The Bad Hire - Why We Don't Want to See it Until it's Too Late

There you are, sitting in the dark, imprisoned by dastardly captors and oblivious to what's happening in the outside world; content with the snippets of information you're fed by others because you've come to trust and depend on them for your survival.

While this sounds like an extract from Natasha Kamputsch's diary or a case study in the Stockholm Syndrome, it parallels the phenomenon of the 'bad hire' and the blissfully ignorant CEO who, imprisoned by his or her elevation is protected from the grim reality of the poorly-chosen candidate.

To understand this phenomenon let's employ the famous case example of another high profile kidnapping, that of Patricia Hearst. Patty Hearst, heiress granddaughter of a wealthy American banker was captured by the Symbionese Liberation Army, an urban guerrilla group in 1974. After a failed prisoner swap attempt, the SLA demanded every poor person in California receive money for food. Her father immediately gave food to the local poor to the value of six million dollars but Patty was later heard on tape to say he "could have done better". Nine weeks after her capture, Patty Hearst committed an armed robbery with other members of the SLA, brandishing an M1 semi-automatic rifle.

How do we explain this? And how is it relevant to the bad hire and our corporate blindness about it?

In my undergraduate studies, we analysed this case as a fascinating early example of a psychological phenomenon, "cognitive dissonance" theory. As the theory goes, when our firmly entrenched beliefs and values are challenged with new or conflicting information, we are psychologically 'uncomfortable'; and thus motivated to resolve the 'dissonance'. The person who smokes heavily and is in denial about the damaging effects of cigarettes can rationalise their father smoked two packets a day and lived to 90! The person with the racist view of a particular ethnic origin who meets a delightful person with that background feels compelled to argue the person in question was clearly "an exception to the rule". When a confident candidate is knocked back for a promotion, rather than contemplate the possibility they weren't up to the mark, they are more likely to blame favouritism or nepotism for their rejection, bitterly declaring "it's the company's loss".

So in Patty Hearst's case, her 'wealthy capitalist father' became the bad guy and her captors morphed into the champions of the underdog.

Whilst less dramatic, what happens in an organisation when a manager or panel invests in a process of sifting through all the promising candidates to choose the best one, only to be confronted with the sad or potentially catastrophic reality (in the case of a key appointment) that their intent has not matched the incumbent's impact? If we take the direct and indirect costs of a bad hire, add the need for face saving and a dash of punitive culture, who is going to willingly put their hand up and admit they've made one big fat potentially career-limiting mistake?

How might we define the 'bad hire'? The bad hire could be, purely and simply, a dud. They may be smooth, charismatic and a B.S. artist. They may have heaven-sent references from a previous employer desperate to have them flourish elsewhere. They may have starred previously in a totally different context and be unwilling or unable to make the shift. So, despite all their potential on paper, they arrive, settle in and underperform.

Incompetence may not be the only reason they're a poor fit. Think of Shane Warne (pre Liz Hurley and just now again) or Wayne Carey and his affair with Kelly Stevens (wife of his best friend). Their behaviour was divisive and disruptive notwithstanding the admiration they enjoyed as virtuosos of their respective games. Mark McInnes was good for the DJ's share price when he arrived, but I believe DJ's is still feeling the flow-on effect of the Kristy Fraser-Kirk saga on their brand, even now.

The bad hire may not be malevolent, but may be 'favouratist' or otherwise divisive. Whilst not incompetent or roguish, some new managers have an uncanny knack of offending long standing and/or committed staff by declaring how badly the place needs renovating, and I'm not talking about décor! Engagement and trust deplete as rapidly as a plump helium balloon pricked by a large, sharp needle. If the intrepid renovator brings a few of their former posse with them and knock popular and capable staff off their perches, they may swiftly become the manager that staff most love to hate.

And perhaps, somewhat controversially, the other category of bad hire I see is the good recruit, when what the organisation really needs is a great one. The deleterious impact of such an appointment is magnified if the new recruit is the CEO or another in the C-suite; particularly if the organisation is bracing for high impact change and needs a visionary, empathic, inspirational leader or conversely must deal with new entrants to the market or a weakening profit or spiralling cost scenario such that a tough but fair economic rationalist is required.

So, bad hires come in different flavours, but why might we struggle to face up? I've already mentioned denial as a potent defence mechanism. The CEO, the HR department, the selection panel may not be able to admit even to themselves, they made a monumental 'blue' in the hiring decision. As per cognitive dissonance theory, the human brain doesn't need to be logical, but it needs to be right. But they might not even know a mistake was made.

In some of the culture audits I've performed, I've encountered managers who are superb at 'managing up' whilst simultaneously disregarding the needs of their teams. Their executive may see them as responsive, good gatherers of intelligence, willing to schmooze key clients and make their bosses look good. However, sometimes these so-called 'stars' have their own teams suffering badly from neglect or bullying in order to satisfy a demanding executive. Thus what makes them successful in the eyes of their superiors is what may disturb and demoralise their own people.

Granted, it's not always easy to assess the impact of one person in a large, complex organisation where leadership is diffused. But if we've realised someone was a bad hire, there are a plethora of operational and psychological compulsions for rationalising their continuing presence. These include: IR legislation, expensive early termination clauses, recruitment freezes, the "anyone is better than no-one" argument and increasingly in a world of voracious media appetite for scandal and rising threat of consumer backlash via social media, a pathological fear of bad publicity.

However this can be a false economy. An executive that carries the poor performer can lose the respect of their people and unwittingly incentivise mediocrity; sabotaging their own critical projects and change programs. Worse still, enabling the serial bully, the corrupt or unethical decision maker or the misogynistic manager signals a tolerance, and creates a breeding ground for, counterproductive workplace behaviour that takes culture backwards.

To be the best, I believe we need to study the best. Elite sporting teams have been known to leave players out of grand finals if they're not well-suited to the conditions or have hit a patch of poor form. It's become increasingly commonplace for team management to take decisive action against players who threaten the fabric of the team; even if they risk losing a few matches because star players are relegated to the sidelines.

It's hard to face up to the reality of costly mistakes, particularly if we know people meant well. But we must never forget. We get the culture we deserve. We get the behaviour we're prepared to tolerate.

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