We’ve all heard this – right. We probably even finished the sentence in our head without realizing it; it’s automatic.
But the idea of fit is not so automatic when it comes to vetting and hiring CEOs or acquiring companies. Fit doesn’t only apply to shoes. And unfortunately it is often overlooked.
When the Board hires a new CEO – it expects he or she will be successful because they have been. When one company acquires another company, the acquiring company expects the transaction will be accretive to their organization. Yet more often than anyone wants – it’s not.
When we hire a CEO, or any key position in the company for that matter, what do we look for? We look for technical skills, managerial skills, history of doing the job (or a similar job). Less often do we look for temperament; and even less often than that do we look for fit. That is, how likely is this candidate to fit into our organization?
When we look to acquire a company, we “run the numbers”. We perform a due diligence. Yet how often do we accept or reject a deal based on fit? Not very often.
And what’s the success rate of CEO’s and acquisitions? Poor. One survey result published in the Harvard Business Review reported that 40% of executives fail within 18 months. And the success rate of acquisitions is even worse. A number of studies report success rates below 50%.
So what’s going on? Well one of the things that’s going on is this thing called fit. That is – how well does the CEO fit into the culture of the organization; and, how well does the acquired company fit into the culture of the acquiring company?
Fit is based on values, and unless you know the values of the leader and the values expressed by the company culture, it is near impossible to gage fit. And if you can’t gage a critical component of a successful hire or a successful merger, then your might as well just flip a coin. And it’s so much less expensive for a similar outcome.
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Copyright 2012 Kubica LaForest Consulting
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