Lessons Learned from a Failed Hire

By Dan Grosh – Managing Partner, San Francisco –

As we know, making the wrong executive hire can be costly on multiple levels: company morale, resources to replace the hire, productivity, time, and money. According to a study by the Society for Human Resources Management (SHRM), the cost of one single bad hire can range up to 5x the hire’s annual salary*. A majority of our recent search requests have come from clients asking us to backfill a recently departed executive or to replace an incumbent that is not working. To avoid this unfavorable situation, let us look at measures that can be taken to reduce the number of replacement hires at the executive level and understand the key lessons learned.

First, Why does this happen? From our perspective, most of breakdowns happen from both-sides and these are the most common reasons (note: lack of competency is not one of the most common reasons cited):

1. Lack of a clear shared mission / up front goals
2. Personality conflicts
3. Poor communication
4. Broken promises
5. Un-met deliverables

Hiring is a lot like dating or marriage. Like a first failed marriage, statistics have shown that a second marriage has a higher possibility for divorce (Forest Institute of Professional Psychology**), so what preventative measures can a company instill to ensure the next hire? Here are several we have compiled from our experience:

1. Did the company strive to empower the executive? Obviously both sides need to pull their weight, but many times we find the company did not do everything in their power to provide the executive with all of the tools for success.

2. Was there a sufficient on-boarding process? This is such a critical component to an efficient and productive start. http://www.inc.com/guides/2010/12/how-to-make-an-employees-first-90-days-successful.html. We are surprised by the number of employers that have inconsistent on-boarding procedures.

3. Did too many shared personal interests influence the decision to hire this person? Although it is great to have shared personal interests & hobbies, this will not always help sustain a long term relationship. We have found that shared values and a common company mission are much more sustainable.

4. Speaking of Shared Mission…. Did the company clearly communicate to the candidate the mission of the organization as well as defined and reasonable deliverables for the first 90 days, 6 months, 1 year? In our opinion, a company must have a clear mission statement that is shared and understood by any candidate that becomes a hired executive of the company.

5. Environment & Expectations. Has morale been low? If so, why? What steps can be made to rectify? We admire companies that want to change the world, but were the expectations reasonable from the onset?

6. Upon past resignations, was an exit interview conducted to determine areas for improvement? We find it surprising that many companies do not perform exit interviews upon receiving a letter of resignation. This tactic can help an organization determine blind spots not initially identified and adjustments to be made prior to bringing on a new hire. It is important to have more than one person conduct an exit interview in order to discover any discrepancies in the ex- executive’s reasoning.

7. Were there any warning signs that were ignored during the executive’s interview? Sometimes the urgency to fill the position can impact the ability to recognize red flags in a candidate and happens often. Was feedback from the interviewers ignored? If so, why? Was reference checking not sufficiently conducted – i.e. asking the tough questions? Time and time again we tell our clients that it’s better to wait for the perfect fit than to hire mediocrity.

Failed hires do happen and is part of the learning process. It is increasingly important as a candidate gets farther along in the interview process to heed these insights and strive for the best possible fit for a long-term leader.

 

Sources:
* http://www.shrm.org/about/foundation/research/documents/retaining%20talent-%20final.pdf
* http://www.linkedin.com/groups/Cost-Bad-Hire-4254889.S.109468735
** http://www.divorcestatistics.org/

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