Chapter 3: Distorting leadership evaluations when assessing candidates

Trap 1: Succumbing to the fallacy of comparison

Experiencing the fallacy of comparison is natural; there is an intrinsic inclination to directly compare candidates against each other to make a quicker decision, to hone in on a capability, or to simply evaluate two tangible options (rather than comparing to an intangible, unseen ideal profile). But in doing so, decision-makers may inadvertently overvalue or undervalue certain characteristics.

This tendency can be due in part to distinction bias in joint evaluation: when two options are directly contrasted against each other, the differences seem substantial. However, when evaluating the two options separately, the differences appear less significant, or there is a realization that the gap between expectation and reality is not as wide as previously thought.

In joint evaluation, decision-makers are more likely to hone in on insignificant details or elevate minor differences as the determining factors in the decision-making process. For example, boards may find themselves drawn to a leader with a distinguished educational background who is well-connected with prominent figures, as opposed to a candidate who has not yet built a deep network. Having established relationships can certainly enhance organizational growth and opportunities; but, it may not have been an original criterion, and it may not be a gap that the organization is currently facing.

In another situation, boards may find themselves comparing two models: a tenured candidate with CEO experience who has led through turbulent markets, versus an emerging leader who is being shaped by experimental ideas. In evaluating them against each other, it may seem more reasonable to appoint a seasoned leader who offers conventional wisdom and confidence. However, in stepping back and separately evaluating each candidate against the success profile, boards may realize that the emerging leader better addresses the current leadership gap, bringing intellectual diversity from non-traditional institutions.

Stakeholders may also unconsciously employ the ‘take-the-best’ heuristic, comparing only one competency, instead of evaluating holistically across all success profile competencies. For example, a board may be swayed by a candidate for their unparalleled charismatic storytelling capabilities—critical in today’s landscape for connecting with employees, reassuring investors, or shaping public sentiment—and believe that the silver medalist falls significantly short in this competency. But in separately evaluating each individual against the success profile, the board may find that this candidate only spikes in storytelling, whereas the silver medalist not only brings good-enough storytelling capabilities, but also outperforms across all success profile attributes.

Trap 2: Succumbing to fundamental attribution error

The idea of transferable capabilities—skills and abilities that are useful and applicable in any organization or role—should be met with pause at the senior leadership level. The concept traditionally views leadership capabilities independent of context, does not account for leadership potential, and focuses on table-stakes competencies. Holding onto the idea of transferability will create mismatched expectations between what the board anticipates and what the potential CEO can accomplish.

In naturally giving the candidate the benefit of the doubt, boards may assume that the candidate was responsible for many of the successes at their previous organization, and extrapolate which capabilities were important for success. However, it is not always evident what factors contributed to a leader’s success.

Soft leadership capabilities—such as strategic thinking, purpose, agility, and emotional intelligence—are difficult to measure, and may only come to life when individuals are evaluated beyond traditional business experiences. Here, stakeholders encounter fundamental attribution error: the belief that personality traits and individual capabilities have more impact on outcomes than external environmental factors.

Candidate experience, when taken at face value, does not always tell the full story. Many leadership accomplishments occur in part due to hidden (perhaps immeasurable) attributes—how these were bolstered by an effective team, the available resources and information at hand, or serendipitous market events. These external elements make it difficult to understand what achievements can be directly attributed to candidates’ leadership and how transferable their perceived successes will be in a new environment.

With increasing volatility and uncertainty coming from all sides, boards cannot afford to merely assume that a leader’s prior successes are automatically transferable to another organization, without properly considering contextual factors.

Methodology

Data sourced from Russell Reynolds Associates’ H1 2023 Global Leadership Monitor, which surveyed 500 CEOs, board directors, and CHROs on the state of CEO succession and stakeholder perspectives, and interviews with 14 of our Board and CEO Advisory Partners consultants.