“Hiring was - and still is - the most important thing we do.” Marc Bennioff, Chairman & co-CEO of Salesforce.
I see it every day, recruiters with their content marketing headlines about how much financially it will cost a company for a hiring mistake. This is of course true and there are hard financial implications for getting a hire wrong, but there are much greater personal consequences many don’t take into consideration.
Let’s look at the facts of mis-hires, Leadership IQ conducted a three-year study of 5,214 managers, across 312 organizations, hiring more than 20,000 employees, and found over an 18-month period that 46% of those hires were found to be mis-hires. That’s a staggering number, 1 in 2, but more than that, the study also showed that only 19% of all hires turn out to be successes in the end, that’s just 1 in 5 hires will eventually work out!
If your company stats show you’re doing better than this, then at least you’re doing better than average, but the chances are you’re not and still have cause for concern.
Mis-hire cost estimates vary vastly, anything from 3 to 18+ times annual salary, a total made up of both direct and indirect costs incurred, but it’s the less tangible personal human cost to executives that many fail to appreciate is a major consequence of mis-hires. Executive careers and reputations are easily derailed if sales numbers aren’t hit, product isn’t developed to time and budget, or customer service and retention levels dip.
See, the hire who didn’t work out in the end has been a loose cog in your highly efficient business machine, not working as effectively as he/she should have been, to the detriment of your business and those employees around him or her. You and your team will have invested a large amount of time, emotional energy and effort in selecting, on-boarding, training, and mentoring the person, only to feel it’s come to nothing. Employee morale is likely to have taken a hit whilst your team feels the ripple effect of the under performing team member as they pick up the workload in an attempt to help you achieve your company targets. The lower performer takes up too much of your and your high performer’s time, and you have tried to coach poor performers like this previously, but it rarely works. Finally, you or other team members picking up the slack will likely have made personal sacrifices that need not have been made, such as working extra hours at the expense of personal time and family activities. We all know too well the downward spiral of knock-on effects non-performing employees can put in motion, which can affect the bottom line of a company in so many ways.
But ultimately the buck stops with you, the executive, for the performance of your company, region, department or team, and so it’s your career, your financial future, and your personal well being that is representative of the true personal cost of mis-hires in your business.
Same applies of course for every other performing company employee; their careers, financial and personal well being is all in your hands as their leader, and that’s just one of the many burdens you carry.
So next time you’re hiring, in an effort to reduce the chances of a mis-hire I challenge you to both raise the selection bar and ask yourself the following question:
“After a thorough interview process of the best possible talent the market has to offer, are we sure we’re hiring a top performer, whom through their contribution to company success can help my team and I achieve our career, financial and personal aspirations?”
If you hesitate in answering this question with a resounding yes, you have your answer.
Contact us to discuss how we can eliminate your risk of mis-hires.
About the author. Shawn Rutter is the Founder of Excelsior Search, a market-leading, niche search company, specializing in international executive search and recruitment solutions for financial technology (fintech), data, and research providers to the global capital markets and investment industry. With experience delivering search assignments across the Americas, EMEA and APAC, he founded Excelsior in 1999, having previously worked as an Army Officer and for the international search firm MRI. Shawn invites you to connect on LinkedIn.