06 May 2021
Turning the tide on Leadership Turnover
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Through the lens of the technology domain, I explore how dropping in new leaders runs the risk of high attrition rates, while taking the time to orchestrate an executive search and leadership assessment process can turn the tide on leadership turnover.
Many HR leaders are evaluated against the metric of employee churn rate. While some churn is healthy, both minimising role stagnation and introducing new ideas and energy into a company, not all churn is created equal.
"Attrition rate" refers to the lifecycle of a workforce including retirees and those who move on to pastures new. Leadership turnover, on the other hand, is often the result of a poor hiring decision or as we will explore, a poorly designed executive role in the first place. This is both costly to the organisation and the HR leader involved in the hiring process.
When leaders leave, replacing them comes at a high financial cost, in terms of severance pay and benefits continuation, recruitment fees and training costs. Leadership turnover may also impact revenue, client base and even employee retention, particularly with the departure of a high-profile executive.
These costs are difficult to swallow, but the most bitter pill? According to a 2019 Work Institute report, 75% of reasons for employee turnover can be prevented.
So how do we turn the tide?
Many of the reasons for executive churn can be prevented. Executives can leave because of culture, colleague and managerial behaviours and a lack of career development. However, for the purpose of this article, I want to focus on the steps required to ensure you identify the right person in the first place.
In my article last month I asked the question “Does your executive team understand the data leadership requirement?” Research from New Venture Partners highlights how Chief Data Officers have experienced the evolution of their role over the past decade. Their short tenure in the position reveals some hard truths. Employers know they have an acute need for CDOs, but often lack any understanding of the CDO’s scope and requirements. In addition, these rare individuals often begin their new roles without clarity of responsibilities, focus and scope of influence. All this is a recipe for churn.
Does your organisation understand what new roles should achieve?
Over the next few months, I will look at specific roles from Chief Data Officers to Chief Innovation Officers and Chief Digital Officers (amongst other such leaders in the technology sector). Many of these brilliant people leave organisations sooner than they should because the organisation did not properly understand the role or what that new hire would achieve in their first 6-12 months. To hire for new roles like your very first Chief Data Officer, you must first understand if the organisation understands what this role will achieve. Likewise, for a Chief Innovation Officer, you must understand what type of Innovation you require. Are you seeking process improvement? Is it incremental innovation? Is it transformational innovation? What is your organisation's attitude towards such roles? Will these people be accepted or will they be rejected like an unsuccessful organ transplant?
"Hire good people and get out of their way"
Such questions must be considered and incorporated into both the role profile and the selection process. As an HR leader or a hiring manager, it is perfectly understandable that you want to save time by hiring the person as quickly as possible. Then you want to take Steve Jobs timeless advice, “hire good people and get out of their way”. But - and there is a major but - we need to do the necessary prework to save ourselves a lot of expensive and energy-sapping rework. In doing so, we can start to turn the turnover tide.
To turn the turnover tide, connect with me or my colleagues here or on LinkedIn.
Until next month, thanks for reading.