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Everybody is entitled to OUR opinions!

Doing the math

11/15/2020

2 Comments

 
You are faced with lots of competing options for your talent development budget. I dare you to find a better investment than entrusting Executive Springboard with leadership assimilation.
 
Let’s do the math.
 
Studies by the Harvard Business Review, Heidrick & Struggles, Gartner and the Corporate Leadership Council place the odds of a failed senior hire at somewhere between 40 and 60%. Failure rates are probably a mixed bag when you consider other ways leaders begin new roles --- lower in promotions or reassignments, higher in mergers. We will conservatively use a probability of failure of 40%.
 
Let’s assume that a senior hire has a $250K salary and an annual bonus of $100K. And let’s assume that this leader lasts one year. What are the costs of a failed adventure? 
  • Salary and bonus of $350K. 
  • Benefits (insurance, vested 401K, housing/moving costs, etc.) and business-related expenses (T&E, computer, etc.) of at least $50K. 
  • Severance package of 6 months of annual compensation, or $175K. 
  • Replacement search of $100K. 
We will exclude any soft costs associated with a failed hire (e.g., management time on searches and remedial action, lost customers, exiting employees) and put the sunk costs of this failed hire at $675K.
 
The expected value of a failed senior hire is 40% x $675K, or $270K. 
 
Here is our track record: Well over 90% of the executives Executive Springboard mentors are still in place after 18 months. Let’s assume our failure rate were as high as 10%. By reducing the risk of failure from at least 40% to 10%, we decrease the expected value of failure from $270K to 10% of $675K, or $67.5K. 
 
The improvement in expected value is $202.5K. The cost of an Executive Springboard engagement is $15K for eight months of onboarding, making the return on investment for using Executive Springboard 1350%. That’s $13.50 for every dollar invested. How many HR initiatives approach this ROI? And it is reasonable to argue that, by taking more aggressive positions in risk improvement or executive compensation, or by monetizing soft costs, the ROI would rise to over 2000%. 
 
We attribute our success in improving executive retention to several factors:
  • Executives feeling valued by their employers’ investment in their development
  • A proprietary onboarding program accelerating impact and sustaining it long-term
  • Elite mentors sharing their wisdom as a legacy to the next generation of leaders
 
Over the past six months, we have innovated to improve your ROI even more. Like, how does an ROI of infinity sound? That happens when your investment is zero. And we have two ways for that to happen.
  1. Our success rate allows us to now offer a money-back guarantee. If your recruited, promoted or reassigned executive leaves for reasons other than a reorganization, reduction in force or change in ownership during our 8-month engagement, we will refund your investment.
  2. We also offer a zero-cost offer for our services. Let us recommend one of our 15 boutique recruiting partners for your next executive search. The recruiter will integrate Executive Springboard’s onboarding with its placement for the cost of the search alone.
 
Getting your key employees off to a great start seems like a good thing to do. But our analysis suggests that investing in Executive Springboard’s onboarding mentoring is just about the best thing you can do.


2 Comments
roddy martin link
12/15/2020 08:27:47 am

research and study

Reply
Veronica Davenport link
10/30/2023 11:27:47 am

Thanks foor a great read

Reply



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    Executive Springboard President Steve Moss shares learning from years as an executive and a mentor.

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