Protecting Your Company's Investment
Jim O'Malley
Simply put, a headhunter is a hired gun whose job it is to find talented executives for firms outside of their organization. Companies pay well for these services (typically a third of the newly hired executive's first year total cash compensation) and it therefore stands to reason that they want to protect their investment. That's why we executive search professionals are often asked to guarantee our services for a year. However, the newly hired executive seldom leaves within the first 12 months. More leave their new employers in the first 18-24 months – and at quite the alarming rate!
Some 15 years ago, a study by the Center for Creative Leadership found that 40 percent of external hires failed in their new positions within 18 months. Today, data suggests that this number may be as high as a whopping 60 to 80 percent within 24 months. In fact, according to Challenger, Grey and Christmas, 2014 could outpace 2013 for executive turnover. A total of 1,246 chief executives departed from American firms in 2013, according to Challenger, the highest number since 2008.
Even more troubling than the revolving door in the leadership suite is the cost of such a failure. In addition to direct hiring costs, companies also pay for lost productivity of others, negative PR and decreased productivity of the next hire during the time it takes to get him/her up to speed. Most companies these days are obsessed with managing risk but, ironically, the biggest risk may be losing our own executives. Companies are simply not doing enough to ensure the success of their newly hired executive and consequently failing to protect the company's investment.
The problem is multi-layered, but mostly centers on lack of attention or too little time and/or resources invested in:
● Understanding and acting upon all of the pre-hire data typically collected and part of the new hire vetting process including references, due-diligence, pre-hire assessment tools. While not many of our peers in executive search may admit to it, no candidate (or human being, for that matter) is perfect. These assessments can be extraordinarily helpful in understanding a new hires strengths and weaknesses when the data is used to assist the executive in overcoming those weaknesses. A particularly effective way to do this is to hire a skilled professional coach to offer impartial advice and guidance during the executive's first few months on the job.
● Getting the new hire up to speed even before he/she crosses the threshold at your organization. This is called On-Boarding. Many organizations have embraced it at mid-and lower levels in their organizations but are loathe asking more senior executives to participate in these programs, figuring that the executive will learn about company culture, norms, and procedures through osmosis. Wrong. Everyone can benefit from a well-crafted on-boarding program. If you don't want your senior team to be in the same sessions as your plant manager, figure out an alternative delivery method to get the executive on-boarded through e-learning, for example.
● Taking the time to socialize the entire organization on why the company is bringing an executive from the outside. This cuts both ways—the new hire must also be introduced to the company culture and, just as importantly, understand how it evolved to where it is today. This is called Acculturation.
● Setting expectations for the experienced executive. Often, he or she is expected to hit the ground running – especially when a position has remained unfilled for some time. That is unrealistic as everyone needs time to learn and understand their new role, the people on the team supporting them, their customers, their products and services. This is called Training.
● Mentoring and coaching the new hire. Everyone needs a mentor and even the CEO deserves to have someone help guide them through the new organization. A study conducted last year by the Stanford Graduate School of Business and The Miles Group found that while nearly two-thirds of CEOs and half of all other senior executives do not receive coaching or leadership advice from outside consultants or coaches, 100% of those who received coaching said that they enjoyed it. (Source: http://www.gsb.stanford.edu/cldr/research/surveys/coaching.html)
Like many of the hired guns in the executive search industry, I could say that my job is done and close the file once my client hires the executive. But, in my opinion, that's not how the executive search industry ought to operate. We are changing people's lives and the relationship we build with the candidate during the hiring process obligates us to make sure that both the company and the newly hired executive are set up for success. We can't just sell the job and hope that things work out.
It's always easy to "talk the talk", but more challenging to "walk the walk". That's why, to demonstrate to our clients and to the new recruit our belief in the importance of on-boarding, we provide a dedicated on-boarding coach for newly hired executives—at our expense—for the first 90 days. We believe that this kick starts a desire and commitment to continued success by the client, newly hired executive and the recruiter. It is our hope that the client will see the value and convert this 90 day assignment to a full 12 month engagement with the coach to maximize results. This type of program shortens "startup" times for new executives, increases learning and accelerates action while improving productivity. But most of all, it's designed to make sure that our client's investment is protected.
J. James O'Malley is Partner, Executive Search & Workforce Planning Practice Leader at talentRISE. Jim has over 25 years of experience in developing HR and talent acquisition solutions to ensure that leadership talent aligns with changing business needs. Jim joined talentRISE in 2012 to address our clients' executive leadership challenges by leveraging his passions for strategic workforce planning/analytics, executive talent search and executive coaching.
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