If you’re an HR leader, hiring manager or CEO, you’ve likely done the math. The cost of recruiting and onboarding a new senior executive quickly adds up, especially in a tight labor market like the current environment.
Most experts peg the price of replacing a role at approximately one-third of the position’s salary; some in the field estimate expenses as high as $240,000 when factoring in compensation, benefits, hiring and training.
Giving new executives a springboard to success makes smart business sense—and provides measurable ROI
Either way, companies hiring for C-suite and vice president roles can easily place a five-figure price tag on the recruiting and onboarding process. Add in the fees for an executive search firm and the numbers climb even higher.
Protecting that substantial investment is why more companies now insist on a defined executive onboarding process for new hires. It’s a small expense that many equate to buying insurance for top talent.
Executive Onboarding Reduces Risk and Speeds Success
No business intends for an executive’s experience to end poorly, yet as many as 60 percent of leaders hired externally leave within the first 18 months. The cost of a bad hire can be particularly steep for small and mid-size organizations that lack the deep pockets of their larger competitors.
The negative affects of an early departure can ripple far beyond the bottom line. When a new executive fails, companies often experience significant business disruption, reduced productivity among team members and even lost customers. Depending on how amicable the separation, there can be fees for litigation and outplacement services, and even reputation issues for the employment brand.
As many as 60 percent of leaders hired externally leave within the first 18 months
A number of derailers can sink new employees, from missed expectations to poor team dynamics and cultural mismatches. In addition, most organizations underestimate the amount of time and structure needed to support new leaders effectively. When resources are tight, a “sink or swim” approach is common.
A formal onboarding process acts as a safety net. It works across the new hire’s first four months days to proactively identify opportunities, assess potential pitfalls and strengthen the entire organization.
More Than Three Decades of Results Behind Executive Onboarding
Executive onboarding traces its roots to the 1980s and the groundbreaking research of John Gabarro. His work examined the challenges of navigating a new organization, with even the most savvy executives requiring 13-18 months before truly thriving in a new role.
Using a facilitated and collaborative executive onboarding process, however, speeds ramp-up time by as much as six months. It also results in faster contributions, greater team engagement and increased retention.
A structured executive onboarding process speeds ramp-up time by as much as six months
Numerous Fortune 500 companies, from GE and Citigroup to Exxon and Ford, rely on Gabarro’s tenets. Executive onboarding is also common practice at a number of smaller organizations.
Effective Onboarding Includes the New Leader, Boss and Team
Fast-forward to the present, and structured executive onboarding remains a best practice across industries. It’s especially timely during the “Great Resignation,” as senior leaders weigh the pros and cons of the current work environment. Employers who do more than the usual to welcome new hires can demonstrate their commitment to a new executive’s satisfaction and success.
Employers who do more to welcome new hires can demonstrate their commitment to a new executive’s success
A typical executive onboarding process should facilitate:
- A productive working relationship between the new leader and their manager
- A roadmap for learning and integration during the first 100 days
- A high-performing team that’s aligned on key priorities
- Strong relationships at all levels of the organization
Important components include:
- Goal-setting to establish expectations and align the new hire and their manager
- A customized plan to understand the business, establish relationships and achieve early wins
- A facilitated team onboarding session to build trust with direct reports
- Regular check-ins to maintain accountability and provide a sounding board
Leveraging an outside consultant to support executive onboarding provides an additional benefit: one-on-one coaching. This peer-to-peer guidance can be invaluable to the new leader for navigating obstacles and accelerating traction.
With a tight labor market and the continued uncertainty of COVID-19, senior executives face more pressure than ever to lead their organizations wisely. Giving them a springboard to success from day one makes smart business sense—and provides measurable ROI.
Streamline your next executive transition. Navigate Forward’s Fast Start service pairs your new hire with the structure, support and perspective needed to onboard effectively. Contact us to learn more.