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Strategies Against Wrong Decisions When Filling Management Positions

If a manager leaves a company just a few months after starting work, this not only causes resentment, but is also associated with high costs. Accordingly, it is important to find a manager who is a perfect fit for the company and can bring it forward. The fit between the manager and the company is the most important factor in achieving the desired results.

However, finding the right candidate does not guarantee one hundred per cent success. The time leading up to the person starting in the new position is also important. The staffing process does not end with the selection of the best candidate, but when this candidate truly arrives at the company.

EO Executives’ whitepaper The Most Expensive Leader Is the One Who Leaves: Strategies Against Wrong Decisions When Filling Management Positions reveals what matters at every stage of the appointment process. Download it for free and learn, with concrete examples, how to attract the most suitable leadership talent and what you can actively do to make new leaders feel welcome and comfortable in your company:

How much does it cost when a manager leaves?

When a new manager leaves a company, this results in direct and indirect costs. The indirect costs include the loss of time in projects and other important tasks as well as the loss of trust, both internally within the own team and externally with customers and business partners.

While indirect costs often cannot be quantified, direct costs can be calculated relatively accurately, for example, with the Good Hire Calculator™. The basis for the calculation is the Cost of Vacancy approach by Dr. John Sullivan.

Calculate the Cost of Vacancy

In a successful company, each employee generates more value than the company pays them. If you calculate a concrete figure for this daily profit, you can multiply it by the time it takes to successfully fill the position. This gives an estimate of how much the vacancy costs the company.

Typically, this Cost of Vacancy is around three times (or more) the salary for the position in question. The more company- and person-specific factors are included, the more accurate the calculation becomes. Since an executive does not reach their optimal performance until the sixth month in the new position, the Cost of Vacancy can be used not only as a calculation approach for vacancies, but also for bad hires.

Cost of Vacancy: concrete example

The whitepaper The Most Expensive Leader Is the One Who Leaves: Strategies Against Wrong Decisions When Filling Management Positions uses the case study of a Chief Marketing Officer with an annual salary of €250,000 to calculate the costs that can arise, for example, from an executive who leaves the company after four months:

Direct costs

Indirect costs

Total

In the case study, the wrong staffing decision at C-level results in total costs for the company estimated at 779.000 € ... more than three times the annual salary after only four months with the company!

What is the reason why a manager resigns?

There are many possible reasons why a manager leaves after only a few months. Some reasons are beyond the company’s control, for example, in the case of private misfortunes. However, the vast majority of causes can be consciously avoided by recognising them early and countering them with suitable measures.

Possible reasons for the early dismissal of managers are, for example:

• The corporate culture: If the general culture in the company does not match the values and habits of the new manager, sooner or later, conflicts will arise, which, in the worst case, will lead to dismissal.
• Unclear expectations: Goals and responsibilities have not been clearly defined or communicated, which can lead to frustration on the part of the leader.
• Internal disputes: This includes conflicts with other managers, departments or team members. If these conflicts cannot be resolved, the productivity and well-being of all involved may suffer.
• Lack of recognition: If managers do not receive any or only insufficient appreciation (in their opinion) for their efforts and successes, this can have a negative impact on their motivation to continue working towards the company’s goals.
• Strategic differences: A core task in leadership positions is the practical implementation of decisions made at the highest level of the company. If a leader does not stand behind these decisions because, for example, they could not voice their concerns, this creates dissatisfaction in the long run.

Proven strategies to attract and retain the right candidate for a leadership position include:

• Hiring a personnel consultancy: An experienced personnel consultant has the people skills, expertise and networks to find the right executive for any situation. A personnel consultant can also mediate between the candidate and the company in case of problems.
• Diagnostic tools: A thorough personality analysis helps to identify the candidate’s skills, wishes and needs at an early stage.
• Regular contact: Direct contact with the new manager is the only way to determine whether they have doubts about their new position and whether special measures are necessary.
• Onboarding coaching: An experienced coach can effectively help the new leader settle into their new role.

More information on the ideal appointment process

Do you want to learn more about how to optimise candidates’ experience in your company? Would you like to offer your new managers the best possible onboarding? Are you looking for ways to support the executive search process with modern diagnostics?

The EO whitepaper The Most Expensive Leader Is the One Who Leaves: Strategies Against Wrong Decisions When Filling Management Positions outlines, with lots of practical tips, what each phase from executive search to completion of onboarding should ideally look like to make the new executive feel completely at ease. Download it today for free and learn all about best practices in the appointment process:

The authors

About EO Executives 

Success in companies is made by people

Success in companies is made by people ("Results through people"). Executives play a particularly important role in this. Our mission is to help our clients build the best leadership team they have ever had.

To do this, we bring together our clients with consultants who are highly individual and have specific knowledge. Our consultants are experts in their respective industries and functional areas. Because our consultants have such a high level of expertise, we ensure that success-critical leadership positions are filled quickly, permanently and successfully.

Successful leadership teams through executive-intro®

In addition to competent consultants, our team consists of dedicated researchers and staff – and each brings their extensive knowledge to the search for the perfect executive. Our unique methodical approach, executive-intro®, ensures that our candidates are not only convincing from a professional point of view, but also represent a long-term enrichment for the management team and the company on an interpersonal level.

We call this a ”Perfect Match“.

EO Executives was founded in 1997 and is now present in six countries worldwide with a total of 33 locations. We fill positions with both permanent executives and experts as well as quickly available interim managers for temporary assignments and projects. In addition, we support our clients with further consulting services in the areas of executive search, interim management and leadership development.