Ever heard of the stick ratio?
If you are in the market for a retained executive search firm, it’s something you want to know.
The stick ratio is the percentage of candidates the firm has placed with other clients and who are still in the job at a given point in time, usually two or three years later.
One, it is probably the best “top-level” measure of success and competence in a difficult business. If the firm’s stick ratio is high, it is a testimony to how effective the firm is in locating the right person for the job. Finding the right qualifications and experience can be a major challenge to overcome in many highly specialized businesses.
It’s not skill, it’s fit
Two, perhaps even more important, it is a reflection on the thoroughness of the firm’s candidate screening processes. If a new manager quits within a couple of years it is very seldom a problem of qualification. It is nearly always a problem of fit.
Modern HR management and employee relations have established that the suitability of a person to the particular workplace and alignment with the company’s culture are the most significant issues in a lasting relationship.
Personality and psychographic assessment have become mainstays of sophisticated executive recruiting. This is particularly true in the retained search sector where the contractual relationship favors this analysis and is usually backed up by a replacement guarantee of some kind.
Members of Cornerstone International Group – in 70 locations around the world – regularly report stick ratios in the high 80% and 90% region at the two-year mark.
Statistics can be misleading
It should be noted that this ratio alone – as with many statistics — can be misleading. The reasons for a newly placed executive leaving the job early may have nothing to do with suitability, fit or enthusiasm. Illness, sale or closure of the company and family issues are among the many causes why a candidate might leave a job he or she thoroughly enjoyed and excelled at.
Reputation and a healthy stick ratio are valid indicators of a successful recruiter. And the reason for making sure you are dealing with an accomplished recruiter is simple. You don’t want to do this again. You really don’t.
Executive recruiting is a painstaking, sometimes painfully lengthy, process. But it is just one cost component in a very expensive process.
The six-figure setback
A recent article in Forbes placed the cost of replacing a high level or highly specialized employee at 400% their annual salary. Maybe you feel that’s high. So let’s do the math at 200%:
If two senior employees each with an average salary of $240,000 need to be replaced, the cost involved is just under $1 million – specifically $960,000.
This certainly speaks volumes to the desirability of having sound policies of compensation, benefits, training and engagement, since it is clearly more expensive to lose key employees than to keep them.
But sooner or later, you will be in the recruiting market. When that happens, here’s a word of advice:
Tip #1 – go the retained search route for the best results for your specific need
Tip #2 – ask for the stick ratio.