The English philosopher Gilbert Ryle famously distinguished between two forms of knowing. The first involves knowing that something is the case and concerns factual knowledge; the second involves knowing how to do something and concerns procedural knowledge.
Organizational psychologists know that there is a right way and a wrong way to choose people who can perform well in specific jobs. Moreover, there is no difference, in principle, between the method for choosing good CEOs and the method for choosing good janitors—although the consequences of choosing a bad CEO are much more severe than the consequences of choosing a bad janitor. However, tested knowledge and proven methods for making good selection decisions are all but ignored when it comes to how CEOs are hired.
A friend of ours, an expert in employee selection, consulted with a franchise in the National Basketball Association. To his dismay they hired player after player based on technical ability, and each of these players was subsequently released—at great cost—for reasons of bad conduct. We asked our friend why the franchise owners ignored his hiring advice, and he said, “There is so much money and ego involved in these decisions that no one cares what I think.” Much the same sentiment seems to apply in the process of selecting CEOs. CCL’s research on executive selection confirms that little rigor is used when appointing top leaders.
CEO selection is prone to three recurring problems.