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Richard O'Sullivan

SMEs 'suffering losses' through failed senior appointments

SMEs are experiencing a loss of growth and opportunities as a result of failed senior appointments, according to new research.

The study from executive search and interim management firm Intramezzo shows 80 per cent of venture capital and corporate venture capital fund managers have always or frequently failed to achieve expected business plan forecasts because of failed appointments. Nearly three-quarters (73 per cent) reported missing commercial milestones.

Nine out of 10 said they have experienced an unsuccessful failed hire, which they said had cost them between 10 and 60 per cent of lost annual growth in a portfolio company.

Seventy per cent said they a bad executive appointment had resulted in a failure to attract further funding, while 52 per cent said they had lost other staff and 48 per cent said it had delayed exit plans.

More than two-thirds (67 per cent) said that distraction at management level caused by the upheaval associated with failed appointments had frequently left to lost opportunities.

For 84 per cent of investors, the biggest issue when searching for talent is finding someone with entrepreneurial experience, mind set and a cultural fit.

Georgina Worden, client director at Intramezzo, said: "Senior hires can make or break a business, not only in terms of initial investment support but also when it comes to reaching business goals or maximising opportunities. If the UK hopes to find the next tech unicorn, organisations must invest in the necessary resources to aid the executive hiring process. Finding the right person to take a company where it needs to go isn't an easy task, it cannot simply be a question of culture, for example. Mapping a person's experience and skills against the business's vision and needs is integral. Thankfully, an increasing amount of organisations are giving talent capital equal weighting to investment capital. These companies are set to thrive in the years ahead and gain a competitive advantage across the market.

"While considering a candidate's entrepreneurial history is vital when hiring, it is also important to think about what traits the leadership team needs as a whole. For instance is the CEO's entrepreneurial passion complemented by the COO's commitment to the day-to-day running of the business? A lack of just one of these assets could be detrimental to success.

"The processes used to find senior appointments should be as rigorous as possible and should constantly be reviewed and improved to attract candidates who enhance the team by bringing something different to the business. Setting ambitions high and looking beyond existing networks, geographies and known sectors in order to find those world-class individuals who can make the biggest impact is key. As long as organisations are clear about what good looks like to them, then the risk of failed appointments will be much reduced."

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