It’s understandable that some companies, given limited resources, are unable to engage outside sources for their talent acquisition needs. Some companies have successful in-house teams that are capable of finding and engaging top talent. But the truth is that most do not.
On the surface the “upfront” cost of hiring an executive search firm can be daunting. And given the availability of resources like Linked In and other job boards, it seems to make sense to try a DIY approach. But “saving money” has an underlying cost that might not be readily apparent.
Instead of investing in the front end, some companies seem to make hiring decisions based solely on short term cost savings. They fail to take into account that along with the salary expense of the bad hire comes an opportunity cost – how much revenue/profit is lost during the time frame that the poor hire is at the helm of the ship? How many potential clients passed on working with your company based on this bad hire’s poor performance?
There are many other opportunity costs besides the direct bottom line. Good employees leave companies that hire poor leaders. Poor leaders tend to hire poor employees, further damaging the company. And company cultures suffer when a poor fit is hired, leading to a loss in productivity. The list of repercussions goes on and on.
It’s always interesting (if a bit puzzling) to read posts about entrepreneurs and all the bad hiring decisions they made as the learned how to build their team. We are not casting aspersions; they are admitting they made the mistakes directly in these posts. While it’s admirable to learn from your mistakes, repeating those same mistakes over and over to “save money” is an ineffective business model.
Isn’t your company’s future worth so much as to not “try” DIY hiring? Why do some companies choose to hire on their own when it is evident they are truly not good at it? If you know you are not good at something, wouldn’t it make sense to outsource the task and focus on what you do well?
Here’s a practical example: We recently connected with a interactive technology company hiring an executive leader for their digital marketing efforts. They stated they “had it handled” and then proceeded to hire someone who had 4 jobs in the last 6 years; not completing a year of service at any of them and having gaps of employment between each. The candidate showed a track record of not sticking in a role or a particular vertical, taking roles in a variety of different spaces, and in a striking bit of irony, none of them was within the digital marketing space. What digital experience they had dated back 6 years, and given the evolution of digital marketing over the past few years, was completely out of date.
But the company only looked at the bottom line/upfront cost and took a risk on this candidate no doubt thinking that they “saved” money on an executive search fee. But what did it truly gain? Time will tell. Perhaps we’ll read a future post from their CEO about the hiring mistakes his company made.