Companies Are Bleeding Leadership Talent
And Hiring from the Outside Does Not Seem to Be a Good Option
“People don’t leave bad jobs,
they leave bad bosses.”
A continually well-fitting quote
The title for this piece and some of the stats are coming from a recent DDI HR Leadership Insights Report.
Companies are bleeding leadership talent. During the pandemic in 2020, HR respondents in a DDI study said they experienced an average overall leader turnover of about 14% in their organization. In a September 2021 survey, HR respondents reported that leadership turnover had increased to 18% on average.
DDI also found that internally hired leaders are successful 65% of the time, compared to 52% of external hires. It does speak to the relative success of internally hired / promoted leaders. And it also says that half of those hired in from the outside turn out to be unsuccessful.
That is a staggering statistic, and from a sales leadership perspective completely in line with other stats frequently quoted: a 2.5-year average tenure of a sales leader and only 1.5 years for the first VP of Sales a company hires.
Who is to blame? Since sales is a metric-driven activity, the blame often goes to the sales executive. Jamie Scarborough gives us five reasons:
Sales reps routinely bypass the sales manager
Sales team turnover is too high
Sales reps consistently miss their targets
Sales team is giving away the product
Sales manager refuses to roll up their sleeves
He provides those under the assumption that ”you’ve hired the right person for the job." Really? If you, the CEO, Founder, or Owner of a business, see several of those five scenarios occur, you clearly hired the wrong person for the job. The blame goes to you, your recruiter, and the others who potentially interviewed.
A Harvard Business Review article going back to 2012 points out that as much as 80% of employee turnover is due to bad hiring decisions. According to Julie Chance, those are the result of:
Rushing the Process
Inaccurate Job Description
Lack of Objective Data
Half-Hearted Onboarding Process
Having been a hiring manager myself for 25+ years, two stick out because I know that I have committed those mistakes:
Rushing the Process - Hiring against a deadline, feeling that every day a position is unfilled, the business loses out, the notion that any warm body is better than the empty seat, pressure from upstairs or the board, none of these lead to good hiring decisions. And as it is so often the case, knowing these facts intellectually does not prevent the mistake. With increasing pressure to fill a role, I just convinced myself that a mediocre candidate was a really great fit.
Lack of Objective Data - Hiring based on emotions rather than objective data. Phrases I used in this context were "he is a great guy" or “she fits perfectly into our team.” What does that even mean? It was merely a feeling, an emotion on something that is not measurable. We all have those, and they guide us well in many areas of our life. And they can at best augment but not ever replace objective criteria in a hiring process.
My solution today: Contract, don’t hire, and define the criteria for the Perfect Match beforehand and stick to them.
Contracting allows for more flexibility, allows access to a larger talent pool, speeds up the process, gives the chance to only pay for what you need, creates focus on short- and mid-term goals, and allows for try-before-you-buy.
And then define the criteria for your Perfect Match without having a specific executive profile in mind. Just ask yourself what past experiences does the person need to have to allow them to help you achieve your goals in the next 6 to 18 months.
And for a sales leader, those can be very detailed and measurable and directly reflective of your sales scenario. Here is an example: selling a custom software solution, 12-18 months enterprise sales process including an initial pilot phase, with CTO's as key decision-makers, targeting an average deal size of $1m.
If this is your sales scenario, contract a sales leader that has executed this specific scenario before.
And we are here to help and find the perfect match for your sales scenario.
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DDI - HR Leadership Insights Report 2021
Jamie Scarborough - 5 Reasons to Fire Your Sales Manager
Julie Chance - Why We Make Poor Hiring Decisions And How to Stop
Photo by Anne Gosewehr