Latest / Hiring & Firing with Fexingo: Recruitment, Performance, and Workforce Decisions / How One Bad Interview Process Cost 10 Million Dollars
Transcript
- Lucas: So there's a number that's been rattling around in my head since I read a 2024 study from the firm Braintrust. They looked at 68 failed executive hires across 40 companies and calculated the average direct cost per failed vp level hire at one point four million dollars. Luna: One point four million. That's not just severance, right? That's recruiter fees, lost productivity, maybe some integration costs? Lucas: Exactly right. Severance is a chunk — typically six to twelve months for a VP — but then you add the recruiter's fee, which is often 25 to 30 percent of first-year comp. Then there's the opportunity cost of the team's time, the stalled projects, and honestly, the morale dip when the team watches a leader who doesn't work out. Luna: And the study didn't even try to quantify the soft costs — like damaged client relationships or lost institutional knowledge. That one point four million is probably conservative. Lucas: It is. And here's the part that really stopped me: Braintrust says 70 percent of those failures could have been caught before the second interview. Not after the offer. Before the second round. Luna: That's a huge claim. How do they back it up? Lucas: They did a forensic review of the hiring process for each failure. They looked at scorecards, interview notes, reference call summaries. What they found is that in almost all the cases, the warning signs were documented internally but then ignored or overridden. The classic pattern: the hiring manager loves the candidate's charisma, the structured scorecard flags three risks, and the scorecard gets buried. Luna: So the process exists but nobody follows it. That's a culture problem, not a process problem. Lucas: That's exactly it. One company in the study had a mandatory structured interview scorecard — every interviewer had to fill it out before the debrief. For this particular VP of Sales hire, four out of five interviewers noted concerns about the candidate's ability to manage a large team. One person wrote 'seems more comfortable as an individual contributor.' The hiring manager overruled them because the candidate had a great demo. Luna: And that VP of Sales lasted how long? Lucas: Seven months. Severance was four hundred thousand dollars. Recruiter fee was another one hundred fifty thousand. Plus the six months of lost sales productivity while they backfilled. Luna: It's such a human pattern though. You meet someone who is polished, confident, tells a great story. Your gut says hire. That structured scorecard feels like bureaucracy. Lucas: And that's the real enemy here — the feeling that structure is anti-intuition. But the data from Braintrust says the opposite: when companies actually used structured scorecards and weighted them equally, the failure rate dropped from about 45 percent for executive hires down to 22 percent. Luna: That's a massive improvement. So what were the specific red flags that kept showing up in those 68 failed hires? Lucas: They grouped them into three buckets. Bucket one: the candidate couldn't articulate how they built or led a team. They talked about their own achievements but never said 'I hired five people, I developed two into managers, I let one go.' Bucket two: they had no verifiable references who had seen them manage underperformance. And bucket three: they consistently dodged questions about past failures — not in a polished way, but in a way that suggested they hadn't reflected. Luna: The reference thing is interesting because we did an episode on reference checks failing. But this is a specific pattern — not checking if someone has actually managed people through a tough performance situation. Lucas: Right. Braintrust found that in 80 percent of the 68 failures, the company either skipped a formal reference call or only called the references the candidate provided — which are almost always positive. They never triangulated. They never said, 'Give me a peer from a different team or a direct report who left.' Luna: And if you're a VP candidate, you're probably smart enough to give references who will only say glowing things. So the company is essentially checking a box. Lucas: Exactly. The other thing that jumped out was the cultural-fit question. Most companies ask some version of 'How do you handle conflict?' but they don't dig into the specifics of the culture they're hiring for. Braintrust gave a great example: a company with a very collaborative, consensus-driven culture hired a VP who had only ever worked in command and control environments. The interview team noted he seemed 'decisive' — which was a positive in their minds — but nobody asked how he would handle a situation where his team disagreed with him. Luna: So they hired someone who was decisive in a culture that values deliberation. That's a recipe for tension. Lucas: It lasted about a year. The VP alienated three key directors, two of them quit, and the CEO eventually had to let him go. The cost? They estimated it at over two million when you include the lost talent. Luna: So what's the one thing a company can do differently starting tomorrow to avoid this? Because not every company has a Braintrust to audit their process. Lucas: The single highest-leverage intervention Braintrust identified was adding a structured case-study exercise in the final round. Not a brainteaser, not a presentation — a real-world scenario that the VP would face in the role. They found that when a case study was used and scored against a rubric, the failure rate dropped by 46 percent. Luna: Why does a case study catch things that interviews miss? Lucas: Because it forces the candidate to show their thinking in real time, not just talk about past results. The Braintrust report gave one example: a VP of Engineering candidate looked great on paper — strong pedigree, impressive past launches. But in the case study, when asked how they'd prioritize a backlog of 200 features with only three teams, they couldn't articulate a framework. They just said 'I'd talk to the product team.' That's not enough at the VP level. The company saved themselves a likely failed hire. Luna: So the case study acts as a forcing function. It reveals the candidate's actual decision-making process, not their rehearsed stories. Lucas: Exactly. And it's not about getting the 'right' answer — it's about whether the candidate can reason through ambiguity, handle constraints, and show self-awareness about what they don't know. Luna: We've been talking about this for a while, and it strikes me that conversations like this, where we dig into real data and practical fixes, are exactly the kind of thing that can actually help people in their jobs. And we do this without any ads interrupting — that's a deliberate choice. Lucas: It is. Look, if these episodes have ever helped you think differently about a hire, or saved you from a bad decision, the only way we keep this ad-free is through listener support. You can find that at buy me a coffee dot com slash fexingo. No pressure, just if the show has moved your work forward in some way. Luna: Yeah. And honestly, it's nice to know that people who find value in it can help keep it going. So back to those case studies — did Braintrust find any other bright spots among the companies that had fewer failures? Lucas: They did. The companies with the lowest failure rates — below 15 percent — shared two habits. First, they required a 'reference triangulation' step: at least one reference from a former peer, one from a former boss, and one from a former direct report. Not optional. Second, they had a mandatory 24-hour cooling-off period between the final interview and the offer decision. No same-day offers. Luna: The cooling-off period is interesting. It breaks the emotional momentum of 'we love this person, let's lock them in.' Lucas: Exactly. One CHRO they interviewed said that the cooling-off period had killed exactly one offer in two years — but that one offer would have been a disaster. The hiring team slept on it, came back the next day, and realized the candidate's comp expectations were way out of line with the role's scope. They withdrew the offer and later found a better fit. Luna: So the simple structural interventions — scorecards, case studies, cooling-off periods — they don't just reduce bias, they also reduce the influence of charisma and pressure. Lucas: That's the takeaway for me. The Braintrust study is really a story about process discipline. The companies that treat hiring as a high-stakes decision with checks and balances do dramatically better than those that rely on gut feel. And the cost of not having those checks is one point four million dollars per VP. Luna: And probably more than that when you count the team members who leave because of a bad leader. Lucas: Yeah. The study didn't even try to quantify the ripple effects on culture and retention. But we know from other research that a single toxic manager can drive away good employees at a rate of three to four times normal turnover. So the true cost of a failed executive hire is almost certainly much higher. Luna: Alright, so next time I'm in a hiring debrief and someone says 'let's just go with our gut,' I'll have the one point four million dollar number ready. Lucas: And the case study exercise. I'd start there. It's low cost, high signal, and it forces exactly the kind of thinking that structured interviews are supposed to capture.