Stacey Philpot

Roy Notowitz: [00:00:00] Hello, and welcome to How I Hire, the podcast that taps directly into the best executive hiring advice and insights. I'm your host, Roy Notowitz, Founder and President of Noto Group Executive Search.

We work with leading consumer brands in the athletic, outdoor fashion, food/beverage, grocery, and natural product sectors.

My guest today is Dr. Stacey Philpot, Managing Partner at Executive Development Consulting. Stacey was most recently the Head of Deloitte's Succession & Leadership Development Practice, where she guided the firm's work with clients on matters of talent assessment, leadership development, inclusion, and succession.

Stacey has also held managing partner and principal roles at Korn Ferry and Oliver Wyman, where she designed and delivered innovative, transformative, and fast-paced leadership development programs. Her impressive client list has included Apple, JPMorgan Chase, General Mills, Harley-Davidson, Johnson & Johnson, Nike, and PayPal.

In this podcast, Stacey will share three things that hiring executives and boards should be thinking about as they reset and rebuild their leadership teams. We'll also discuss how data-driven hiring will be a vital trend to mitigate points of failure when filling complex leadership positions. 

Stacey and I were first introduced through a mutual friend and colleague, Ted Freeman. I was impressed by her data-driven approach to human capital and her firsthand experience coaching CEOs of Fortune 500 companies. Stacey, thank you for taking time to join us today. 

Stacey Philpot: [00:01:33] Thanks Roy. I am delighted to be here. 

Roy Notowitz: [00:01:35] Can you tell us a bit more about your unique career up to this point?

Stacey Philpot: [00:01:38] I've been an organizational consultant in some capacity for over 20 years, and I feel really lucky that I found this career. I started out early on really wanting to be a psychologist and loving business and, while now that seems like a very normal career, at the time it was sort of unusual. I think what really drew me to it was the idea of, how could we use what we know about social science and research to help people's work lives be better? As a young professional, I saw how much working impacted people's sense of self and then how they brought that home to their family.

And so I was really curious to see what I could learn about people and behavior in the workplace and how that can make workplaces better. I got my doctorate in organizational psychology at Rutgers, and I actually started my career doing kind of psychological profiling for boards or founders who were interested in identifying their CEOs, successors, and key leaders.

And it was just an amazing opportunity because I started to really see how people thought about leaders and what they were looking for in people. You know, that was really interesting, but I also became really passionate around what we could do to help accelerate people's leadership and moved into more executive education and got to work with amazing leaders in a wide variety of industries to improve their ability to innovate, to think strategically, to manage their people better.

And then, you know, more recently I was at Deloitte for several years, heading up their practice on succession, leadership development, and diversity/inclusion, and then began to see how all these things needed to become intertwined if we were going to make workplaces better and developed a lot of points of view on the connection between identifying leaders and creating more inclusive workplaces. And that of course is, you know, what brings us today because our mutual friend, Ted Freeman, who is also a psychologist had talked to me a lot about the great work you're doing with purpose driven and purpose oriented organizations. And from that came some really exciting conversations. 

Roy Notowitz: [00:03:43] Let's start with how you think the current environment has shifted what we need from leaders. 

Stacey Philpot: [00:03:48] There are actually two trends that have really been occurring over the past years that have been rapidly rapidly accelerated by recent events.

And those are the very nature and structure of how work is changing and what that demands of leaders. And the second is really a trend at the societal level around the importance of equity and social justice and people becoming more aware of that. So I'll talk about the first one, which is how is work changing, right?

So there's a lot in the conversation in human resources and people organizations about workforce transformation. And that's really because ecosystems, right? So it's not just your company or your work. Ecosystems are becoming more connected. That is good in terms of more opportunities for innovation and creativity, but it also means barriers to competition are lowering, organizations are becoming flatter and more networked, work is moving from being done by people or roles to being done by teams.

So, what does that mean for leaders? The first thing is the amount of complexity is exponentially larger in their roles. They can't just manage their job. They have to think about teams and functions. They even have to think about their competitors or, you know, people in supply chain. Like they have to think beyond their own boundaries. It also means they need to be more collaborative.

They need to know how to lead teams and they need to know how their work or their part of the business fits into the broader scheme. So a lot more around synthetic and integrative thinking, more collaboration, more leading teams, and of course, more understanding how to navigate diverse perspectives, diverse thoughts, diverse identities, and creating more inclusive environments. So all the data can rise to the top and the best decisions can be made. 

And then the second trend is, obviously with events surrounding George Floyd's murder, the protests around that, the conversation around race, equity, social justice, inclusion, white privilege has really come to the forefront. And so companies are now being asked to have a point of view on social issues and they can't leave that to others.

Purpose driven companies were kind of ahead of the curve on that and they know that, but now everybody has to have a point of view. So I think those two things just really are changing what we need from our leaders. 

Roy Notowitz: [00:06:12] In the article that you wrote on data-driven approach to hiring, there was a statistic around 71% organizations aspire to having diverse culture, but only 11% reported having one. Why is that? And how can a data-driven approach help? 

Stacey Philpot: [00:06:30] There's a lot of complexity in that. So I'll try to break it down. I think the first thing I'll say is people are slowly realizing that because of these changes in how work gets done, diversity is not just a moral issue. It's actually a competitive requirement. So that's led to the aspiration that people know they need it and they want it.

The question then becomes as well, if you want something, why can't they make it happen? And part of that is because companies have to change more than just who they're looking for. Right? So it's not enough to say, you know, "I want more people of color in my head of marketing role, and I want to add people to the slate."

Often they need to do things like say, "Do I need to change things about the role? Do I need to piece it out differently?" Right? "What do I need to do to be attractive for people of color, what cultural changes do I need to do? How am I going to support them?" And so the actual amount of change the companies have to do is a little bit more than they anticipated. And so it was kind of easy to have the aspiration, but what they're finding is it's actually pretty complex to systematically support diverse people in being successful in their companies. 

Roy Notowitz: [00:07:46] You mentioned diversity being the key to unlocking high performance within organizations. Can you speak to that just a little bit?

Stacey Philpot: [00:07:52] Sure. I mean, there's been a lot of support that companies that have more female leaders tend to do better from a performance perspective. That's also true for more diversity in terms of the LGBTQ community or people of color, but you know, this is where we move from just diversity to equity and inclusion.

It's not enough to have representation. It's what are companies doing so that even if they bring those people to the table, that they actually have a voice and they have influence. Right? And so that means that when you bring diversity in, you have to make sure that they have a career path, you have to be aware of some of the systematic biases that might get in the way of that people being promoted once they're brought in.

Think about, how do you make sure voices are heard at a variety of levels in your company? And that may fight against some of your old cultural norms. So some of the work I do with companies is to say, "What type of leadership do you need now? And how has that shifted from what you had in the past?" Because it probably needs to be more collaborative and more inclusive, but that may go against what you're used to. And how are you going to change that? 

Roy Notowitz: [00:09:04] So, given these important shifts, are you seeing any changes in how companies think about leadership? 

Stacey Philpot: [00:09:09] Yeah, I definitely think so. I mean, a couple of them are sort of things I began to mention earlier.

One is really beginning to understand that the unit of analysis in a company isn't a person, it's actually a team. That's a big, big shift because now people are thinking about, "How do I put a team together to do this work? Because no one single person can do it all. That means when they're thinking about succession, they think about what are the knock-on effects of the team around the leader or what kind of roles or people do we need to support person A in the role versus person B. And that again is more complicated, but it also allows me more opportunity for voices and creativity and innovation. So shifting from thinking about hiring just people to creating teams is one.

Another shift around leadership is people are really looking at adaptability as a leadership trait, right? They're thinking of talent more as a pool, and it's going to need to shift and be more fluid. You know, if you think about the COVID-19 crisis, how that's changed how leaders support their people, communicate, relate, that the folks that are more adaptable are the ones who are being more successful.

And so what that means in terms of what people are thinking about leadership is they're looking for adaptable talent. They want evidence not just that people have subject matter expertise or have an experience set, but that they can prove that they have adaptability. And then the last point would be literally about the importance of diversity and inclusion like we just talked about. I think companies now understand that if their talent doesn't reflect their customers and their communities, that they're going to be judged, often harshly, and that that is a standard that they have to meet. 

Roy Notowitz: [00:10:57] You know, one thing I've been noticing, and actually it's been a theme throughout my career, is the importance of understanding the existing team and their capabilities and competencies and leadership abilities. Because before we hire a new position, it helps to have that context. But oftentimes companies don't have deep knowledge of the capabilities or competencies or leadership within those teams or clarity around roles. Can you speak to that at all? 

Stacey Philpot: [00:11:25] I would agree with you. I think really forward thinking companies are making sure they're getting data, not just on the candidate that they're bringing in or the new person, but really on the full component of the team.

So I, for example, have worked with a couple of companies in the retail sector where the CEO wanted data on their executive team and the people below to help think about what were the right combinations of folks and what were the scenarios, if you will. I think what's happening is people are seeing that certain things they do in other parts of business also transfer to talent.

So, you know, if you think about strategy, we recommend scenario planning. We talk about using greater data. We thought about bringing discipline to our decision making. The same is true for people. It doesn't mean that people are widgets or numbers, but some of those best practices, thinking about scenarios and fits and combinations of people in teams is really important because we know from our own experience that is one of the things that impacts productivity.

Roy Notowitz: [00:12:29] So not getting it right, what does that mean for companies?

Stacey Philpot: [00:12:33] One of the things that I've paid a lot of attention to lately is that, frequently when companies want to change or they want to do something new, so they want to start a new business, they want to move into an adjacency, they want to respond to new competition, they look to people from the outside. The challenge, however, is that most companies, the data says they only have a 50% to 60% success rate with bringing in leaders from the outside. A lot of times we aren't really very good at identifying the right people for the right roles and those mistakes become very expensive.

If we're bringing in someone from the outside, there's hiring and recruiting fees. Turnover in leadership causes a disruption around focus for the team direction. Priorities can shift. You can have low morale, poor performance, low engagement. I mean, there's a lot of hard data around just the recruiting and retention costs, but there's an even larger cost when it comes to the impact on the people who report to that leader and the potential attrition of those folks as well.

So it's very expensive. 

Roy Notowitz: [00:13:36] This is huge. I mean, this is something that I talk to clients about a lot. So with an average rate of 50% to 60% failure with new hires, why aren't companies doing better at selecting leaders? 

Stacey Philpot: [00:13:50] I love this question. And like you, I've spent a lot of my life trying to understand it. And you know, the first reason is that we don't actually have a common, universal definition of leadership and that makes it hard to make an objective hiring decision.

You know, if you think about it, when you talk with people about functional expertise or certain knowledge in a role, they can get pretty specific. You know, we think we know what makes someone a good accountant, a good doctor, a good technician, right? We think about those functional skills. But when we start getting into leadership, there's so many books and definitions and lectures, it can feel very confusing.

Then you add on cultural biases around perceptions of leadership, not to mention demographic differences or just people's own experience. And you know, there's not a lot of commonality. So it's not a surprise that we don't do a great job of hiring it because we don't exactly know we're looking for, if you will.

Roy Notowitz: [00:14:42] Do we really know what makes a good leader? 

Stacey Philpot: [00:14:44] What I would say is actually we do, there is a lot of social science research that consistently identifies a couple of things about what helps someone become an effective leader faster than their peers. One of the challenges we have is that leadership is context dependent.

So that adds some complexity. But let me talk about first thing, right? So if you think about leadership potential, meaning what are some of the attributes that people have that's going to make them a better leader faster if they're given the right opportunities and experiences? And that tends to be be four things, right?

Cognitive ability, particularly around pattern recognition, emotional intelligence, are they socially skilled? Do they have empathy? Are they inherently motivated and driven to accomplish something so that no matter the extrinsic rewards, they want to accomplish something. And, like we discussed earlier, how adaptable are they?

People who are higher in those things are going to become leaders faster. They're going to benefit from the right exposure and experiences. And they're going to demonstrate that they are a better leader and kind of that's your classic definition of a high potential. 

Roy Notowitz: [00:15:52] So, let's get back to the context piece that you mentioned, because I think that's really critical as well.

Stacey Philpot: [00:15:57] Leadership is context-dependent and just like we know that there are certain attributes that good leaders or more effective leaders have, there are elements of the context that can be defined so that we can get a common definition. The things that really make a difference for leadership tend to be the life stage of the business. That has so much implication for what is needed from leaders.

The other thing about it is what is the company culture and what are contextual things that influence leadership needed? Every organization is unique and there are cultural attributes that define behavior, right? And leadership is basically behavior. It's what are your attributes and some of your skills? But then it's also, what's the context you're in? The stage of your business? The circumstances around it and the culture of the institution?

Roy Notowitz: [00:16:50] Absolutely. If we know, based on research, what makes someone high-potential, why don't we make better hiring decisions? 

Stacey Philpot: [00:16:57] So one part is what we discussed, right? We don't have a great definition, but the other side of it is what do we use in the absence of a common definition? And as human beings, the truth is we aren't very good decision makers. We want to be right. And so what that means is we do two things. One is we look for information that supports our opinions and ignore data that is going to prove us wrong. And the second thing is we tend to be overly confident around our decision making accuracy.

And in, in the social science world, they refer to this as the confirmation bias, we seek information that confirms our thinking, and confidence bias, we assume that our decision will be accurate and we are more likely to be successful. Then you get into what are people then using as sort of their filter or frame for identifying leaders if we don't have a definition?

And the truth is there are some common biases or shortcuts that we use around leadership. We tend to believe that people who are more attractive, who we see as similar to ourselves and are extroverted are more competent leaders, even when none of those attributes are actually linked to leadership effectiveness.

So if your leadership team looks more attractive, taller, and white than the average American and they are similar to the person making the decision, and they're really good at public speaking, that's probably the criteria of leadership that you're using, even if you're not aware of it. 

Roy Notowitz: [00:18:27] So when you're working with leaders, executives or CEOs and boards, how do you coach them through some of these things so that they don't have as many biases?

Stacey Philpot: [00:18:36] There are basically three things that successful organizations are doing, and that other people can adopt that are going to make a difference. The first thing is clarifying what type of leadership you need and getting a data-based definition of that. The second is using more valid objective data in evaluating candidates so that you have something to mitigate against our natural biases. And then the third thing is shifting how you onboard people into their roles, particularly outside hires. If companies that do all three of those things tend to be much more effective, add retention, and they tend to have greater diversity. 

Roy Notowitz: [00:19:14] So what type of leadership is it time for now? 

Stacey Philpot: [00:19:18] That is a question that, you know, as simple as it sounds that I asked my clients to consider. It is not helpful for companies to assume that the way that they "grew up" in a company is the experience that the next generation needs, but it's very understandable, human, and natural.

So the first thing that companies need to do, and this is where, you know, those of us in talent and human resources can help. Is by helping people get clear on what type of leadership they need. Right? So this can be looking at the industry and how it's changing their strategy, how competition is changing, what life cycle stage the company is in, and talk about what they need and how it's been different from the past.

You know, I've worked with a lot of founders to help them understand that a business at this point in time as they're moving out, requires a leader with different strengths than that person had. And it's very humbling and very hard to accept. Getting clear on what we actually mean, not just by functional skills, but leadership is really important.

Roy Notowitz: [00:20:21] You know, how would a company know when it's time to make leadership changes within the team, in the executive team or leadership team? 

Stacey Philpot: [00:20:28] The challenge with leadership is that people tend to have very strong opinions about it. And believe, as I said earlier, that they actually can identify it when they can't. So the trick is to help people talk about what's happening outside the company, what's happening in the external environment that the company needs to adapt to, because that takes it away from kind of a personal judgment, a moral issue, a preferences thing. And you can talk about more data. 

What's happening in our industry? How is this changing our company and how we make money? What does this mean for what we need our people to do and what we expect of them? If you start with what's happening outside the organization, you're going to move into more data and more fact and go beyond or over just people's preferences. 

Roy Notowitz: [00:21:15] Let's talk about data. How can companies use better data to improve the hiring process? 

Stacey Philpot: [00:21:22] There are a lot of things that companies can do. And again, they're going to sound simple, but they're not always easy. The first thing that they can do is that they can improve the interview process. Interviews are notoriously ineffective at providing accurate data on a candidate. Enhancing your interview process to ensure a more comprehensive and consistent approach creates more equity, more fairness, and also increases the accuracy of your decision. So that can be things like giving people a protocol of asking the same questions for every candidate, ensuring the setting is similar, right? Having team debriefs of data. So there's a lot that you can do to improve the interview process. 

Roy Notowitz: [00:22:02] Those are a lot of things that we do as well. And I always tell clients it increases the likelihood of success by a certain percentage, but it's not a perfect science still.

Stacey Philpot: [00:22:11] So, if you think about any other decisions you're gonna make in business, there are some things that increase your confidence that a decision is good. One of them is objectivity and the other is what I would refer to as triangulation, meaning when you're getting multiple points of data that agree. And the same is true when you're identifying leaders.

So a lot of companies, these days use external assessors to provide a more objective perspective on a candidate and that improves their accuracy. And it also helps companies identify underrepresented minorities. And then the other thing is triangulating multiple sources of data. So that could be a structured interview along with some valid psychometrics, along with maybe a 360 review or getting impact from people who've worked with that individual.

You know, you want to do some triangulation versus just one point of data. The more data you have, the more valid your assessment is likely to be. Just to give you you an example, I worked with a company that was trying to identify who was going to be on their executive committee, right? And we combined interviews and some valid psychometrics.

We also interviewed people who had worked with that individual to understand what was their impact on their teams, what kind of culture they created. And we built a profile of each person. And of course, one of the things that we noticed was that almost all the candidates were white and male. And because of that, we then went back and said, let's identify and women and people of color to be assessed because who you're even putting into this decision is probably not as diverse you want.

And of course, the data showed that one of the people in that more diverse pool ended up being much higher in leadership capability, but wasn't really seen. Right? And as a result, they were promoted and now they are actively being developed as a CEO candidate. And I don't think that would have happened if they hadn't used a more data-based approach.

Roy Notowitz: [00:24:07] That's a great example. Using these ideas around assessment. How can you also tie that to culture shift or culture change? 

Stacey Philpot: [00:24:16] The decision companies make of who they're going to put in a leadership role is incredibly important for culture. Right? It, it tends to influence culture very strongly. The other thing is perceptions of how people get those roles by employees also influences culture.

If you want to create a more inclusive culture, people believing that someone like themselves could have a fair shot at being a leader is incredibly important, in addition to obviously representation in leadership. If you have a more fair and transparent process that uses data in terms of how you select your leaders, it's one way, not the only way, but one way to move towards more inclusivity and a more what I would refer to as an elastic culture. 

Roy Notowitz: [00:25:06] Speaking of culture, everyone defines culture and culture fit in their own way and there's a lack of consistency there. So do you have any recommendations in terms of improving the likelihood of success? 

Stacey Philpot: [00:25:17] Yeah, it's interesting. Right? Because culture "fit" can mean a lot of things, just like leadership. It's another place that I would say unconscious bias leaks in. So to what extent is the person that you're bringing into this position... are you asking them to change the status quo versus reinforce the status quo? If you hire someone in and their mandate is to change the status quo, and then you're frustrated that they're not a culture fit.

Those are two things that don't align very well and people are going to get frustrated. And then the third thing I would say about that is culture is defined and made real through behaviors. So as much as you can talk about what are the behaviors and the culture that matter, the more you're going to move towards being able to make a data-based decision versus an intuitive and likely biased one. 

Roy Notowitz: [00:26:13] What I've seen is that too often, unfortunately, that bias that you talk about, whether it's conscious or unconscious, can say the person's not a culture fit. So the way we like to think about culture is getting a common definition but then also thinking of it in terms of culture add. And so getting at the culture as it is defined by as many people as possible so that we can understand it collectively, but then also thinking about how they want to shift it, how they want to move it to the next level. 

Stacey Philpot: [00:26:44] Absolutely. And if you think back to what we were discussing earlier about inclusivity and allowing people to be different but additive is really important because if you start having everyone be a culture fit, there will come a time where your whole organization can't be as adaptive as it needs to because it could be disrupted by something.

Roy Notowitz: [00:27:03] Initially, we talked about the idea of controls and you had some great ideas around that. Can you speak to that a bit? 

Stacey Philpot: [00:27:10] There are things you put in place from a process perspective around really important decisions. So for example, doing things like blinding resumes, removing gendered language from job descriptions or increasing the diversity of interviewers have all been shown to moderate unconscious bias.

And so some companies are really formalizing process around that. There are a lot of computer programs right now that can run job descriptions through and identify gendered or biased language and make recommendations for different language. You may have heard about the story of the orchestra that had notoriously few women in the orchestra.

And when they did auditions behind a curtain, their gender diversity soared by over 50%. So where you can remove names or identity information from resumes to at least get people on the slate, that can make a difference. 

Roy Notowitz: [00:28:05] Given what we discussed today, what are the three things that hiring executives should do with this information as they start to rehire and reset their leadership teams?

Stacey Philpot: [00:28:15] I mean, I think the first is get really clear on the type of leadership you need in the role. Don't assume that what worked before is still what needed and force people to have the conversation about how the business is changing. And in addition to functional responsibilities or subject matter expertise, what type of leadership behaviors or things do you need in the role?

The second thing is be clear and specific about what data you're using to make decisions, right? Step back from just the decision of this person or not. But look at what are we using to make that decision? Is it one person's opinion via an unstructured interview, or is it something more robust, like an assessment that incorporates multiple points of data?

And then I think the third thing is look for hidden gems when promoting internally. I am struck by how many CEOs I talk to who feel like they don't have line of sight to who their high potential people are. They know intuitively that they don't have good visibility to all the talent there. And they're frustrated that they can't access that talent. 

And so being more proactive around saying, how are we going to find these hidden gems? So these could be people who are in a different type of role than we currently source from. Let's say we always source from marketing and we're going to go into technology. Things that actively expand the diversity of your pool of talent will help your leaders have more confidence that you're finding the best leaders as well.

Roy Notowitz: [00:29:55] So as we wrap up, can you share a bit about your consulting practice and what you're working on now and what's coming in the future? It's pretty exciting. 

Stacey Philpot: [00:30:03] Yeah, thanks. I am really excited. You know, I've been really privileged to work in a variety of larger consulting firms. I've run a startup before and now I am back to running my own consultancy with a couple of my colleagues, and I'm really doing a lot of work around succession, leadership development, and helping workplaces become more inclusive.

 Those are the three problems, if you will, that I address. A lot of my work now is on helping founders of small to medium sized companies identify and transition to their successors because that tends to be both really strategic and psychologically meaningful work, which I enjoy and have heard that I'm well suited for.

So that's been really exciting. And then I'm doing a lot of work with companies that are going through major change in their industries. I do a lot of work in retail, consumer goods, and helping more proactively prepare their leaders for a role that looks really different than anything they've ever known, getting them exposed to different kinds of business models and different talent and helping them really see how the world is changing and what they need to do differently has been some really exciting work that I'm doing.

Roy Notowitz: [00:31:17] That's great and I'm super excited to find more ways to collaborate with you and Ted in the months ahead. I think it'd be great. If you could share how our listeners can get in touch with you if they have any questions about this podcast or if they'd like to work with you. 

Stacey Philpot: [00:31:33] Absolutely. I'd be happy to. First of all, you can reach me at LinkedIn under Stacey Philpot or by my email at stacey.philpot@edc-llc.com. 

Roy Notowitz: [00:31:46] It's been great to have you on the podcast. I appreciate all this great information and I think it's really timely and thanks again for being on the show. 

Stacey Philpot: [00:31:54] Thank you so much, Roy. 

Roy Notowitz: [00:31:56] Thanks for tuning in to How I Hire. Visit howihire.com for more details on our show and sign up for our monthly newsletter to get updates on episodes as well as open opportunities. 

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How I Hire is created by Noto Group Executive Search. To learn more about Noto Group, visit notogroup.com or follow us on LinkedIn. 

This podcast was produced by Anna McClain. For more information about her great work, go to aomcclain.com.

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