One of recruiting’s secrets is that 46% of new hires fail within 18 months. It’s a shocking statistic that was first reported in 2005 by the leadership training and employee engagement firm Leadership IQ. It’s been confirmed by multiple studies, including several that broke new hires down by type and level of responsibility.
Dr. John Sullivan, professor of human relations and a recruiting advisor to many of the largest companies in the world, reported that these studies found:
- 50% of hourly new hires quit or are fired in their first six months
- Between 40% and 60% of management new hires fail within 18 months.
- 40% of new CEOs fail in their first 18 months.
Kevin Kelly, CEO of the global executive search firm Heidrick & Struggles, told the Financial Times, “We’ve found that 40 percent of executives hired at the senior level are pushed out, fail or quit within 18 months. It’s expensive in terms of lost revenue. It’s expensive in terms of the individual’s hiring. It’s damaging to morale.”
As serious as the new hires fail rate is, recruiters and hiring managers are now coping with an equally troubling trend: candidates are “ghosting” recruiters – disappearing from the hiring process without notice — or just not showing up on the first day. At the same time, an increasing number of new hires are quitting within a few months, some within days of starting a new job.
A Jobvite survey of 1,500 workers found 3-in-10 had quit a job in the first 90 days. 7% admitted to “ghosting” an employer after the interview. An Indeed survey of 4,000 job seekers found 29% of them had ghosted and nearly a quarter had accepted an offer but didn’t show up.
As troubling as the ghosting trend is for employers, having new hires fail or suddenly quit is worse. Besides having to begin the recruiting process all over again, there’s a loss of productivity, a hit to team morale and the potential that others may choose to leave, a phenomenon known as “turnover contagion.” Estimates of the cost of turnover range from a low of around $4,500 for entry- and lower-level workers to more than 200% of salary for senior management.
It’s tempting to blame the recruiting process. And there is some truth to that. The Leadership IQ study found poor interpersonal skills were most often the cause of new hires failing. They fail because:
- 26% can’t accept feedback
- 23% were unable to manage emotions
- 17% lacked motivation to excel
- 15% because of the wrong temperament for the job
The lack of the right set of skills was the cause only 11% of the time.
In hindsight, 82% of the 5,247 hiring managers surveyed admitted that in the interview there were “subtle clues that these employees would be headed for trouble,” but they were ignored.
Other research suggests that the onboarding process bears as much responsibility, as well as an unrealistic or incomplete description of the job and the company culture.
What can employers do to reduce the new hires fail rate?
Leadship IQ offers this: “If managers focus more of their interviewing energy on candidates’ coachability, emotional intelligence, motivation, and temperament, their hiring success will improve.”
Dr. Sullivan said employers must redesign their recruiting process to use “data that reveals which process elements accurately predict future success on the job.” He estimates that as much as 75% of the hiring decisions involve human intuition – a “gut” feeling – rather than hard data.
Preventing new hire failures and quits starts with how the company portrays itself. Candidates need to get an accurate feel for what it’s like to work for the organization. “You want to give them the ability to self-select in, as well as self-select out,” says a whitepaper on “How to Hire for Success.”
The guide echoes Sullivan and other experts in emphasizing the use of data in selection. Survey both top performers and those at the bottom to discover the work ethics, attributes and traits of each. Use these to develop a process to know exactly what qualities to look for – and what to avoid – in hiring.
Train managers in behavioral interviewing. Develop a series of questions around the most common reasons why new hires fail, and probe for examples and situations where the candidate can show how they set and achieve goals, collaborate and handle disappointment.
Onboarding is also key to reducing both the new hires fail rate and improving the retention of new workers. Sullivan and others advise making onboarding a long term process that includes career pathing and personalized training to give your new worker the skills – both hard and soft – to move along their own career path.
Managers need to act as coaches, meeting frequently with their new team member to give them feedback on their performance and especially to get their feedback on the job. Bamboo HR research says what would make new hires want to stay is more attention from their manager, recognition for the work they do, clear guidelines and effective training.
As professor and author Michael D. Watkins writes in the Harvard Business Review, “Onboarding is among the toughest types of job transitions. Why? Because new hires, even if they are experienced professionals, are unfamiliar with the business, don’t understand how things really work, lack established relationships, and have to adapt to a new culture. Research has shown that challenges in the latter two categories are the biggest reasons for quick turnover.”
“Being systematic in onboarding,” he says, “Brings new employees up to speed 50% faster, which means they’re more quickly and efficiently able to contribute to achieving desired goals. Effective onboarding also dramatically reduces failure rates and increases employee engagement and retention.”
Contributions by John Zappe
