Have Tesco suffered from a common recruitment problem?

Replacing a senior level role within any organisation can be challenging and this is where market leading headhunters recognise the value they provide – they know the impact of finding the right person who can start in the role before it becomes time critical for their client.

This could have been one of the main challenges that faced Tesco during their recent £250m hole in their profit forecast fiasco, as they have had no actively involved Chief Financial Officer (CFO) since April with a new one originally not due to start until the 1st of December.

A common and significant challenge

This highlights a common and very significant challenge that faces organisations of all sizes when recruiting for senior positions. The vast majority of senior roles have 3 or 6 month notice periods, which are primarily designed to allow an organisation time to bring in a replacement.

On occasions, if the individual who is leaving is going to a competitor, an organisation may use all or some of this notice period as gardening leave to ensure the individual no longer has access to company confidential information that a competitor would benefit from. However, this can hinder an organisation more than it helps as it exacerbates the issue of getting a quick replacement.

As a result, many organisations, including those as big as Tesco, try to survive a substantial period of time without the senior position being filled and often don’t have the budget or inclination to pay what can be significant costs of filling the position on an interim basis whilst the perfect candidate is found.

Using a good headhunter to help

This is where using the right headhunter can be extremely beneficial. Not only will the best headhunters find the best person for the role, but they are also experienced negotiators who can help reduce notice periods and get someone into a position sooner.

A headhunter’s relationship with their client is also critical of course, and the more engaged and involved the headhunter is within their client’s business, the quicker they will become aware of potential vacancies, and therefore the sooner they can start work on filling that vacancy before it becomes time critical.

So much time is often wasted by an organisation in getting approval to recruit or going through an internal process first knowing there are unlikely to be suitable candidates, that an individual can have left a role before a headhunter is tasked with finding the best candidate to replace them.

Cost effectiveness

Many organisations are also put off by the perceived high cost of using a headhunter (on average 30% of year 1 remuneration), but these costs can pale into insignificance against the backdrop of appointing interims, or not appointing anybody at all.

Tesco may well have used a market leading headhunter and their issues may have arisen regardless of appointing a CFO sooner, or there may have been little scope to bring forward the new CFO’s appointment. However, the 11% drop in share price upon the market hearing about the reduced profit forecast and the lack of an actively involved CFO, highlights the significant cost a senior level vacancy can have on the market’s confidence in an organisation as well as the wider brand damage.

Arguably, senior level roles are even more important in smaller businesses where the loss of a senior employee can have a much greater impact, so whilst there may not necessarily be public shareholders to satisfy, the survival or competitiveness of a business may depend on a quick and suitable replacement. Getting recruitment wrong in the small and medium sized business sector can incur even greater costs.

Working with a market leading headhunter to replace a senior level role as soon as possible for organisations of all sizes could prove to be very cost effective indeed.

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