Patrick Murtagh, November 2023
At a recent roundtable, we tackled the question that’s often whispered but rarely addressed openly: What’s the true price of a poor executive hire? And why do so many of these critical appointments end up going wrong?
Here are some eye-opening insights:
According to research by the Corporate Executive Board (CEB), a staggering 50% to 70% of executives stumble within their first 18 months, regardless of whether they’re internal or external hires.
A botched C-suite hire in the UK can set a company back a hefty £200,000 to £250,000 on average (Source: Chartered Institute of Personnel and Development – CIPD).
Choosing the wrong C-suite leader can shave an average of £27 million off a UK-listed company’s market value (Source: London Business School).
Executive turnover often results in productivity losses equal to 15-20 times the executive’s annual salary (Source: Institute for Employment Studies).
Even a 5% dip in reputation scores can lead to a 6.3% decrease in market capitalisation for FTSE 100 firms (Source: Reputation Institute).
A single executive mis-hire in the UK can lead to opportunity costs of £1 million or more, including missed business prospects and squandered resources (Source: Institute of Leadership and Management – ILM).
In the grand scheme of things, the financial loss could tally up to 5-20 times the executive’s salary, and that’s not even considering the toll on productivity, recruitment efforts, onboarding, or the culture you’ve carefully crafted.
Getting it right from the start is a challenge, however, there are proven strategies to help you minimise this risk. One of the key steps is engaging with the right recruitment partner.