Executive Search: Avoiding Hiring Pitfalls

You might overhear whispered conversations in the company kitchen or hidden corners of your office, discussing the expenses of the new boss's car or the money spent on client entertainment. However, what often remains shrouded in silence is the potential damage your company may have suffered due to a bad hire of an executive who quit just a few days ago. Why? Simply put, because nobody really knows...

While some costs associated with a poor executive search can be easily traced, such as fees paid to an executive search firm, relocation or onboarding expenses, others remain concealed as they are difficult to quantify. These hidden costs may encompass lost commercial opportunities, a tarnished reputation and employer brand, weakened team performance, and more.

To illustrate, let's consider a scenario where a company's cost for hiring a senior executive (annual salary including bonuses EUR 150,000) involves EUR 50,000 for executive search and EUR 30,000 for onboarding and relocation. This sums up to a total of directly attributable costs of EUR 80,000. However, this is only the first part. The crucial aspect lies in the second, hidden part.? While various studies suggest different figures, there is a consensus that these costs are multiples of the directly attributable ones. This brings the total to a few hundred thousand euros - a significant sum. Yet, this amount could escalate, reaching millions, contingent on the position or specific company circumstances. In extreme situations, it might even endanger the entire business.

Such a staggering amount should be compelling enough for all stakeholders to make the hiring process of a senior executive a well-orchestrated and finely tuned operation. But is this truly the case? Not at all! Our market observations lead us to the conclusion that many companies underestimate this process, thereby eroding shareholder value. Our finding is supported by a study from the Harvard Business Review which reveals that 80% of employee turnover is due to bad hiring decisions, and 45% of bad hires are attributed to a lack of process. Therefore, in the remainder of this article, we aim to delve into the most damaging mistakes during the hiring process and provide insights on how to avoid them.

Avoid shortcuts!

The initial challenge in your hiring journey often involves the temptation to expedite the executive search process. It's all too easy to bypass a thorough, resource-intensive, and costly procedure. Simply posting a job ad without developing a comprehensive company target list may seem like a quick solution! But do you truly wish to attract only active job seekers to your pipeline without involving best performers who may not be actively perusing job advertisements? Or would you rather bet on one or two candidates recommended by your colleague or friend without conducting a thorough search?

Regardless of the chosen shortcut or any other similar approach, your "search" is likely to result in failure. And by failure, we don't just mean the need to find a new replacement, but also if your selected candidate is considered merely a good choice. Because there's a significant difference between good and great…

The only assurance that you genuinely have the best talent on board is through the completion of a comprehensive search process, resulting in a long list of target companies with most relevant candidates.

Choose experts, not recruiters!??????????

Having successfully navigated the initial hurdle and decided to seek external assistance, you now encounter another challenge – selecting the right executive search firm. A crowd of headhunters clamors outside your window, declaring, “We know your talent pool! We are the foremost experts in your field!” So, how do you choose the best one?

Beyond possessing a comprehensive understanding of the sought-after role, the paramount criterion for selecting the best executive search provider should be a profound comprehension of the industry in which your company operates. However, exercise caution with their past references – how can you be certain that these searches were genuine successes and not fabricated, unsuccessful, or merely mediocre? Strive for the best!

Do not hesitate to involve your business colleagues in discussions about your specific challenges. This collaborative effort will promptly distinguish headhunters with superficial industry knowledge, often pursuing "Open to Work" profiles, from those employing astute search strategies and robust processes to deliver the highest caliber candidates. Executive search is akin to high-value management consulting with a substantial retainer fee - ensure you get what you pay for!

Make time your priority!

After selecting the appropriate executive search firm and kicking off the search process, numerous pitfalls lie ahead. Crafting a misleading job specification, maintaining inadequate communication with your executive search firm, adhering to inflexible hiring procedures, or pursuing a super(wo)man are just a few examples.

However, based on our observations, the most detrimental mistake is the frequent unavailability of business line managers, particularly direct reports of the sought-after position, throughout the hiring process. Undoubtedly, they are busy individuals. Yet, are budget meetings or ongoing marketing campaigns truly more critical than hiring a senior manager for your team? Certainly not!

When these busy individuals cancel or reschedule meetings with still unconvinced candidates, or worse, delegate to more junior staff, it becomes a challenging time for HR and the executive search firm. They must step up and attempt to reorganize the priorities of these executives. Unsurprisingly, this phenomenon is more prevalent in large corporations compared to smaller, often family-owned businesses.

Watch out for ingrained biases!

Another challenge impacting the entire hiring process, especially the final interviews with selected candidates, is known as unconscious bias. It can be challenging to combat because it often operates unseen, lingering in our subconscious and leading hiring team members to favour one candidate over another for reasons they may not even be aware of.

Therefore, it's crucial to exercise caution when hearing phrases like, "I have a gut feeling that this is the right candidate!" People tend to gravitate towards those who are similar to them – those who share the same hobbies, attended the same university, or are fans of the same music band. However, bias can also stem from factors like candidate appearance, age, race, religion, communication style, and more. Those most susceptible to unconscious bias are often the least experienced in the hiring process – business line managers, who are typically ultimate decision-makers.

To prevent this situation, both HR and the executive search firm must provide appropriate training and guidance to business leaders and adhere to structured interviews and objective evaluation methods.

Company culture first!

Last but certainly not least on our list is company culture. According to a comprehensive study, 60% of newcomers leave the company within the first year due to cultural misfit. While this statistic may be alarming, it should not come as a surprise.

It conveys that a significant number of hiring managers still value hard skills, like educational backgroundand relevant experience, more than soft skills such as personal attributes or values. This is a significant oversight. While hard skills can be acquired or learned through additional training, changing a candidate's personality is a much more challenging, if not impossible task.

If you have any reservations about a candidate's fit with your company culture, don't hesitate to remove him/her from consideration. Although this decision may not be easy as it only becomes apparent in the later stages of the search, it will ultimately pay off by ensuring long-term employee satisfaction, improved team dynamics, and a healthier organizational culture.

CONCLUSION?

In summary, establishing a resilient hiring system and ensuring unwavering adherence to relevant policies is the key to minimizing the risks associated with errors in hiring senior executives. As outlined in this article, such measures serve to safeguard your organization from substantial financial consequences, including hidden losses that could significantly, if not gravely, affect your future competitiveness in the market.