PrimeGenesis has reduced onboarding failures from 40% to 10%. There is no excuse for others not reapply our learning to do the same.
"We’ve found that 40 per cent of executives hired at the senior level are pushed out, fail or quit within 18 months. It’s expensive in terms of lost revenue. It’s expensive in terms of the individual’s hiring. It’s damaging to morale."
So said Kevin Kelly, CEO of Executive Search Firm, Heidrick & Struggles, discussing the firm’s internal study of 20,000 searches in an interview with Brooke Masters in “Rise of a headhunter” Financial Times, March 30, 2009. (Request a pdf of the article.)
It is expensive. The cost of failure for an executive can be catastrophic, relegating them to "surival jobs" after a failure. The cost of failure for an organization has been calculated at somewhere between two and twenty times total compensiation and includes direct and indirect costs – not including the far larger opportunity costs.
Direct costs include recruiting, signing, relocating, salary and severance.
Indirect costs include impacts on customer satisfaction, brand reputation, lost clients, financial results, downtime, others' morale and turnover.
Opportunity costs include the missed benefit of all the things the executive was supposed to deliver, but did not. (For example, private equity firms looking to exit after 5-7 years of ownership lose two years of trajectory with a failed CEO.)
Matches generally accepted wisdom,
This matches the new hire failure rate cited in Manchester, Inc.'s 1998 study and the numbers we've been using.
…but it should not match
Think about it. Manchester's study was for the general population, not senior level people recruited by one of the top executive search firms. And the Manchester study was over a decade ago.
We are not making the onboarding progress we need to make
People are still tripping over the same landmines: organization, role, personal, learning, relationships, delivery and adjustment. And the failure rates are the same. (Fortune's Anne Fisher notes "research shows has stood at about 40% for at least 15 years now" in her article "New Job? Get a Head Start Now.")
…but we can make progress if we want to.
The basics of how to improve are known. There are ideas for leaders moving into new roles in our books "The New Leader's 100-Day Action Plan" for experienced leaders and "First-Time Leader" for first-time leaders. And there are ideas for hiring managers in our book "Onboarding – How to Get Your New Employees Up To Speed In Half The Time." (Go to PrimeGenesis' books page for more on these.) PrimeGenesis has reduced the failure rate from 40% to less than 10%. There is no excuse for living with the expense and damage associated with a 40% failure rate.
George Bradt
PrimeGenesis Executive Onboarding
