Cost of a Bad Executive Hire UK: Drive SME Business Growth

Since May 2005, we have been supporting SME businesses to recruit key leadership roles. We have helped founders /owners OR directors to make their first board appointment. We have helped growing businesses bring in the senior leaders who have taken them to the next level, and if we are being honest, we have also seen what happens when a key appointment goes wrong. It’s certainly not pretty, and it can be very expensive.

A failed executive hire at the £100,000 salary level can cost your SME business over £1,000,000. That’s not a made-up number, that’s from a paper written by Harvard Business Review. And, 89% of those failures come down to cultural misalignment, not a lack of skills or experience. Let that sink in for a moment!

From our 21 plus years of recruiting leaders for our SME clients, we have reflected on the journey we have had and below is everything we have learned and how we now support our SME clients to minimise the risk of a bad leadership appointment.

Is Your SME Ready for a Senior Leadership Hire?

THIS GUIDE IS FOR YOU IF…

You’re making your first board-level appointment and the pressure feels immense
You’ve been burned by a senior hire that looked brilliant on paper
Your business has scaled and your leadership team needs to scale with it
You want to understand what proper executive search actually looks like
You’re creating a new director or C-suite role and there’s no predecessor to benchmark against

I get it. The pressure is on for this next hire.

We have this conversation with SME business founders / owners and directors all the time. They know how important this recruitment is. They can feel the weight of it. And they’re right to feel that way, because the data backs up their instincts.

Harvard Business Review (HBR) found that the cost of a failed executive hire can reach up to 10 times the individual’s annual salary [1]. On a £100k salary, that’s potentially over £1,000,000. And that’s not just the recruitment fees and wasted salary. It’s the lost productivity across the wider team, the damaged client relationships, the knock-on effect on morale, and the strategic opportunities you missed while the wrong person was sitting in that chair. HBR also published that 50% of all executives who change jobs or get promoted fail in the first 18 months.

And here’s the thing that really gets me. Bain & Company‘s research shows that top performers are roughly four times as productive as average performers [5]. Four times. The difference between getting this right and settling for someone who looks “good enough” isn’t marginal. It’s transformational.

The “Gut Feel” Gamble And Why It Catches So Many SME Business Leaders Out

Here’s a statistic that should make every SME business owner / director sit up: within the first 18 months of a new executive appointment, there’s a 50% chance that person will leave your organisation [1]. Half GONE within 18 months!!

So why? Why is the failure rate so high? It’s rarely about skills or experience. Most candidates who get to the final stages of a senior appointment can do the job. The problem is what happens after they start.

“89% of hiring failures were due to issues with attitude and cultural fit, NOT a lack of technical ability.” – Leadership IQ study of 20,000 new hires [3]

Leadership IQ studied 20,000 new hires and found that the main reasons people failed were a lack of coachability, low emotional intelligence, poor motivation, and a temperament that just didn’t match the team they were joining [3]. In other words, the things that are hardest to spot in a traditional interview are the things that matter most.

We get it. Most SME business owners rely on “gut feel”. You meet someone, you like them, they seem to get what you’re about, and you make the call. Doug Mackay, our Managing Director, has done it himself when recruiting for Collingwood in the early days. But, when the financial and cultural risks are this significant, “gut feel” on its own isn’t enough. In fact, it’s a huge gamble and the odds aren’t in your favour.

McKinsey‘s research backs this up. Their surveys consistently show that “failure to attract and retain top talent” is the number-one concern among CEOs globally, yet only 9% of leaders are confident their current approach is up to the job [4]. That gap between knowing how important it is and actually having a process that works is where most SME businesses we speak to come unstuck.

The challenge is clear. Cultural alignment is the single biggest factor in whether a senior hire works out, but it’s also the hardest thing to measure through a CV and a couple of unplanned interviews. You need a different approach and we have created one alongside a number of our longest serving clients.

What We Do Differently at Collingwood

Over the past few months, we’ve had more conversations about talent strategy than at any other time in our 21 year history. Why? Because forward-thinking SME business leaders are realising that getting the right people around them isn’t just a recruitment issue, it’s a growth driver.

Our End-to-End Talent Consultancy is a robust process we’ve developed and refined over two decades of partnering with SME businesses. It’s not a theoretical model and it’s not a sales pitch, it’s how we actually work, on every assignment, because we know it delivers. Furthermore, it is why new clients choose to partner with us and why existing clients continue to.

We go beyond the CV and the standard interview. We position ourselves as your strategic talent partner / advisor, NOT a basic recruiter or a supplier of CVs. We’re transparent about what we’re doing, we involve you in decisions, and we use hard data to back up our thoughts and recommendations. If this is a newly created role or a first-time board appointment where the stakes feel especially high and there’s no predecessor to benchmark against, this process is designed to give you the confidence to get it right but it leaves “gut feel” behind.

PHASE	FOCUS	WHAT THIS MEANS FOR YOU
1. Discovery & Alignment	Understanding your business, its strategy, its culture, the role, and what success looks like	A clear, shared brief that ensures we are aligned before we go to market
2. Partnership & Planning	Agreeing how we work together, update cadences, timelines, and communication	You’ll know what’s happening at every stage. No black box, no surprises.
3. The Search	Transparent, collaborative candidate identification with weekly check ins to align, discuss “live” data and ensure we are aligned every step of the away	Better decisions based on real insight, not just CVs
4. The Science of Fit	Extended DISC assessment of your leadership team and then each candidate so you can see the behavioural impact they will make	Data-driven evidence of cultural alignment
5. The Decision	Multi-stage interview and assessment process	Total confidence in your final choice of candidate

Here’s how the process actually works.

STEP 1: Discovery & Alignment

Good appointments start with us properly understanding what you’re looking for. We kick off every assignment with a thorough briefing to make sure we’re completely aligned on the role, the responsibilities, and the type of person who’ll succeed.

We sit down with you to understand your business objectives, the specific challenges of the role, and what ‘good’ looks like. We then work with you to create a compelling Assignment Specification that accurately describes the opportunity and will attract the right calibre of candidate. We also create bespoke marketing collateral that are proven to attract and engage target candidates into a discussion with us about your opportunity. Our objective is to identify and attract “passive” candidates who are performing well in their current role and not just candidates who happen to be job-hunting at the time.

This might sound straightforward, but it’s where many searches go wrong. If the brief isn’t detailed and agreed, everything that follows is built on a pretty shaky foundation. We take the time to get it right so you don’t waste yours further down the line.

What this means for you: A clear, shared picture of what you need. No assumptions, no ambiguity, just a solid, transparent and “black and white” foundation.

STEP 2: Partnership & Planning

Your time is valuable and we respect that. Here, we agree on the practicalities so the process runs smoothly and works around your schedule.

We agree how often we’ll update you and in what format: video calls (our ideal and recommended method) OR written updates. We deliver the whole recruitment process through an online portal which you can have access to. This will allow you to view what we are doing whenever it is convenient for you. We will propose out a realistic timeline, including key milestones, interview dates and we lock in your availability from the start of the project. This avoids the situation we’ve seen too many times: a great candidate is ready to meet you, but your diary’s full for three weeks and by the time you’re free, they’ve lost interest.

What this means for you: You know exactly what to expect and when. No surprises, no chasing.

STEP 3: The Search

This is where many executive search firms go quiet. They take the brief, disappear for a few weeks, and then send over a stack of CVs for you to sift through. That’s not how we work.

We keep you informed and involved throughout. We put a weekly call in the diary with a clear agenda to update you on progress, discuss the candidates we’re speaking to, so we can use live data to make decisions together. In the first week, we share a handful of “Navigator Profiles”, example candidates that help us calibrate whether we’re on the same page about the type of person you’re looking for, before we go too far down the line.

Crucially, we discuss candidates with you properly. We give you the context and insight you simply can’t get from a CV. We talk about their motivations, their career trajectory, what they’re looking for, and how they came across in conversation. This means you’re making decisions based on real understanding, not just what’s written on paper. It also means you’re not wasting time interviewing people who aren’t right. As a values driven executive search consultancy, Collingwood are clearly your brand ambassador, but we are also focused on doing the right thing by candidates. Ethically, we only want to make an appointment that is right for both parties.

What this means for you: You’re in control and fully informed at all times. Better decisions, and less wasted time.

STEP 4: The Science of Fit

This is where our process really sets itself apart, and it’s the bit we are most passionate about. We know from the data that 89% of hiring failures come down to cultural misalignment [3]. So, we’ve built a step into our process that directly addresses this. We use the Extended DISC assessment, a scientifically validated behavioural profiling tool used in over 112 countries to map the behavioural and communication styles of your existing board and then measure every final-stage candidate against it.

We’ve been using these psychometric tools successfully for over 20 years. Here’s how it works:

We map your board. Each board member completes a short online Extended DISC assessment which takes about 10 minutes. From these, we build a Team Map: a visual picture of your board’s collective behaviours, showing communication styles, decision-making tendencies, and, as a board or leadership team, where the gaps are.
We assess the candidates. Every candidate who reaches final interview completes the same assessment, giving us an objective, comparable profile for each person.
We overlay and compare. We place each candidate’s profile onto your leadership Team Map. This is where the real value is. It lets us have a proper, evidence-based conversation with you about three critical things:
- Complimentary Strengths: Does this candidate fill a gap? If your leadership team is strong on detail and process but could do with someone more decisive and action-oriented, the data makes that visible. This isn’t about finding a clone of your existing team, it’s about making a strategic appointment that strengthens the overall balance.
- Potential Friction Points: Are there areas where this person’s natural style could clash with how your team currently operates? Every team has friction points. The key is knowing about them before you make the hire, not discovering them six months in when the damage is already done.
- Overall Leadership Team Impact: How will bringing this person in change the dynamic of the entire leadership team? We find that a lot of business founders recruit employees in the same behavioural mould as themselves. We can show you how their presence is likely to affect communication patterns, decision-making speed, and the overall culture of the board. That’s a level of foresight a traditional interview process simply can’t give you.

What this means for you: You’re not relying on instinct alone. You’ve got real evidence that the person you choose will work well with your existing team. That dramatically reduces the risk of a hire that looks brilliant on paper but doesn’t work out in practice.

STEP 5: The Decision

We put every serious candidate through a rigorous, multi-stage process so you can be certain you’re making the right choice. We develop and suggest an interview process bespoke to the role you are recruiting and your needs. It could look something like this:

Initial Call (60 minutes): A conversation with key members of your team to check cultural alignment and give the candidate a proper sense of the opportunity and where the business is heading. This is as much about them getting a feel for you as it is about you assessing them.
Technical Interview: A focused session to properly test the candidate’s technical and functional abilities for the specific role. Can they do the job? This is the foundation everything else sits on.
Final Interview (2 hours): A comprehensive session combining a candidate presentation, a competency-based interview, and a detailed discussion informed by the Extended DISC results and their track record to date. This brings everything together, skills, experience, cultural fit, behavioural data into one thorough assessment.

And we don’t stop there. We manage the offer and negotiation process on your behalf, handle any counter-offer situations, and provide structured onboarding guidance to give your new leadership hire the best possible start. We’ve invested too much in getting this right to let it fall apart at the last hurdle.

What this means for you: By the time you make an offer, you know this person inside out. They’ve been tested from every angle, and you can move forward with real certainty.

Why This Matters If You’re Running an SME Business

We built this process because we understand what’s at stake for you. As a founder / owner or director, you’re not just filling a vacancy, you’re making a decision that will shape the future of your business. If this is a newly created board role, the pressure is even greater. There’s no predecessor to benchmark against, no established playbook. You need to get it right first time.

We’ve been doing this for over 20 years. We’ve helped founders build their first boards, replace outgoing directors, and bring in the senior leaders who’ve taken their businesses to the next level. We’re so proud that over 75% of our annual fees come from repeat clients, and 98% of the companies we work with come back to partner us again. That tells you something.

True partnership, not a supplier. You’re involved in every decision. We explain our thinking, share our market intelligence, and work with you – not for you.

Proactive search, not reactive. We find the candidates who aren’t on job boards – the people quietly excelling in their current roles who’d be transformational for your business.

Data, not gut feel. The Extended DISC board mapping gives you objective evidence to support your instincts – not replace them, but validate and inform them.

Risk reduction at every step. Every phase is designed to reduce the chance of a costly mis-hire – from the first briefing to the post-offer onboarding support.

What sets this apart from a traditional recruitment process is the combination of partnership, transparency, and data. You’re never left in the dark. You’re involved in every decision. And when it comes to the critical question of cultural fit, you’ve got objective evidence to support your judgement – not just a hunch.

Frequently Asked Questions

How much does executive search cost for a small business? Fees typically range from 25% to 33% of the appointed candidate’s first-year salary. It’s a meaningful investment, but weigh it against the cost of getting it wrong. Harvard Business Review puts that at up to 10 times annual salary. Potentially over £1,000,000 for a senior role. A rigorous search process isn’t a cost; it’s risk mitigation at worse and a positive investment at best.

What’s the real failure rate for senior hires? It’s worse than most people think. Harvard Business Review found that half of all new executives are gone within 18 months [1]. And the main reason isn’t skills; it’s attitude and cultural fit. That’s a 50/50 coin toss on one of the most important decisions you can make.

How do you actually assess cultural fit? We use Extended DISC, a validated behavioural assessment tool, to map your existing leadership team’s collective profile, then overlay each final-stage candidate against it. It moves cultural fit from gut instinct to objective, data-driven evidence. We’ve been using it successfully since 2005.

What is Extended DISC? It’s a scientifically validated behavioural profiling tool used in over 112 countries. It maps communication preferences, decision-making tendencies, and working styles. In our process, we use it to build a Team Map of your leadership team and then compare candidates against it so you can see exactly how each person would fit into your existing leadership dynamic.

How long does an executive search take? Typically 5 to 10 weeks from briefing to offer acceptance, depending on the seniority of the role and the market. We would always rather take an extra couple of weeks to get it right than rush and end up with 18 months of disruption from the wrong appointment.

What’s the difference between executive search and a recruitment agency? A recruitment agency advertises roles and search their candidate databases before filtering CVs and presenting them to you to interview. Executive Search or headhunting proactively identifies and approaches the best candidates, and probably passive candidates, in the market. For senior leadership appointments, it consistently produces a stronger, more targeted candidate pool. And a true search partner goes well beyond CVs to assess and dig deeper to ensure shortlisted candidates can do the job but also align culturally.

What does a bad executive hire actually cost an SME? For a senior leader on £100k, it can cost over £1,000,000 when you factor in everything including wasted salary and fees, the cost of starting the search again, lost productivity, damaged client relationships, reduced morale, and the strategic opportunities you missed while the wrong person was in the role.

When should an SME use executive search rather than recruiting in-house? For board-level appointments, C-suite hires, newly created leadership roles, and any position where cultural fit is critical and the cost of a mistake is high. In-house recruitment works well for volume hiring and mid-level roles, but it lacks the market intelligence, candidate access, and assessment rigour you need for senior appointments.

More FAQs

Ready to Talk?

If you’re planning a board or senior leadership appointment and you want to make sure you get it right, Doug, our Managing Director, would welcome a conversation. No hard sell, no obligation, just an honest discussion about your business, the role, and how we can help.

We have been doing this for over 21 years. We know what works.

Get in touch today.

References

[1] Nawaz, S. (2017). “The Biggest Mistakes New Executives Make.” Harvard Business Review. hbr.org/2017/05/the-biggest-mistakes-new-executives-make

[2] Favaro, K., Karlsson, P. and Neilson, G. (2015). “The $112 Billion CEO Succession Problem.” Strategy+Business (PwC Strategy&). strategy-business.com/article/00327

[3] Murphy, M. (2015). Hiring for Attitude. Leadership IQ. leadershipiq.com

[4] Keller, S. and Meaney, M. (2017). “Attracting and Retaining the Right Talent.” McKinsey & Company. mckinsey.com

[5] Mankins, M. (2014). “How to Hire More Top Performers.” Bain & Company. bain.com/insights/how-to-hire-more-top-performers/