Hiring and Retaining Top Talent Blog

Business guru Peter Drucker has said, “Of all the decisions an executive makes, none are as important as the decision about people because they ultimately determine the performance capacity of the organization.” Warren Bennis, professor of business at the University of Southern California and author of Managing the Dream, calls the search for Top Talent “the most significant problem facing all organizations.”

 
According to a study by the Corporate Leadership Council, hiring the wrong executive can cost an organization as much as three times their annual salary. The Gallup Organization has noted that the cost of poor hiring decisions may even be much higher than previously estimated. Some researchers have calculated the cost of a bad hire can be as high as twenty four times the position’s base salary.
Presidents, CEOs, Boards of Directors, and hiring managers should never underestimate the ramifications of a bad hire. The fallout can affect an entire organization, doing far more damage than leaving the position empty would have.
Think of all the lost opportunities and hidden costs associated with a bad hire. The total financial impact can include reduced time to market, lost revenue from incomplete projects, and failed execution of strategies. This results in untold lost profits and productivity.
While reasonable experts may disagree about specific salary-to-cost ratios, the fact remains that the cost of new executive failure is much higher than merely search costs and salary. Those are just two of the direct costs.

To avoid a bad hire your company has to have an effective hiring process. Most of time when a bad hire occurs it is generally a break down in the system. The problem is most companies just accept this and try again. Few if any take a serious review at what went wrong, what failed, what can be done to reduce the chances of it happening again, are the people using the process competent and so on.

We recommend that you step back take a hard look at your hiring process. Determine if it is effective, are the people competent interviewers, have they been trained, is the job description effective, does everyone interviewing really know what is important to success in this role and then implement change. Just as you would do if any other system in your company failed.

Don’t just accept a failed hiring process. It costs too much.

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