When David raised a sensitive or provocative issue with the SMC, or pressed others in the room for commitments to act, the committee members would either fall silent or recite a litany of reasons why things couldn't be done a certain way. David approached the CEO with his concerns and was told it would probably just take more time for him to understand "the way we do things here".

Two months in, with his patience frayed, David decided to simply focus on what he had been hired to do: revamp the processes to support the company's growth. New-product development was his first target, for several reasons: his fact finding had pointed out numerous holes in that function, which touched many other parts of the company, and given his previous experience, R&D was something David understood quite well. So he convened a meeting of the heads of R&D, operations, and finance to discuss how to proceed. At that gathering, David presented a plan for setting up teams that would map out existing processes and conduct a thorough redesign effort. He also outlined the required resource commitments - for instance, assigning some strong people from R&D, operations, and finance to participate in the teams and hiring external consultants to support the analysis.

Given the conversations he'd had with the CEO during the recruiting process and the clear mandate he felt he'd been given, David was shocked by the stonewalling he encountered in the meeting. The attendees listened attentively but wouldn't commit themselves or their people to David's plan. Instead, they urged David to bring his plan before the whole SMC since it affected so many parts of the company and had the potential to be disruptive if not managed carefully. (He later learned that two of the participants had gone to the CEO soon after the meeting to register their concerns; David was "a bull in a china shop," according to one. "We have to be careful not to upset some delicate balances as we get out the next-gen turbine," said another. And both were of the firm opinion that "letting ‘Jones' run things might not be the right way to go.")

Even more troubling, as David tried to implement his ideas, he experienced a noticeable and worrisome chill in his relationship with the CEO. Previously, the CEO had reached out to him frequently. But increasingly, the onus was on David to initiate conversations. Their discussions had become both more formal and more formulaic, as the CEO increasingly stressed the importance of the launch of the next-generation turbine-indirectly suggesting that the product rollout should take precedence over efforts to improve processes. The CEO also deflected discussions about when David would begin to run his own internal operational meetings.

The onboarding challenge

As David Jones's story suggests, joining an established business from the outside is never easy - the new leadership role is often ill defined, the organisational architecture will most likely be unfamiliar, and the politics are even more complex than usual. But such transitions are becoming increasingly common: because of their inabilities to build their own deep benches of talent, and given their ever-present mandates for global growth, more and more companies are looking outside for senior-level executives and then seeking effective ways to "onboard" them.

It follows, then, that firms that have spent a great deal of time and money to identify and recruit talent can ill afford for their newly hired executives to underperform or, even worse, become so frustrated that they decide to leave before they get a chance to gain traction. That's where successful onboarding comes in. If new leaders are welcomed into a supportive environment - one that encourages them to realise personal and organisational aspirations - they'll produce much more quickly and are more likely to stay around for a while.

But while the onboarding challenge is receiving more attention these days, many talented leaders still don't believe their companies do a good job transitioning newly hired executives. A recent survey of senior HR executives I conducted through the IMD Business School in Lausanne, Switzerland, revealed that 54% of the respondents thought their companies did an inadequate job of executive onboarding.

It's also important to note that the onboarding challenge applies not just in those instances when new leaders are transitioning between two different companies, as David Jones was, but also when he or she is moving between units of a company. In fact, my studies have shown that on average, moves between units in the same company are rated to be 70% as difficult as joining a new company: The primary reason is that units of the same company often have very different subcultures, the result of "bolt-on" acquisitions or the nature of work done within the unit.

Reprinted by permission of Harvard Business Press. Excerpt from Your Next Move. Copyright 2009 Michael D Watkins. All rights reserved.