The National Search Mistake

“An expert is an ordinary fellow from another town.” ~ Mark Twain

Many years ago I served as a board member of a good-sized nonprofit organization. (I was drafted, i.e., I felt compelled to say “yes” because of who asked.) The board was far too large – having over 30 members – making it little more than an amorphous group of people who gathered monthly to have lunch, listen passively to boring financial updates, be informed of the latest “opportunities” to give the organization more money, and endure what the leadership team took to be moving stories from sad people being served. These board meetings were two hours out of my day spent in a bastion of mediocracy. So perhaps it was not surprising that after the first several meetings I started to find important conflicts in my schedule – you know, like having to go to the grocery store or read a book.

(Note: I have also served on nonprofit boards that were not only functional, but were led by a CEO of the organization who knew how to plan and conduct board meetings that were always efficient, interesting, and often enjoyable. There is a formula for achieving this – maybe I will share in another blog or drop me a note if interested.)

When the long-time CEO announced his intention to retire, this less-than-functional board needed to spring into action to find his replacement. So how was this going to work?

[Sidenote: I see nonprofit board members often being incredibly important and impactful as individual consultants to the leadership team. As a whole, however, boards have but four functions: 1) hire the CEO, 2) support the vision of the CEO, 3) provide adequate oversight to assure assets are being expended to further the mission of the organization, and 4) fire the CEO. So in this situation, the board was faced with the task of carrying out its #1 responsibility.]

It soon became clear that a smaller group of board members would need to be designated to conduct the CEO search and selection process. As is often the case on large community-based boards, this board included some executives from large and prominent corporations. They quickly offered themselves as being the best qualified to handle something as important and complex as finding the new CEO and negotiating their terms of employment. So a committee of seven was empowered to proceed.

These powerful executives quickly decided two things: 1) it was important to conduct a “national search” so as to find the very best person in the nation for this vital position (the best person in Omaha would inevitably fall well short of what was needed!), and 2) that they were far too busy to be bothered with details, so we needed to spend $65,000 (30% of the new CEO’s first year salary) to hire a search firm to find and vet candidates.

After roughly three months, a hire was indeed made. The new CEO had been found! It was a person who lived many states away, had impressed the three people on the search committee who had actually spoken with the applicant, and had an impressive resume that the search firm had assured the committee was first-rate. I still remember the day the new CEO flew into town to be introduced to the full board. I was dumbfounded: the new CEO knew nothing of our community, nothing of our state, was unprepared to (or unconcerned about) making a good first impression, and appeared to be considerably self-absorbed. In short, I left thinking I could find three better candidates not only in Omaha, but in my neighborhood.

So what is my point? Of course there are times to search well outside your community for individuals who have highly specialized skills, such as a specific type of surgeon, a rare scholar and researcher to attract to your university, or someone who has unique knowledge of technology. But when looking for someone who can lead people, and create and protect a healthy workplace culture, it is not only unnecessary to look outside a 50 mile radius, it is often unwise.

When I hear the term “national search” I think it often is a reflection of the egos of those who are asking for the search. It’s just more impressive to tell others that they are at the helm of a “national search” process.

Many recognize the value of being in a position to promote from within. That newly promoted executive comes into their new role with an understanding of the culture of the company – and that is no small benefit. But what I think so many underestimate is the significant value of a leader who comes to the role with an understanding and appreciation for the culture of the broader community where the organization operates. So I see two levels of hiring “from within”: a) from within the company and b) from within the community. I believe this is absolutely true for both for-profit and nonprofit entities, but true on steroids for nonprofits, including big operations like medical centers and Universities.

If I were to take a CEO position with a company here in Nebraska, I would have to learn a lot about that company’s operations and culture. If I were to take a CEO position with a company in Vermont, I would also have a steep learning curve with respect to that area’s power structure, politics, history, and social norms.

We can see this when we look at college football teams. Many programs, like the Huskers here in Nebraska, recruit players across the country. That is necessary because elite athletic skills are rare. But it is also a fact that the student athletes recruited from outside this region of the country are significantly more likely to not pan out as players or depart the team after a year or two. This should not be surprising as players from outside Nebraska must adjust not only to being in college and the rigors of being a scholarship athlete at a Big 10 school, but also must adjust to a community, city, and even climate that is far different from where they grew up, e.g., Los Angeles, Miami, rural Louisiana, or New Jersey.

An example of the danger of being a culturally ignorant outsider occurred here in Omaha many years ago when a local Fortune 500 company hired a new CEO from far outside Nebraska. Shortly after starting, the new CEO saw an appointment on his calendar to attend what appeared to be a recurring quarterly meeting with some group of individuals from outside the company. Unsure of what it was, or if it would be worth his valuable time, he elected to send a vice president in his place. When the poor VP showed up at the meeting, they asked who the heck he was, and then quickly showed him the door – sending the VP back to tell the new CEO that not only was a substitute not acceptable, but that the CEO was lucky to have been invited to start with! The meeting was for a highly select group of the most powerful and influential business and philanthropic leaders in the state. What a great example of getting off on the perfectly wrong foot, and jeopardizing that company’s ability to be in that room where so many important decisions were made.

Look – amazing leaders are not a dime-a-dozen, but they are much more plentiful than remarkable heart surgeons, top gun fighter pilots, or all-American shooting guards. Using a “national search” process to find a leader can result in you overlooking potential leadership talent that is already employed by the company or sitting within 75 miles of where you are. As a result, you may miss out on leaders who have outstanding potential, may already know the organization, and have an understanding of – and appreciation for – the community in which you operate.

I like the theme: buy local. When it comes to leadership, I suggest you tell the search firm that you would like them to understand that it is your preference to hire local as well.