Why New Hires Fail
(The Landmark "Hiring For Attitude" Study Updated With New Data)
Leadership IQ studied more than 20,000 new hires and 1,400 HR Executives to determine WHY new hires fail....
In this landmark study, Leadership IQ discovered that 46% of newly-hired employees will fail within 18 months, while only 19% will achieve unequivocal success. And contrary to popular belief, technical skills are not the primary reason why new hires fail; instead, poor interpersonal skills dominate the list, flaws which many of their managers admit were overlooked during the job interview process. In fact, attitudes drive 89% of hiring failures, while technical skills account for only 11% of hiring failures. Here are some key findings from this report...
- 46% of newly-hired employees will fail within 18 months
- Only 19% of newly-hired employees will achieve unequivocal success
- Attitudes drive 89% of hiring failures, while technical skills account for only 11% of hiring failures
- 82% of hiring managers saw signs that their new hire would fail
- Only 15% of companies have defined the attitudes that make their high performers so special
- 56% of HR Executives said that half or less of their current employees have the right attitudes
- Only 39% of companies say their recruiting process represents their employment brand
- Only 26% of companies are frequently gathering feedback from new hires about their recruiting process
This report was developed using two different studies. In STUDY #1, from 2011 and reported in the bestselling book HIRING FOR ATTITUDE, Leadership IQ tracked 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 hiring managers assessed “quality of hire” at multiple points throughout the study period. And when a new hire was determined to be a “failed hire,” the hiring managers completed a survey to assess why the new hire failed. In STUDY #2, during June-October of 2020, 1,463 participating Human Resources Executives completed a survey of their talent management practices. The Top 5 industries represented are: Financial Services/banking (8%), High-Tech/telecom (9%), Hospital/healthcare/insurance (15%), Manufacturing (14%), Services (10%). Pharma/biotech/medical device accounted for 5% of survey respondents, and other represented industries (with no more than 5% of respondents from any one industry) include Food Products, Mining/agriculture, Chemicals, Consumer goods, Education, Energy/utilities, Entertainment/hospitality, Government, Nonprofit, Retail, and Transportation. The following company sizes are represented in the study: Under 100 (23%) , 100-499 (20%) , 500-999 (9%) , 1,000-3,499 (19%) , 5,000-9,999 (8%) , 10,000-24,999 (7%) , 25,000-49,999 (4%) , 50,000-99,999 (3%) , 100,000 or more (7%).
FINDING #1: 46% OF NEW HIRES WILL FAIL WITHIN 18 MONTHS
In the landmark Hiring For Attitude study, we discovered that 46% of newly-hired employees will fail within 18 months, while only 19% will achieve unequivocal success. Leadership IQ had each of the 5,247 hiring managers in the study rate their new hires at 6 months, 12 months, 18 months, and 24 months. A “failed” hire was not limited to employees who were terminated, but also included those who were rated as “would not hire again,” left under pressure, received disciplinary action or significantly negative performance reviews.
FINDING #2: 89% OF HIRING FAILURES ARE THE RESULT OF ATTITUDE, NOT A LACK OF TECHNICAL SKILLS
Contrary to popular belief, technical skills are not the primary reason why new hires fail; instead, poor interpersonal skills dominate the list, flaws which many of their managers admit were overlooked during the job interview process. When a new hire was determined to be a “failed hire,” the hiring managers completed a survey to assess why the new hire failed. The study found that the Top 5 reasons why new hires failed were as follows:
- 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 ones 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.
This is NOT because companies shouldn’t assess technical skills, but rather because companies are already quite adept at assessing candidates’ skills. For instance, if a hospital needs to hire an ICU nurse, there are literally tests of critical care nursing competence. If a software company needs Blockchain developers, there are literally tests of Blockchain expertise. And so on. By contrast, assessing candidates for attitude (e.g., coachability, motivation, etc.) is often neglected in the hiring process.
While there are companies that espouse a “hire for attitude train for skill” mantra, the truth is that in most situations, companies can actually hire for attitude AND hire for skill. What prevents that from happening is simply that companies don’t focus enough energy on hiring for attitude. [Note: the Top 5 reasons why new hires fail only account for 92% of hiring failures; the remaining 8% was distributed across a variety of generally attitudinal factors].
FINDING #3: 82% OF HIRING MANAGERS SAW SIGNS THAT THEIR NEW HIRE WOULD FAIL
While the failure rate for new hires is distressing, it should not be surprising: 82% of managers reported that in hindsight, their job interview process with these employees elicited subtle clues that they would be headed for trouble. These warning signs included negative language, answers deemed as power-hungry or arrogant, offering generalities rather than specifics, the use of absolute language (words like Always or Never), disparaging former colleagues, and more.
Why didn’t managers act on those warning signs? Hiring managers reported that they were managers were too focused on other issues, too pressed for time, or lacked confidence in their interviewing abilities to heed the warning signs.
FINDING #4: MOST COMPANIES SAY THAT EMPLOYEES DON’T HAVE THE RIGHT ATTITUDES TO FIT THEIR CULTURE
When Leadership IQ recently surveyed 1,463 Human Resources Executives in 2020, the overwhelming majority indicated that they still had many employees who did not have the right attitude to fit their corporate culture. As you can see in the chart below, only 2% of HR Executives indicated that everyone in their company had the right attitude to fit their corporate culture, and only 12% said that 90% of their current employees had the right attitude. By contrast, 56% of HR Executives said that 50% or fewer of their current workforce had the right attitudes.
FINDING #5: ONLY 15% OF COMPANIES HAVE DEFINED THE ATTITUDES THAT MAKE THEIR HIGH PERFORMERS SO SPECIAL
It’s hopefully obvious that when a company says they want “to hire for attitude,” one of their first steps needs to be defining the attitudes that differentiate their high performers (i.e., their best employees) from everyone else. Otherwise, how can a company expect to hire for great attitudes when they don’t truly understand what comprises those great attitudes? Unfortunately, only 15% of HR Executives say that their company has thoroughly defined the attitudes that distinguish their highest performers from everyone else.
FINDING #6: ONLY 20% OF COMPANIES HAVE DEFINED THE ATTITUDES THAT MAKE THEIR COMPANY UNIQUE
Along the same lines as the previous finding, only 20% of companies have thoroughly defined the attitudes that separate their organizational culture from other companies. Too many companies try to hire for the kinds of people that work at Southwest Airlines or Google or the Ritz-Carlton (or wherever). But the reality is that every corporate culture is unique, and without understanding the attitudes that define our unique organization, it’s nearly impossible to hire people that will fit our culture.
FINDING #7: ONLY 46% OF COMPANIES HAVE ABOVE AVERAGE EMPLOYMENT BRANDS
One of the easiest ways to create an appealing employment brand (or employee value proposition) is to highlight the attitudinal characteristics that make this particular culture unique. Some cultures move quickly, others are more methodological and thorough. Some cultures are entrepreneurial, others are creative, while others still are hierarchical, with fancy corner offices. None of these corporate cultures or attitudes is better than another; rather each is unique and appeals to different types of candidates. However, the data from HR Executives shows that the majority of companies have not done nearly enough to clearly define and articulate their attitudes, and thus, their employment brand.
FINDING #8: ONLY 39% OF COMPANIES SAY THEIR RECRUITING PROCESS REPRESENTS THEIR EMPLOYMENT BRAND
Even if an organization has a well-defined employment brand, it may still not be enough to create an effective recruiting process. As you can see in the chart below, only 9% of HR Executives think their recruiting process very frequently represents their corporate brand. Meanwhile, 25% say that their recruiting process rarely or very rarely represents their corporate brand.
FINDING #9: 74% OF COMPANIES ARE NOT GATHERING ENOUGH FEEDBACK ABOUT THE EFFECTIVENESS OF THEIR RECRUITING PROCESS
One of the fastest ways to gather data to improve your company’s ability to hire for attitude is by getting feedback from new hires. After all, as people who have recently experienced the actual process, they are uniquely positioned to measure your company’s effectiveness at hiring for attitude. And yet, as you can see in the chart below, only 26% of companies are frequently or very frequently gathering feedback from new hires. Meanwhile, 74% are very rarely, rarely or occasionally gathering insight about the recruiting process from new hires.
FINDING #10: 85% OF COMPANIES ARE FAILING TO GET FEEDBACK ABOUT THEIR RECRUITING PROCESS FROM THE MOST VALUABLE SOURCE
There’s an old concept in sales that suggests the best source of feedback isn’t from your customers but rather from the people who chose to go with a competitor. Similarly, in recruiting or hiring for attitude, one of the greatest sources of candid feedback will come from the candidates who rejected our company’s job offer. And yet, shockingly, only 3% of HR Executives say their company very frequently gathers that feedback, while 12% say their company frequently gets it. That means roughly 85% of companies are failing to regularly access one of the greatest sources of data about the effectiveness of their recruiting process.
FINAL THOUGHTS ABOUT WHY NEW HIRES FAIL
The typical job 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 hire’s success or failure. Do technical skills really matter if the employee isn’t open to improving, alienates their coworkers, lacks emotional intelligence and has the wrong personality for the job?
In addition, the study found no significant difference in failure rates across different interviewing approaches (e.g., behavioral, chronological, case study, etc.). However, 812 managers experienced significantly more hiring success than their peers. What differentiated their job interview approach was their emphasis on interpersonal and motivational issues.
Highly perceptive and psychologically-savvy interviewers can assess employees’ likely performance on all of these issues. But the majority of managers lack both the training to accurately read and assess candidates, and the confidence to act even when their assessments are correct.
Hiring failures can be prevented. If managers focus more of their interviewing energy on candidates’ coachability, emotional intelligence, motivation and temperament, they will see vast improvements in their hiring success. Technical competence remains the most popular subject of interviews because it’s easy to assess. But while technical competence is easy to assess, it’s a 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. And the human cost can be even worse.