New Hire Turnover Increases

Headquartered in Washington, DC with regional offices in Atlanta, GA and Westport, CT. Leadership IQ, a global leadership training and research company, provides best practices research and executive education to the world’s leading companies and their leaders.

Their work has appeared in Fortune, Forbes, Business Week, the Harvard Management Update, CBS News, and many more. They’ve trained tens of thousands of leaders from across the Fortune 500, non-for-profit, small-and-midsize companies, and government organizations.

They direct one of the largest leadership studies ever conducted, and currently focus their work on management and executive performance, workforce issues, negotiations, strategic planning and customer service.

In a three-year study, they examined 5,247 hiring managers from 312 public, private, business and healthcare organizations. Collectively these managers hired more than 20,000 employees during the study period.

The study focused on why new hires fail at such alarming rates which is certainly a growing trend. For instance:

  • 46% of newly-hired employees will fail within 18 months.
  • Only 19% will achieve unequivocal success.
  • Contrary to popular belief, technical skills are not the primary reason why new hires fail.
  • Instead, poor interpersonal skills dominate the list.

The study also discovered that:

  • 26% of new hires fail because they can’t accept feedback.
  • 23% of new hires fail because they’re unable to understand and manage emotions.
  • 17% of new hires fail because they lack the necessary motivation to excel.
  • 15% of new hires fail because they have the wrong temperament for the job.
  • and only 11% of new hires fail because they lack the necessary technical skills.

The above data is certainly not rocket science. However, while the failure rate for new hires is distressing, it should not be surprising:

Eighty-two percent of managers reported that in reflection, the interview process could have been handled more effectively. Warning sign may have been noticed had the managers:

  • been more focused on the interview itself;
  • listened more and talked less;
  • spent more time on the actual interview; and
  • had stronger interviewing abilities and experience.

Mark Murphy, CEO of Leadership IQ, explained that “The typical interview process fixates on ensuring that new hires are technically competent. But coachability, emotional intelligence, motivation and temperament are much more predictive of a new hires’ success or failure. Do technical skills really matter if the employee isn’t open to improving, alienates their coworkers, lacks drive and has the wrong personality for the job?”

The study tracked the success and failure of new hires and interviewed managers about their hiring tactics and new hires’ performance, personality and potential. Upon completing the 5,247 interviews, Leadership IQ compiled, categorized and distilled the top five reasons why new hires failed (i.e., were terminated, left under pressure, received disciplinary action or significantly negative performance reviews). The following are the top areas of failure, matched with the percentage of respondents.

  • Coachability (26%): The ability to accept and implement feedback from bosses, colleagues, customers and others.
  • Emotional Intelligence (23%): The ability to understand and manage one’s own emotions, and accurately assess others’ emotions.
  • Motivation (17%): Sufficient drive to achieve one’s full potential and excel in the job.
  • Temperament (15%): Attitude and personality suited to the particular job and work environment.
  • Technical Competence (11%): Functional or technical skills required to do the job.

Eight hundred and twelve managers experienced significantly more hiring success than their peers. What differentiated their interviewing approach was their emphasis on interpersonal and motivational issues.

Hiring failures can be very costly, impacting not only your organization but other employees as well. However, these failures can be prevented if managers focus more of their interviewing energy on candidates’ coachability, emotional intelligence, motivation and temperament. Doing so will provide vast improvements in the hiring success. Technical competence is actually a very poor predictor of whether a newly hired employee will succeed or fail.

“The financial cost of hiring failures, coupled with the opportunity cost of not hiring high performers, can be millions of dollars, even for small companies,” adds Murphy. “And the human cost can be even worse. If a hospital hires a nurse that won’t accept feedback and alienates pharmacists and physicians, the result could be a medical error. This one bad hiring decision could cost a patient their life.”

About Harry K. Jones

Harry K. Jones is a motivational speaker and consultant for AchieveMax®, Inc., a company of professional speakers who provide custom-designed seminars, keynote presentations, and consulting services. Harry's top requested topics include change management, customer service, creativity, employee retention, goal setting, leadership, stress management, teamwork, and time management. For more information on Harry's presentations, please call 800-886-2629 or fill out our contact form.

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