Lessons from Brexit: It’s Hard to Get It Right and Costly If You Don’t
In the political world, the predicted repercussions of a decision by the United Kingdom to leave the EU started immediately: financial markets in Europe, Asia and the U.S. lost billions of dollars, the pound sank to its lowest level in 21 years and the prime minister resigned.
On the other side of the Atlantic, the lengthy USA presidential election campaign grinds on with likely the most divergent choice of candidates ever, pitting the first woman to head a major party against a businessman with controversial opinions and no political experience.
Both situations have exposed deep divisions in their respective countries. Both are illustrating dramatically the complexity of “getting it right” and the frightening alternatives if you don’t.
The corporate world also shares this challenge. A leadership team which does not Get it Right can put thousands of people in jeopardy. Employees, shareholders, suppliers and dozens of related groups end up counting for their future on decisions made by others.
In all of these instances, the pivotal action takes place several stages back, long before such issues break the surface. In the case of the business world, the core issue is who ends up in the decision-making roles to start with.
There is no more important decision to be made than choosing the leader, or the leadership team.
Getting It Right
Organizational effectiveness, management confidence, employee engagement and a strong balance sheet are just a few of the immediate benefits of getting it right when it comes to hiring a new leader. The risks associated with an unsuccessful hire can be catastrophic. Widely-cited research indicates nearly half of new Senior Executives / CEOs don’t make it past 18 months, and the costs of replacing them are staggering.
Direct costs include compensation, duplicated recruiting investments, and the impact on sales or market position. More indirect costs include lost momentum and the negative impact on organizational, market, and customer confidence. Research confirms what business leaders know from experience: the wrong hire affects employee morale and productivity, client/customer relationships, and economic performance.
A survey last year in the U.K. placed the true cost of a bad executive hire at 355 thousand pounds, or US$468,000.
This is not an isolated risk. The competition for qualified leaders is fierce and the turnover rate for CEOs is significant at approximately 14%, a frequency which should justify an established strategy in advance.
Reducing The Risk
These risks can be reduced and converse benefits enhanced by leveraging the experience of executive search consultants. Our consultants at Cornerstone International Group are business leaders before they join us.
With our 70 offices worldwide, 19 of them in Asia, our depth across industries as well as geographies, and 25 years of experience, we help our clients identify the leadership assets they have, the talents they must acquire and the competencies they must cultivate to meet the challenges of a competitive marketplace.
An African proverb says it takes a village to raise a child. It also takes a very experienced team of qualified consultants to recruit a true business leader.
