Thanks to technology, anytime you need to fill a position you can post the job online and have a plethora of applicants within a week. You would think that such a large applicant pool would make filling positions easy, but this isn’t always the case, especially when it comes to executive searches. Many people are surprised to learn that 40 percent of all executive searches actually fail to place a candidate in the needed position.
In a survey conducted by ESIX (Executive Search Information Exchange) of companies hiring an external executive, they discovered 40% of all executive searches fail to make a viable hire.
A number of factors hinder the executive search process from, limited candidate pools, to hiring indecision, and extended process times to a lack of position clarity. Companies cannot afford to leave executive-level positions open for long, but the hiring process still tends to last months for many of these roles. Unorganized and poorly managed executive hiring processes can be detrimental to the overall growth and success of a company.
Why Executive Searches Fail
The cost of a failed executive search
When you look at the overall cost of a failed executive search, the importance of a proper recruiting process becomes even more apparent. The most obvious cost associated with failing to secure an appropriate executive candidate is time. While the overall hiring process takes anywhere from 17 to 33 days for the average positions, according to a report by Glassdoor. Executive searches can up to three times as long to see the position filled, up to 120 days or more. On average, companies invest four months into finding a high-level executive candidate, and that’s just to hire the person. If the candidate then isn’t working out in the position three months into the job, that’s nearly half a year wasted on the role. Then the process has to start all over again.
Research by Gallup estimates that actively disengaged employees in the United States cost businesses anywhere from $450 billion to $550 billion in lost productivity each year.
The next business impact a failed executive search has on your business is cost. Executives receive a significant salary as well as benefits from your company. It is estimated that a bad hire can cost the company as much as 30 percent of an employee’s first-year earnings. Say you’re planning to pay a C-level position $275,000. This means a poor hiring choice will cost you more than $80,000. This number doesn’t even include opportunity cost or the amount you’ve invested in onboarding and the overall hiring process. Not to mention, if a candidate is let go after a short time period there is a severance package to consider. A lot of money is being invested into your executive hire, so repeatedly failing to hire the right person for the job will have a big impact on your bottom line.
The Undercover Recruiter reports bad hires can cost $240,000 in expenses. Those are broken down into costs related to position, hiring, pay and retention.
Finally, the other big cost to your business is a loss of trust. When a board struggles to find an appropriate VP, CFO, COO, or another major role for the company, employees and partners begin to lose trust in the company’s execution abilities. People begin to disengage with the company leaders, and they feel less motivated to see the business grow. In severe cases, you can even end up losing other key employees because of a bad hire. Installing a poor candidate in a leadership role reflects negatively on your business strategy, and it can be seen as a lack of foresight for business needs. These are just the three main effects of a failed executive search, but there are many others involved including decreased sales, low employee morale, and a change in company culture.
Costs of a Bad Hire
How to successfully execute an executive search
One of the biggest reasons companies fail to make a successful executive hire is that they try to rush the process. The rushing is not necessarily referring to making a decision too quickly, either. In many cases, companies rush putting together the position description as well as working to get everyone on the same page.
According to CareerBuilder, 74% of employers say they hired the wrong person for the job.
For a successful executive search, you need to slow down and take the time to write a clear and accurate position description. A clear description not only lets candidates know what to expect in the role but also helps recruiters seek out the most promising candidates for the job. Make sure your description includes the below information:
As you work to compile the description, make sure you consult with the other executives and managers who will be working closely with the position. Get their input on what the role needs and requires. This is also an opportunity to ensure everyone is on the same page about what the position needs and requires so you can clear up any confusion early. Once you have this information, condense it down into a concise job description that clearly conveys your company’s needs.
Another aspect of a successful executive search is a clearly defined timeline. Create a timetable and let everyone know what days interviews will be conducted well in advance. With everyone on the same page, you’ll have an easier time working with everyone’s schedules. This is also important to discuss with your recruiters. Make it clear when you expect to have results as well as how often you want to receive updates on the recruiting process. Clear deadlines and progress markers will keep things moving smoothly and ensure the process stays organized.
According to a report by Censuswide, 83 percent of executive leaders agreed that they would prefer to use an executive search firm over their in-house recruitment when it comes to hiring senior level positions.
Finally, a big key to a successful executive search is hiring a third-party recruiting firm. An established national executive search firm has a number of industry connections and can quickly locate top-level candidates for your needs. They also understand how to review a position description and locate candidates based on company culture, needs, values, and more. Plus, companies need to trust in executive search firms just to stay competitive. According to a report by Censuswide, 83 percent of leaders agreed that they would prefer to use an executive search firm over their in-house recruitment when it comes to hiring senior level positions. Executive recruiting firms have in-depth industry knowledge and leadership experience you can’t get with an in-house alternative. Executive recruiters are a valuable resource with years of experience locating top-tier candidates. Your company can utilize search firm services to enhance the hiring process and locate the best people for the job.
It’s time to truly invest and refine your company’s executive search process. Remember, hundreds of thousands of dollars are on the line, not to mention your company’s reputation and much more. Take the time to create a smooth, efficient executive-level hiring process so your company has a success rate hirer than 60 percent.
Cowen Partners Boasts a 100% Success Rate for Retained Searches
Cowen Partners is the nation’s executive search firm, enabling companies to harness the power of human capital to fuel their success. Cowen Partners gives our clients access to the top 1% of human capital to create opportunities that accelerate their growth and market share. With Cowen Partners, clients can grow at scale, create value, and drive results with world class talent.
Our clients are both small and large, publicly traded, pre-IPO, private, and non-profit organizations. Clients are typically $50 million to multi-billion dollar revenue Fortune 1000 companies or have assets between $500 million to $15 billion. Successful placements span the entire C-Suite and include VP and Director level leadership roles.
With our proven processes and guaranteed results, we have successfully placed hundreds of candidates in industries including technology, healthcare, manufacturing, retail, financial services, and private equity.
Cowen Partners Executive search provides recruitment services to all major and minor industries including:
Accounting, Advertising, Aerospace & Defense, Biotechnology, Banking, Board and CEO Services, Computer Hardware, Construction, Consulting, Consumer Products, Computer Software and Hardware, Education, Energy & Utilities, Entertainment & Sports, Finance, Financial Services, Food Products, Government, Human Resources, Health Care, Hospitality & Tourism, Insurance, Industrial, Internet & New Media, Legal, Journalism & Publishing, Marketing, Manufacturing, Medical Device, Non-Profit, Pharmaceutical, Real Estate, Retail & Apparel, Sales, Technology, Telecommunications and Transportation.