There are any number of stats and calculators around that show how much it costs businesses when they make recruitment mistakes and turn-over executives. Major consulting firms quote this figure as being up to 400% of the cost of the failed hire. This means an executive with a salary package of $250,000 can cost you $1 million if you get the wrong person.
Of course, if you get it wrong more than once, it can stall or kill your business, particularly if you are fast-growth emerging company that needs to invest wisely to continue your trajectory. We all know stories of small-to-mid cap listed companies who have brought in the wrong MD or CEO, only to see their investors desert them and the share price crash.
So, when there’s so much at stake, why do emerging companies continue to make the same hiring mistakes? Part of the issue is having a recruitment industry that focuses too much on ‘search’, whereas boards and business owners need to look past the sales pitch and realise that recruitment starts with strategy and continues right through to onboarding.
Don’t make these common executive recruitment mistakes
While any kink in the chain can derail a good process, here are five of the most common executive recruitment mistakes companies make:
- Building the role around a person or their experience, rather than a strategy. It seems obvious that ‘design casts the biggest shadow’ when it comes to recruitment, but it is staggering how many companies go to market looking for an experienced executive without focusing on exactly what this person needs to deliver for the company to succeed. A detailed Information Memorandum and Performance Profile has to be established up-front, which will set the rest of your process up for success.
- Selections based on unstructured interviews. The problem here is that most of us think we are pretty good at ‘reading’ people. But if you are not putting every candidate through the same interrogation, with the same KPI based questions, unconscious biases are likely to hijack your process and/or you can be ‘gamed’ by interviewees turning selection into a personality contest.
- Not disclosing the full story. There is nothing A-Grade candidates hate more than over-promising or surprises after the event. No-one is expecting your company to be perfect, so be up-front about the challenges and situations your business is facing. Great executives like solving problems, just don’t cover them up!
- Over-reliance on referrals and reference checks. When your business is moving fast, there’s always the temptation to lean on your friends to solve your recruitment problems quickly. But this nearly always results in short-cutting a rigorous process – and just because someone might have been ‘good’ in someone else’s eyes, doesn’t mean they are cut out to deliver what your company needs. Cognitive and reasoning assessments have much higher predictive validity than any reference check will give you.
- Hypothetical rather than evidence-based questioning. Some people are great at saying what they ‘would’ do in a situation, but in the real world can’t deliver. ‘What would you do’ questioning is irrelevant compared to questions and assessments that are based on ‘show us how you did this and the measurable results’.
So, before you make your next executive hire, have a good look at your process and make sure you’re not falling into any of these common executive recruitment mistakes.
The downside of getting it wrong is reason enough, but the exponential upside of getting your executive recruitment right is even more compelling!