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We write frequently about the critical need to replace "B" and "C" players with "A" players.  And, we regularly do executive searches for such replacements.  When a CEO implements a replacement search, we get to hear all the reasons why their current executive is failing, and what needs to be different in the replacement hire.  So we thought this would be a good opportunity to be very specific about what these CEOs are seeing in the people they regard as failures.  Here are the top flaws cited by Senior Execs when discussing those they MUST replace in order to move their agenda forward:

Can't Go To The Next Level:  Many managers are OK maintaining the status quo.  However, when management makes a bold plan for growth, or a company is acquired and new directions are set, or you are planning a liquidity event and optimization of performance is required, often the incumbent is judged incapable of going beyond current requirements to a new level of performance.  Perhaps the individual had limited skills and knowledge when hired, and failed to grow along with the business, or is "coasting" when acceleration is needed.  There are a number of reasons why people can't keep up, but if they can't, your agenda won't move forward.

Inflexibility:  Resistance to change is always perceived as an obstacle.  If your manager has an attitude of "we've always done it this way" and "my people would fight a different approach", this will get in your way.  The trait "Change Agent" is almost always cited as something needed in a replacement hire.

Poor People Skills:  Failing execs just don't play well in the sandbox.  They can't communicate corporate goals to their team, they can't coach and mentor, they tolerate poor performance, do nothing about morale, and perhaps worst, can't get along with their peers.  One of the performance objectives we are most frequently given for a replacement hire is "Create a cultural transformation" - to repair the damage that has been done within the incumbent's current team.

Inadequate Leadership Skills:  The inability to inspire others is a major flaw.  Failing managers can't lead by example, they delegate poorly or not at all, take credit and give blame (rather than the inverse), and lose the respect of their team.  This can be catastrophic as it cascades through the organization.

Can't Hit the Numbers:  All senior managers either make you money or save you money.  Poor managers don't ever quite hit the numbers.  In a $100 million company, a 5% drop in growth is $5 million in revenue, and perhaps $500K in EBITDA.  Just two bad managers can have this kind of negative impact.  Dropping from 12% to 7% growth might not get you fired as a CEO, but if you do that continuously over the course of your career, you might lose $100 million in revenue and $10 million in earnings for your employers.

Toxicity:  Some managers are just not going along with your program, and it shows in every way.  They are negative in meetings, talk behind your back, generate active and "passive aggressive" resistance, and you can feel the "poison" when you walk in the door each day.  This type of cancer will spread in your organization if not eradicated.

These are some of the top reasons we hear for failure in an incumbent.  We'd love to hear from our readers on what you've seen in people you've had to let go, and if we get enough additional input, we'll write a sequel to this article.

Many employers cite "discretion" as the primary criteria for bonus payments, and they cite this with a certain level of pride and ego, as if to say, "I determine who gets a bonus and why, and no one else!"  Other employers base bonuses on company performance, but have no criteria for including an individual performance component. 

Would you be surprised to learn that executive candidates discount discretionary and company performance-based bonuses when evaluating a compensation package?  Good candidates embrace the idea of incentives that are tied to their own specific performance criteria - because it puts the bonus in their hands  - they are the person earning it! 

Further, even when an employer is open to performance-based bonusing, most employers want bonuses to be as simple as possible.  They want the bonus to be based on ONE specific goal - revenue, margin, or some other basic financial target.  Would you be surprised to learn that candidates embrace complex bonus formulas, that provide multiple goals with multiple ways to earn their bonus?

As an employer, why wouldn't you want to do that?  If you know precisely what SMART goals you need a person to accomplish, and you can provide meaningful incentives for each of those goals, why not provide a financial incentive for hitting each of the targets?  Too complicated?  We construct incentive matrices for our clients all the time that are based on quantifying the performance objectives for the position - it can be done quickly, and provides a fill-in-the-blank chart for how to calculate the bonus.  When new executives receive and agree to this formula within the first two months of employment, it accelerates their performance, and ensures they will do EVERYTHING it takes to succeed in the job. 

Single-mindedness by employers in going after only one goal (e.g.: revenue or margin) may result in other important goals (new customer penetration, rebuilding a team, improved customer service) falling by the wayside.

The time-honored name for this approach is "management by objective" and it was created in 1954 by Peter Drucker.  An example of an MBO compensation plan can be found HERE on our web page.  We are advocates of this approach, and our clients who utilize this report that it is meaningful to their executives - it both spurs good performance, and is perceived as a significant perk.

 Author Tony Hsieh

In his book Delivering Happiness: A Path to Profits, Passion, and Purpose, author Tony Hsieh writes about his business philosophies and chronicles his journey from Harvard graduate to CEO of online shoe giant Zappos. Tony documents how his early years building an internet company and selling it to Microsoft formed his ideas and philosophies about what a company should be and how it should conduct its business. His ideas and experiences include several new-school thoughts on how to run a successful business, ideas like making company culture the top priority and focusing on the well-being of an organization's employees and customers instead of just its bottom line. His anecdotes and insights prove to be innovative and thought-provoking while inspiring readers to find their passion and use their work to pursue it. Hsieh's stories of sticking to his principles and risking millions to pursue his passions will leave readers with compelling ideas about how to run a business and an inspiring story of a man looking to change the world with his company. After all, who wouldn't want to build an organization with their best friends, have fun at work every day, and be able to turn it into one of the most successful online businesses in the world?