Bad Recruiting, Poor Accountability Costs Businesses Millions
Five Reasons, One Culprit, New Executives Fail
The basic framework of recruitment has remained structurally unchanged for 75-plus years.
Search firms and corporate recruiters are loathe to innovate. Innovation or mere process improvement seems to be a disqualifying factor for career advancement in this industry.
Yet, for more than 25 years, the failure rate for recruiting new management and executive talent to a company has remained much higher than it should be, costing businesses millions of dollars each year. Yet, when it comes to identifying and recruiting talent, businesses seem content to accept what they have always done.
Insufficient recruitment, inept onboarding, and hit-and-miss leadership produce chronic underwhelming employee engagement, another hit to corporate performance and earnings.
While there is growing hope that rapidly developing AI-powered automation might solve some of recruiting’s chronic intractable problems, assuming that talent acquisition managers don’t pervert technology’s promise, we must do a better job today with the fundamentals before we move to the next step.
Poor Performance: The Numbers Haven’t Changed
To refresh, our dismal record of poor performance is well-documented:
Research from the Corporate Executive Board estimates that 50 to 70 percent of executives fail within 18 months of taking on a role, regardless of whether they were hired externally or promoted from within.
If you examine the top five reasons (at the end of this post) for this woeful showing, the reasons point to the elephant in the room for years, seemingly without notice: poor recruiting. Bad onboarding and sub-par coaching also catch some of the blame for this performance, according to research conducted separately by Fortune and McKinsey & Co. However, if a mistake is made in recruiting before the executive gets to the front door, the chances are onboarding or “rescue coaching” will not save the day.
AI automation today will only deliver a silver bullet for this horrible record after we first address those inconvenient fundamentals of recruiting.
Five Recommendations to Improve Performance
In conversations with former clients, applicants, and industry executives, here is my consensus on what needs to change before achieving anything resembling best-in-class talent acquisition.
CEO Engagement. Hiring the right people, which means ensuring the right processes are in place, must be a priority. Not to dredge up old war stories, but during GE’s glory days, with Jack Welch at the helm as Chairman and Chief Executive Officer, he made identifying, hiring, and developing talent one of his top priorities. According to Bill Conaty, who served as GE’s Senior Vice President of Human Resources, Welch did not always hold that opinion. “He used to think of HR as the picnics and benefits crowd.” Conaty led reforms, including overhauling the leadership program to include three eight-month assignments in different business units and functions—including one rotation with corporate audit. That move, he explained, “bred internal credibility.” It also eventually changed Welch’s opinion about HR. Said Welch to a reporter: “I came to realize that it was GE’s most important department for the role it played in anticipating business needs, attracting and developing talent, and building a leadership pipeline for long-term success.” Bradford Smart, Ph.D., perfected his highly
regarded behavior and values chronological interview process, Topgrading, TM while advising Welch and Conaty on talent acquisition processes. To demonstrate his commitment to improving leadership, Welch blocked time in his busy schedule several times each year to teach leadership courses at GE’s vaunted Crotonville campus, an hour north of Manhattan. (Disclosure: I adapted Dr. Smart’s TopgradingTM process to healthcare, and it consistently produced the correct result for our clients.)
Make Recruiting Transformational, Not Transactional. This requires a significant shift in the values that drive your recruiting, onboarding, and retention programs. This is particularly true in executive and management recruiting. Recruit for the outcome, not the process. Toda’s out-of-date recruiting structure is transactional through and through. Some search firms and assorted employers tout some enhanced baseline technology and screening tools, but the effort is more for market differentiation than improving outcomes. It would be best if you robustly focused on finding applicants with the experience that can succeed within your organization’s culture. Your probing interviews must concentrate on their career details (knowledge), performance, and values. One-size-fits-all stock interviews are a recipe for disaster.
Process Accountability Is Necessary. From how applicants are treated when they first apply, whether through a custom submission or an online portal using ATS technology, anyone who touches talent acquisition must be held accountable for their part of the outcome. This begins on the front end with standards for the timeliness for acknowledging the applicant’s interest/submission and providing a schedule, an outline of the recruiting process, and ongoing status updates. No one should be allowed to interview an applicant unless they have thoroughly prepared, including the CEO and the hiring authority. (The number of executives who do not review recruiter notes in advance is staggering. The number of CEOs who do not bother to review the applicant’s resume is mind-blowing.)
Outcome Accountability Is Critical. It begins with the talent acquisition department or external search firm. One of the most significant areas for improvement here is more accountability for the outcome. While internal recruiters have performance metrics for time and cost-to-hire, they face less scrutiny for the applicant’s long-term success. Meanwhile, search firm accountability almost always focuses on the placement guarantee, typically only a one-year commitment. That is essentially no guarantee since most newly hired executives survive at least one year. Given the fees outside firms charge, routinely six -figures and sometimes over $1M, a three-year guarantee for term and performance seems like a reasonable time frame. That is what I used on all executive-level searches. We judged our success based on the number of times we had to honor that pledge. Answer: In 27 years, very few times - less than 10. We constructed a recruiting and applicant screening process to guarantee success, not speed, and we were willing to be held accountable. Given the significant costs associated with a mis-hire, that was the least we could offer. Attention to detail — the client’s needs, performance expectations, and cultural profile, coupled with a deep vetting of the applicant, shaped our perspective.
Righteous Onboarding Matters. Onboarding and Orientation are different. A savvy HR executive once said, “Employee orientation is where you go to learn how to get fired.” Onboarding is not some inconsequential expense. If properly executed, it is an investment that will ensure a successful tenure of new executives recruited into the organization, breaking the national trend of failure. The keys to a successful onboarding program are they must be free of petty internal politics, hidden agendas, institutional bias, and manipulators. The responsibility for a robust process falls to the CEO and their CHRO.
Five Reasons for a New Executive’s Failure
They needed to be adequately trained to lead. (The Peter Principle)
They need help to think and operate at scale.
They have difficulty adapting to politics, pressure, and expectations.
They don’t prioritize listening and learning — and fail at managing change.
They lack cultural awareness.
These new hire failures are directly tied to a lack of attention to detail: poor recruiting.