What is the Cost of a Bad Executive Hire?

Written by EO Executives on Oct 05, 2018

shutterstock_547851280-1

What is the most important quality your business looks for in a new hire, and how much time and additional resources are you willing to dedicate to getting it right? 

If your business is in a time of need and urgently requires an expert to step in, it can be tempting to rush the hiring process. Being experts in executive search, we understand the importance of getting your executive hires right first-time round.  

At EO Executives, over the years we have witnessed businesses make the same hiring mistakes by trying to rush the process to find a great candidate. The irony is that rushing and following this rapid approach will only eliminate the best experts for your business. Yes, you may find someone with an impressive CV and skillset, but within the first few months or even weeks you will realise they are not the more suited individual for the role. This will unlikely be due to their competency (after all you have hired them based on skills) but rather the challenge of on-boarding them into the business.  

One of the costliest and time-consuming mistakes a business can make is hiring the wrong person for a role- especially if it is one of the most crucial hires your business will make all year.  

Exactly how costly exactly is a wrong hire…? 

A recent article by Executive Grapevine stated a poor hire at mid-manager level with a salary of £42,000 can cost a business more than £132,000. So, at Executive/C-Suite level this could cost your businesses a tremendous amount of your hiring budget. 

No business can afford this. 

Besides the financial cost, one wrong hire, especially at Senior Level can have a negative impact on the wider business, potentially costing you productivity and trust from other employees. Especially if they have invested time into training and supporting them. This is why it is crucial to ensure you are investing in candidates who are not only the right fit for the role but also the rest of the business.

Additional costs include any expenses needed for candidate interviews e.g travel, entertainment, on-boarding, termination costs unemployment and potential litigation expenses should the candidate decide to sue you for wrongful dismissal, plus relocation costs and outplacement or career transition costs. The biggest cost will be when you have to repeat the entire hiring process to replace the wrong hire. 

How do you identify the right candidates for your business 

For larger or corporate businesses, the hiring process will be different to the hiring process an SME will follow. Nonetheless, the overall goal will be the same, to find top talent that are the right behavioural fit for the business.  

One crucial point to remember is that for SME businesses the impact of hiring is much greater, as they are unlikely to have the same resources as the larger corporate players. From our experience as Executive Head-hunters, the smaller businesses need candidates fast and as a result crucial decisions are rushed. This only results in poor hires which come with the above consequences of wasted resources.

Why rush if the risks are so high? 

Quite often small businesses hire someone because they needed to fill the position quickly with all possible dangers involved and related to this, but research has shown that as much as 80% of employee turnover is due these kind of bad hiring decisions.  

How do you eliminate the risk of making a bad hire? 

Hiring Managers tend to hire based on CV and initial gut feel following a successful interview. The problem arises when the candidate is in role and does not have the right behaviours or traits to lead the crucial assignment you have hired them for. Yes, they may be a Commercial Director with extensive experience in leading teams and growing businesses by ‘X amount’ year on year, but unless their behaviours are the right behaviours for the specific role you are hiring them to undertake, you are unlikely to see any success. 

At EO Executives, we partner with our clients to eliminate any risk and support hiring managers to source top talent, which are also a great behavioural fit for the business. We recommend that all businesses ask candidates to undertake psychometric profiling to ensure they are hired on both their skills and behaviours. 

The greatest asset any business will have, whether they are an SME/Start-Up or large corporate, is its people.  

Taking short-cuts to grow your team may ease immediate pains and overcome temporary challenges, but will soon create regrets in the long-term. 

So what’s the answer?  

One of the reasons we are able to offer a 12 month guarantee on our search assignments is as a result of our market leading platform – executive-intro .  To find out how we achieve 96% retention over the first year using this technology then please do not hesitate contact our experts. 

Call us today to take care of your future top talent… 

Check out our eBook- How to Hire & Hold onto Superstars

Screen Shot 2018-10-05 at 12.31.58 

#hiring #executivesearch #badhire #executiverecruitment #onboarding  

Follow Us

Follow us on LinkedIn Follow us on Twitter Follow us on Facebook Follow us on RSS

Follow Us

Follow us on LinkedIn Follow us on Twitter Follow us on Facebook Follow us on RSS

Join over 40,000 followers and receive updates on hiring talent and progressing your career.

Subscribe to Email Updates

Popular Entries

Categories