We have written about the cost of making a bad hire previously. But what does cost effective executive hiring look like? It’s not as cut and dry as most companies think. In fact, when looking at all of the numbers associated with hiring executives, companies can underestimate the total cost by half.
The primary cost that is considered when looking to hire a new executive is the external spend on an executive search firm. This number is easy to determine based on the contract with the firm. Of the many benefits you’ll realize by working with an executive search firm, one of them is an all-in cost for the search.
When conducting the search internally, or with contingency firms, the cost of advertising, database aggregation, social media platforms, and recruiting events must be taken into account. And don’t forget to include the salary of in-house recruiters. The idea that this method is cheaper than using an executive search firm is flawed. There may be a small savings, usually less than 10%, but their ability to find and hire top candidates on their own leads to eventually working with a retained search firm for executive hires.
Another important consideration is the time it takes to fill an open executive position. Executive hires take on average 76 days to fill. When you consider the cost of having either an open role for two to three months, the lost productivity is significant. There is the additional impact of having another executive cover the role, which reduces their productivity as well.
In-house recruiting can extend these timelines as they have a smaller network of qualified candidates compared to executive search firms. The longer an executive position remains open, the larger the impact on the organization. Compounding the time to find the right candidate, there is also the time they require to accept the role and then begin in it. There is going to be negotiations once the offer is made, and they may need more than two weeks to wrap up their current role.
Engaging with retained executive search firms is more cost effective and delivers more value over time. Working with executive recruiters should be viewed as a partnership. You’ll save time and money with a single search, but when you work with the same team over time they’ll come to know your business as well as you do, which will further reduce the time required for identifying and screening the best candidates.
Additionally, they can be proactive on your behalf by creating short lists for roles when you anticipate a retirement, departure, or realize a need for a new role. Instead of operating reactively and losing valuable time, your executive search firm can have you in front of qualified candidates weeks earlier than in-house teams.
Per Global HR Research, regardless of the methodology you use, you should look for the following traits to streamline your process, reduce the time you spend determining fit, and improve your chances of finding the best candidate:
- Resilience: Everyone fails – it’s how they respond to the situation that really shows their abilities. You want an executive who can work through problems successfully and doesn’t give up when things go wrong.
- Communication skills: Your next executive needs to be able to communicate well with staff members from the top down. Otherwise he or she will struggle to impart a vision and motivate your team to pursue group objectives.
- Emotional intelligence: Though technical knowledge is important, you also need someone who can relate to others and develop positive interpersonal relationships with your staff.
- Compatibility: Don’t underestimate the importance of cultural fit when you hire your next executive. Consider taking the final candidates you’re considering out to dinner or in other settings to see how they act in a more casual environment.