The True Cost of a Failed Charity Executive Hiring

discussion about failed charity executive hiring

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As leaders, we like to get things right the first time.

We are aware that it generally saves time and money to avoid having to go back and correct a mistake. However, while this is an obvious principle, many organizations do not approach the executive search process from this perspective.

Hiring nonprofit executive leaders is a highly specialized process requiring the proper sector knowledge and experience, or it can end with an incorrect match. As a result, many organizations will likely try to save money up-front by internally managing hiring without the correct qualifications.

But what does a failed charity executive hire really cost you?

Calculate the Total Cost

Organizations must evaluate the total project cost when considering an executive hiring project. You reach the total project cost sum by adding the cost of the search itself to the leader’s salary.

Sometimes the hire can fail, and you must still add the initial search cost to the salary for the time the leader served and then throw in the cost of an entire second search project. If this is the probable result, spending more on the front end to correctly manage your hiring process through an experienced recruiter looks like a more effective and cost-efficient plan.

  • Project Cost = high-quality search expenditure + salary of the leader

            Vs.

  • Project Cost = low-quality search expenditure + salary of the leader for interim duration + second higher quality search costs + salary of the new leader

Assess the Opportunity Cost

Additionally, that project cost says nothing of the opportunity cost. You calculate the opportunity cost by the impact a failed hire has on the organization and its stakeholders. When an organization is working through a leadership transition, there are countless lost opportunities:

  • Staff may not work as efficiently or may experience turnover at higher rates, while opportunities to hire new staff members may be overlooked.
  • Donor relationships may not be maintained effectively, and donations may slow down.
  • New ideas that could have led to more innovation and success may not be engaged due to a lack of consistent leadership.
  • Public belief in an organization may sink after a failed leadership hire, as it comes across that something is wrong or that the organization does not know what it is doing.

These lost opportunities are challenging to calculate financially but add to the total loss affected by a failed executive hire.

Include the Lost Opportunities

  • Project Cost = high-quality search expenditure + salary of the leader

            Vs.

  • Project Cost = low-quality search expenditure + salary of the leader for interim duration + second higher quality search costs + salary of the new leader + lost opportunity cost of other staff, donor relationships and dollars, new ideas, and public morale

Are you convinced you’re ready to use the first method but are unsure how to guarantee a quality leadership search that doesn’t result in a failed executive hire? The best solution is to use an external partner to initiate a professional executive search the first time around.

Choose the Best Executive Hiring Solution

At Cause Leadership, we help and coach Canadian charities and nonprofits to find, select, and develop their next great leaders. Our fully-managed hiring process provides a qualified leader for your purpose-driven organization. We help you find the right leader…the first time. And, in the unlikely event the placement doesn’t work out, we provide a 12-month replacement guarantee.

We simplify things so you don’t have to compromise when finding the perfect-fit leader your organization needs. In addition, our team’s network and nonprofit sector experience help your organization compete in a crowded space for talent that also has the option of turning to a for-profit leadership position.

We offer a free guide and custom packages based on your specific needs. So start your search with Cause Leadership today.

 

 

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