Luke Johnson, the serial entrepreneur and investor made a critical insight in his recent column in the Sunday Times. He wrote about how difficult and costly it is to fire people and said: “The best way to avoid having to fire anyone is to recruit the right team in the first place. Nothing is more important – talent is arguably the most valuable resource of any company. Making the correct appointments is especially crucial for small companies.”
This is a fact known by all successful people, so why does the recent data from Leadership IQ show that up to 50% of senior hires subsequently need to be fired?
Our recent analysis shows that insufficient due diligence is being performed to support the critical decision-making surrounding senior level hires. No other area of business decision-making relies on less real data and so many of Donald Rumsfeld’s ‘known unknowns’.
A key skill that leaders and entrepreneurs display is indeed the ability to pick the right people, but this is not all about instinct. It is the combination of data and judgement. Every senior hire is a business risk so, as with other business decisions, good leaders ensure that due diligence is done so that the judgement portion of the decision is as low as possible.
As heroic as it may feel to some who say it, putting the future of a business on a rush of gut instinct is – at the very least – a high risk approach which is found on average to be no more effective than a coin-toss that then costs a hidden fortune. All senior level hiring – like any M&A – should be supported by independent evidence, evaluation and insight. It is essential decision-support and it works.
Leaders can – and should be – supported with easy to consume due diligence data so that they can focus their honed instinct (gathered through years of experience) on the intangibles. These people intangibles are often wrapped up in the black box word ‘chemistry’. Let’s remember that before we have the right information and insight people used to think that chemistry was ‘magic’. It is not. There is a great deal that we can now explain and compare which educates the leader and enables them to identify the ‘known unknowns’, which they must use their judgement on.
We have shown that adopting a comparative analysis of candidates – professionally, behaviourally and personally – enables leaders to make better decisions. Our Proof of Candidate® approach also enables focussed support for the new employee and better onboarding. This combination raises success dramatically: up from 50% to 88% with all the inherent cost, time and value advantages that this brings.
In short better hires: fewer fires…
Leaders: please think about due diligence when you think about hiring and challenge your colleagues and advisors to help you target your insight on the intangibles.