Hiring the wrong people into senior positions is a big financial and reputational risk. Recent research shows that 48% of new hires fail within the first 18 months. For execs earning up to $300,000 this can be 3.5 X the salary cost and even more for those higher up the corporate ladder, with the true cost of a bad CEO hire coming out at anything up to $30 million for big cap pharma (according to Leadership IQ).
Large companies may ride out the drop in share price or sales; the drop in morale and the exit of key talent. But these quakes cause long-lasting tremors in the organisation and inevitably the seismic effects are always damaging for the company and sometimes fatal for people’s careers.
For the smaller companies – fast growing biotechs and newly emerging mid-sized companies going through change – failed hires can spell catastrophe.
Here’s the paradox though. Most firms will readily agree that hiring is their key priority, but at the same time they treat it as a commodity activity driven by a search for the lowest unit cost. There needs to be more focus on the ROI of great people, currently an almost non-existent concept at many companies.
Due diligence is used to support every major business investment. Can you imagine any M&A without it? Recruitment should be undertaken in the same way as any other strategic business decision, using evidence for hiring the chosen candidate and developing a precise on-boarding programme to enable them to deliver.
New hires often come from widely differing business cultures, lacking the networks and support needed to deal with the pressures of a new job, where they are expected to make an immediate impact. Many HR pros believe that in addition to the basic on-boarding , targeted coaching and mentoring should be mandatory in the first six months. Imagine the difference if the on-boarding spend was even 20% of the exec’s travel budget!
Steve Jobs said, “a small team of A+ players can run circles around a giant team of B and C players”. Most investors and CEOs agree with him that people are their most valuable asset, but the collective absence of due diligence and on-going support of new hires is neglectful at best.
Isn’t it time we walked the talk and invested in talent?
The BIA’s People Advisory Committee hosted a session at the 2015 UK Bioscience Forum where the audience made it clear that there needs to be a stronger industry focus on mentoring the next generation of management talent and that the BIA should be playing a leading role.
This is why we have bought together a directory of schemes to showcase the breadth of options open to companies and individuals in the sector today and we will be launching this in the Autumn. This publication kicks off the BIA’s wider work on the issue of talent and our People Advisory Committee will be playing a central role in driving this forward.