The Best Steps to Prevent Senior New Hire Failure?

A Mark 117 bomb.

Bomb: Image via Wikipedia

The cost to hire a good senior exec (think CFO, GC, COO, CMO, CEO  etc.)  is pricey.

The people are talented, can be really good at what they do, and the market in some sectors is seriously hot.

To compound things, talent poaching – the recruiting of a senior exec from one firm to another – is increasing and multiple offers to execs are on the upswing according to the Wall Street Journal.

So when a new senior hire bombs – such as Time, Inc. CEO  Jack Griffin’s recent firing after just 6 months – the reverberations and shell shock match the cost.

You can be a hero as an employer and spend – in relative terms to other new hire costs – a modest amount to prevent losing 100,000’s of dollars. Or you can chance it out, and hope the fingers don’t point your direction when things don’t work out as planned.

And if you’re one of those senior new hires, negotiating a couple of added benefits described below into your employment offer can be one of the smartest steps you can take. While everyone likes money, success in the new job is what’s likely to help you even more down the road.

First the hard facts. The out of pocket additional cash that can be ponied up to hire a senior executive hire at an established company – say someone making $400,000 and more – is an easy an easy $200K. Governance Focus calculates the cost of an average senior hire – once you throw in the usual items such as search firm fees, severance package costs, hiring bonus, relocation expenses, base compensation, stock options and training costs at  $1.5 M . Another formula that gets quoted frequently is 200% of base salary; replacing a $300K exec ends up cost you $600K in this example.

Second, for startups, while the costs in cash are not nearly so pricey, the cost in lost time when a senior hire does not work out is awful. Lost time, by the way, that startups typically don’t have, and can’t afford.

A Booz Allen study from 2003 found that 55% of outsider CEO’s – people like Jack Griffin – bounced and got fired. The statistics for other senior hires are better, but not by much.

Throw in the cost of business disruption, and another $100,000 thrown into the mix looks like a good investment. Fortunately, it shouldn’t cost you that much.

Here are the two ways that you can help senior new hires get a good solid start that works – and lasts. The type of start that makes all the difference between bombing and being booted, and succeeding.  And at the risk of being perceived as a hammer thinking every solution looks like a nail, I do work in both areas.

  • Provide new hire executive coaching when the senior person gets hired as a standard practice – not when they encounter bumps. While culture is the biggest bugaboo, there are a variety of ways having an an experienced coach work with a senior new hire in the first 3-6 months that can establish a better solid foundation for success, and avoid the inevitable challenges that occur. You could even provide the new hire exec coaching as a benefit – a reason to join your firm.
  • Provide quick start work teaming work with the senior new hire’s leadership team with a goal that they quickly understand and can align with what the new boss wants, what they don’t want, and ways to work most effectively together.  While a clear fact is that many senior new hires will make changes to their teams, some will not. Getting the leadership team on board with the new boss is a way to mitigate one potential fire to fight, leaving the senior hire added bandwidth to work with the boss, or the board, clients, or their senior colleagues.

Sometimes the best solutions are the simplest, and cost less; the two lower cost approaches above to reducing the risk of a senior new hire bombing are great examples.

If you’re the new hire, you should be building these benefits into your employment offer if you’re interested in upping the odds of succeeding, and mitigating the risk of failing.

If your company is not taking these approaches they should be; talent, once again, is in demand, and you don’t want your firm ending up last in today’s talent wars.

Life Back West is an occasional set of writings focused on ways people, teams and organizations can be both more effective (doing the right thing) and more efficient (doing the right thing well). More about executive, new role, career and team / leadership coaching services can be found at the “About J. Mike Smith and Back West, Inc.” sidebar or the “Hire Me” tab above. You can also read an online interview with me at WhoHub, as well as participate in my learning community courtesy of KnowledgeCrush.