Hiring as Asset Development: Treating Senior Leaders as Investments in Productivity and Success

Hiring senior leaders is a major business decision – one you NEED to get right. Paul Cashman outlines key considerations and advice on how biotech and pharma companies can find success in executive hiring by relating the process to that of seeking approval for new health products.

| April 19, 2022

Written by: Paul Cashman

Executive Hiring and Corporate Success

Here are the numbers: less than 20% of new hires are considered “high performers.” Almost half (46%) turn out to be “failed hires” during their first 18 months – either leaving the company or performing so poorly that they’re reducing overall productivity.

For entry-level positions, this is an efficiency issue. And, for senior management, it can be a primary barrier to growth and corporate success.

Hiring senior executives doesn’t operate the same way hiring your more junior workforce does. The hiring decision is, in effect, a significant investment, representing a large capital outlay coupled with a commitment to pursue an executive’s plan of action. Every time a new leader turns into a failed hire, the combined opportunity cost and repeat hiring costs can hit 3.5x the employee’s salary for mid-level positions and up to 25x the salary for CEOs and other top-level hires.

These opportunity costs demand top-level HR decisions to move beyond surface-level match requirements such as personality and technical expertise. Instead, the right approach to executive search is inspired by the process of acquiring and developing new corporate assets. You vet. You check histories and fundamentals. You don’t rely on chemistry or gut instinct. And then, you take steps to fit the asset into your corporate structure, integrating them to enhance the company’s capabilities – not a buy-and-forget addition.

Here’s what that can look like with the proper support.

Finding the right priorities: Due diligence and onboarding

As with any asset development process, hiring a senior executive should start with thorough due diligence. Most companies do a version of this, with a particular focus on technical skills. Here’s the thing, though: the same LeadershipIQ study that gave us the figures above also notes that only 11% of failed hires cite technical skills as the reason. Screening for technical ability is routine, and if raw technical ability were all that mattered, replacing top leadership would be both cheap and easy.

Instead, what matters most is the fit in both soft skills and technical ability – not just between the candidate and the company but between the candidate and the leadership context, environment, and challenges they are brought on to handle. Underlying soft skills like coachability and emotional intelligence are part of the picture. The other big pieces are job-specific aspects of temperament and motivation.

Sounding out those aspects of a candidate’s capabilities, background, and future performance is a high-touch, intensive process. It can be helpful for pharma and biotech companies to treat senior hiring as akin to seeking approval for new health products – best done in stages. So instead of preclinical, clinical, regulatory, market access, and commercialization phases, you’ve got multiple rounds of screening and review focused on different aspects of job fit, soft skills, openness to change, clarity of direction, and strength of motivation in the role – and many others. At the same time, you should benchmark candidates against your existing and previous employees to hire up and to lay the groundwork for a reliable comparative analysis.

That process will let you identify top candidates based on the capabilities and capacities relevant to job-specific success over the next few years. That will get you to the right person.

From there, the analogy to asset development continues to be instructive because the next step is to successfully integrate the new hire into pre-existing relationship networks, social hierarchies, and communication processes. You’ll need to set expectations on both sides and ensure adequate support is available as part of the onboarding process.

Do it right, and you’ll be able to invest confidently in leadership that has real value for your company. Biotech, med-tech, and pharma are intensely competitive industries where exceptional leadership talent is scarce, which leaves little to no room for missteps in the executive search process – especially for start-ups. But where the wrong choice can be a catastrophic setback, the right choice will reliably give a business the push it needs to hit critical goals. This is a major business development decision and one you need to get right.

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