cost of hire in a failed executive

When the initial cost of hire becomes the mindset in talent acquisition, the road to executive failure increases.  The cost of hire Several times over my career in Executive Search I find myself working with a candidate who believes they are an ideal fit for a retained search assignment I am conducting.

The cost of hire in a failed executive is tremendous.  My retained search work is “performance based” NOT contingency based, which means that when a client has paid a deposit for my time and effort, I am expected to get the job done.

Cost of Hire in Poor Recruitment Selection

For an executive search consultant, getting the job done means nothing short of bringing forward high-impact “business changing” candidates to our clients. These are the “A Players“. Not only must they have the required experience, expertise, and a proven track record of success, but he/she must prove to me that they can meet the challenges of the position, meet or exceed my client’s expectations, and make a “direct positive impact” on my client’s business.

Most fail to understand the impact of the cost of hire for a failed executive.  The truth is that by and large, 55-60% of all employees at any given company are in fact “C” Players. They can do the job they were hired to do; they show up for work on time, do the job they were assigned, and are loyal to their managers. However, they lack the entrepreneurship risk taking mentality, the “take charge” attitude, and the take no prisoners’ mindset required to make an impact on the marketplace.

Why Recruiting an A Player Avoids the Cost of Hire Failure

While for many positions it is acceptable to have “C” players in many roles, at the leadership and senior management level, the cost of hire in a bad hire can be fatal. Next come the “B” players which based on my 20+ years experience in executive recruiting, are roughly 25%-30% of all employees at any given company.

Cost of Hire in a Failed ExecutiveThey outperform “C” players any day of the week and possess the intuitiveness and hunger to succeed that makes them valuable to their employer.

They have a track record of success, albeit in their department but rarely make a definitive impact on the company’s overall performance in the marketplace or the business strategy.

So what really is an “A” player?  And why is the cost of hire so low for recruiting them?  These unique individuals comprise the Top 10% to 15% Talent in the client’s vertical market.

These levels are in fact “game changers” not only within a client’s vertical market, but have had similar success in other vertical markets within that industry or in a different industry altogether. They have a responsibility to the owners (founders, investors, and stockholders).

Cost of Hire Increase is due to a poor Talent Acquisition Process

A Mercer study estimated that on average, the cost of hire for a failed executive is estimated to be more than $500,000 or 2.5 times salary. And that does NOT include organizational, opportunity, productivity, and transitional costs for the new executive. As an Officer or Board member, you must ask yourself, why would you risk letting this happen?

The same can be said of a VP of Engineering who needs principal level systems software engineer for that matter. You may save yourself a few dollars in the short run recruiting someone with your existing recruiting process, but the long term effects in the high cost of hire for a failed executive hire may cost YOU and YOUR STOCKHOLDERS much more than a retained search fee.