Most senior hires fail not because of the wrong person, but because the operating model they were hired into was not designed for them to succeed.
The total cost of a failed senior hire is 1.5 to 3 times annual salary. It includes the direct costs of recruitment, onboarding, and severance, and the indirect costs of lost momentum, damaged team morale, and the strategic initiatives that stalled while the role was being filled and refilled.
Most businesses attribute senior hire failures to the wrong person being selected. The evidence does not support this. In most cases, the person was capable. The operating model they were hired into was not designed for them to succeed.
1. The role was designed around the previous person. The role description was written to capture what the previous incumbent did, not what the business needs the role to deliver. The new hire is measured against an implicit standard they were never told about.
2. Overlapping accountabilities. The new hire's role overlaps with other senior roles in ways that create political friction rather than productive collaboration. No one has defined where one role ends and another begins.
3. Unclear decision authority. The new hire does not know what decisions they can make without escalation. They either over-escalate (frustrating their manager and slowing the business) or under-escalate (making decisions they did not have the authority to make and creating political problems).
4. Vague performance measures. The new hire is told to "drive growth" or "improve operations" without specific, measurable outcomes and a clear time horizon. Twelve months in, the assessment of their performance is subjective and contested.
5. An unsupportive team structure. The new hire is set up to deliver outcomes that require the cooperation of teams or functions that do not report to them and are not aligned to their priorities. They are accountable for results they cannot control.
Before making any senior hire, answer three questions:
1. What specific outcomes does this role exist to deliver, and how will they be measured?
2. Does the current operating model support those outcomes, or does the model need to change before the hire can succeed?
3. What would need to change — in structure, governance, or team design — for this hire to succeed?
If you cannot answer these questions clearly, the hire is premature. Design the role first, then hire to the design.
Loop Business Consulting works with businesses before senior hires to design the role and the operating model context in which the hire will operate. We also work with businesses after a senior hire has failed to diagnose whether the failure was a people issue or a model issue — and to redesign the model before the next hire is made.
Contact us at [loopbc.com.au](https://www.loopbc.com.au) to discuss senior hire design and operating model readiness.
Loop Consulting Group works with Australian businesses scaling from $5M to $50M. If this question reflects a challenge you're facing, let's talk.