by J. James O’Malley
Simply put, an executive search professional – or “headhunter” – is a hired gun whose job it is to find talented executives for firms outside of their organization. Companies pay well for these services (typically a third of the newly hired executive’s first year total cash compensation) and it therefore stands to reason that they want to protect their investment.
However, keeping newly hired executives continues to be a challenge. Some 15 years ago, a study by the Center for Creative Leadership found that 40 percent of external hires failed in their new positions within 18 months. Today, data suggests that this number may be as high as a whopping 60-80 percent within 24 months. In fact, according to Challenger, Gray & Christmas, 2014 could outpace 2013 for executive turnover. A total of 1,246 chief executives departed American firms in 2013, according to Challenger, the highest number since 2008.
Such a failure is expensive both in personal terms and also in direct costs. In addition, companies also pay for lost productivity of others, negative PR and the decreased productivity of the next hire during the time it takes to get him/her up to speed. Most companies these days are obsessed with managing risk but, ironically, the biggest risk may be losing our own executives. Companies are simply not doing enough to ensure the success of their newly hired executive and consequently failing to protect the company's investment.
I could say that my job as a headhunter is done and close the file once my client hires the executive. But, in my opinion, that’s not how the executive search industry ought to operate. We are changing people’s lives and the relationship we build with the candidate during the hiring process obligates us to make sure that both the company and the newly hired executive are set up for success. We can’t just sell the job and hope that things work out.
That’s why we’re huge advocates of coaching during the onboarding period to protect our clients’ investments. In our experience, placing hundreds of senior level executives in new roles, professional coaches can have a tremendous impact on a company’s ability to retain executives, particularly within the first 18 months. A study conducted last year by the Stanford Graduate School of Business and The Miles Group found that while nearly two-thirds of CEOs and half of all other senior executives do not receive coaching or leadership advice from outside consultants or coaches, 100% of those who received coaching said that they enjoyed it.
It’s always easy to “talk the talk”, but more challenging to “walk the walk”. That’s why, to demonstrate to our clients and to the new recruit our belief in the importance of on-boarding, we provide a dedicated on-boarding coach for newly hired executives – at our expense – for the first 90 days. We believe that this kick starts a desire and commitment to continued success by the client, newly hired executive and the recruiter. It is our hope that the client will see the value and convert this 90 day assignment to a full 12 month engagement with the coach to maximize results. This type of program shortens “startup” times for new executives, increases learning and accelerates action while improving productivity. But most of all, it’s designed to make sure that our mutual client’s investment is protected.
J. James O’Malley is a Partner at talentRISE. Jim has over 25 years of experience in developing HR and talent acquisition solutions to ensure that leadership talent aligns with changing business needs. His past leadership roles include leadership roles with Fifth Third Bancorp and Huron Consulting Group. Contact him at firstname.lastname@example.org.