Why Failed Executives Always Get Another Job

Here's a pop quiz for you:

What makes these the same?
If your answer was: "The CEO is a failure but there were no consequences," you're correct. If you added: "Even worse, they keep getting rewarded and being asked to take on new positions," you get extra credit - both for the "even worse" and for the answer, itself.

And that's the one of the biggest problems with big business today. There is no real scarcity of talent available at the senior level - but you would never know it based on the business pages. Because these failed and failing executives keep getting the jobs - even as their decisions negatively impact the employees of and investors in the companies they're 'leading.'

Worse yet, a lot of those investors are institutional pension funds - which means that you can have worked your whole life and expect a certain level of retirement remuneration, only to find out that the fund has been hit so badly the money just isn't there anymore.

So where does this problem come from? What creates the illusion of scarcity?

There are two aspects to this problem. The first is a "better the devil you know" scenario. The other is institutionalized, intentional and profit-driven.

In both cases, it's coming from the executive search firms. They're creating and perpetuating a perception of scarcity with their "recycled executives" policy.

For them it's a highly profitable, cheap and cheerful way of doing business. For industry, it's a killer. Here's how it works:

You get a call from a recruiter. You've either worked with their firm before or you've been recommended by someone who has. They have a job prospect that might be of interest. In fact, according to them, it's just perfect for you.

You get the job. (Or one of the other candidates does. It doesn't really matter because they're all being paraded in by the same firm.)

Now it's time to negotiate salary and broader compensation. Stock options, anyone? Bonuses? Perqs? This is the time to ask - and get.

You, of course, want the highest compensation package possible. The recruiter wants exactly the same outcome. That's because, in the majority of recruitment pay models, the search firm is paid - at least in part - based on a percentage of your annual salary and sometimes part of your broader package. So the more you're being remunerated in every form, the better.

Some time goes by - maybe a year, but no longer than two. The recruiter has been in touch periodically - to say hello, ask how things are going, maybe get a recommendation from you for another position that isn't right for you, but you just may know the right person….

But now, at least according to the recruiter, it's time to move you on to your next position - and they've got the perfect fit. It's you all over.

And it begins again. You're theirs now. Part of their executive recycling program.

Wait, you say. What about all those resumes I've submitted to the search firms' websites? Sorry. The sad fact is, the recruiters neither had to nor bothered to look. They just churned - even if you would have been the better pick.

And so we keep seeing the same faces. Over and over. With the same results.

Maybe it's time to adapt the financial services disclaimer, "Past performance does not guarantee future results" to one specifically for executive search firms who put forward candidates with histories of failure. Something like:
"Past performance is your best guide to future results - so if you want to pay someone tons to lose your and the company's shirt, here's your guy."
[This article appeared on Technorati.]