Filling—and Emptying—the Leadership Pipeline

PUBLISHED OCTOBER, 2024

So, yes, we all know that it’s more cost-effective to retain a key employee than to replace one and that the price of failure can be a third to half of the replacement’s compensation. Again, we know the value proposition of organizational stability that comes from keeping the leadership team in place (Exhibit 1: Andy Reid and Steve Spagnuolo). And without doubt, we know that the leadership ranks began thinning out at the start of the pandemic and that the pipeline hasn’t been completely filled.

But still … there are times when you have to make a move in the best interest of both the organization and someone who would be better off on another career path.

Which raises the question: If that’s happening at the same time you’re trying to keep your pipeline full, which is the bigger challenge—hiring or firing? That’s a question we posed to a unique group of Kansas City business executives—the members of this year’s Ingram’s 250. Their responses just might prompt an astute reader to rethink the organizational approach to turnover, whether voluntary or involuntary. 

It is, says Jon Cook, CEO for the global digital marketing giant VML, a “great question. They both require serious due diligence and intuition. Hiring someone for a key role is especially exciting and fulfilling (and yes, I’m not exactly answering the question).”

Perhaps it’s an air of inevitability that goes along with firing that makes it so much easier for many executives to see hiring as the bigger challenge. But not everyone is rowing that same boat.

Firing

The choice between hiring and firing comes easily to Brad Bergman, chairman and CEO of the financial services firm MTC Holding Corp.”  “Firing. That means we failed twice,” he succinctly says.

“For me, firing is far harder,” says Burns & McDonnell COO John Olander. “It means I quit. Sometimes, quitting is the right thing and when that is the case, the sooner I do it, the better. But I’m not built to quit, so firing requires far more deliberation and energy.”

That’s spot-on, says Bill Ferguson, president and CEO of Central Bank of the Midwest: “Terminating someone’s employment is more challenging due to the bond formed with the individual and the belief you had in their potential for success,” he says.

Mike Bukaty, chairman and CEO of financial services firm Bukaty Companies, sees a measure of an executive’s own judgment factoring into decisions to cut someone loose. “Firing is harder,” he says, “because it is a recognition that we didn’t adequately prepare someone for the challenges of their role. It is always disappointing to realize someone was unable to achieve their full potential within our organization.”

Mark Dohnalek, president and CEO of Pivot International, lands in this camp, as well. “Firing is the most difficult if I had to pick one, not that it doesn’t have to be done at times, but obviously, delivering the news is not a fun experience for the recipient,” he says. “Obviously, if one properly takes the person in question through a proper process, it should not come as a complete shock, but still not everyone’s best day.”

Josh Herron, CEO of the fast-growth home services company Southwind, addresses the emotional component when he says, “Firing is always harder. People are not just numbers. They have lives, and firing them disrupts their lives and forces them into a new reality they didn’t ask for. That can be really hard to see. You think about their families and their financial well-being and you try to do your best for them on their way out, but it’s never easy.”

That’s one reason why Sam Huenergardt, CEO for AdventHealth’s Mid-America Region, takes the process personally when it comes to a staff of nearly 3,900 at three hospitals in the metro area. “Firing,” he says. “It means there’s been an error in my choice or in the onboarding, and it means I’ve failed the team I’ve asked them to join.” 

Mark Brandmeyer has his fair share of diversified hiring challenges with the multiple and varied holdings of Brandmeyer Enterprises, which range from construction services to pro baseball with the Kansas City Monarchs. Regardless of the venue, he says, “Firing is definitely harder as a leader. Hiring involves hope and optimism for the future while firing often means dealing with the disappointment of a relationship that didn’t work out. While necessary for the health of the organization at times, firing impacts not only the individual but the morale of the entire team. It requires a level of compassion and thoughtfulness that goes beyond the business aspect of the decision.”

The rapid-growth fast-food world that KBP Brands inhabits is a breeding ground for turnover, and the need to keep 21,000 people in place nationwide is one reason why CEO Michael Kulp says the bigger pain is “definitely firing. It never feels good when things don’t work out. Hiring is invigorating.”

Hiring

On the flip side, there are those who see a bigger hill to climb with hiring.

Count among them Bob Page, whose organization is now the biggest employer in the region (nearly 18,000 just in the metro area), has overseen more hiring in the past decade than perhaps any other regional CEO from his perch at The University of Kansas Health System.

“Hiring is the biggest opportunity and also one of the greatest challenges,” Page says. “We are grateful we can attract some of the region’s and nation’s best talent, but they also must be a cultural fit for our organization. With greater needs than ever for talent, it is a balance of filling much-needed positions and making sure we’re doing so with people who will be with us for the long term. If you get the hiring right, firing is much less of a concern.”

On that score, he’s in lockstep with the system’s Kansas City division president, Tammy Peterman. 

“Hiring to me is much harder,” she says. “The people you hire and bring into the organization send a message to staff already here and people across our communities about what is most important and valued by the organization. If you miss on the hiring piece, you impact existing staff, patients, and the communities we serve. We spend significant time and energy on getting the hiring right so the people we bring on board can live, breathe and fully promote our culture.”

Sharing that view is Chris Long, co-owner of wealth-management firm Palmer Square Capital and co-owner of the Kansas City Current. “I believe that it’s harder to hire,” Long says. “The right cultural fit for organizations like Palmer Square and the Current is important to success, and we don’t take that lightly. There are high expectations that come with being innovative, setting the standard and establishing a blueprint for other investment organizations and sports teams.”

The same goes for Michael Frazier, president and CEO of the region’s biggest residential real-estate brand, ReeceNichols. “Without a doubt, hiring is the tougher task,” he confidently asserts. “Bringing the wrong person on board can really set us back. Not only does it impact our team’s culture, but it also means spending extra time addressing the unmet needs that developed from not having the right person in place from the start. It’s crucial to get it right the first time around.”

Brad Lager, chairman and CEO of St. Joseph rail service provider Herzog Enterprises, concurs. “Hiring because you normally have a short time frame to spend with someone before making a decision,” he says. “If the time comes for us to go a different direction, we will have spent considerable time trying to make it work, and there is no other option.” With plans to hire as many as 400 people over the next 18 months—while addressing turnover among the 3,000 already on staff—the issue is close to top of mind for him. 

Rex Newcomer, president and CEO, of door manufacturer D.H. Pace, says the unknowns that come with bringing someone on board are not inconsequential. “When you are hiring, you are projecting performance,” he says. “When firing, you are judging actual performance. You have more factual data to make the latter decision.” He’ll begin collecting some of that data soon; already with 900 at the Olathe site and 3,500 company-wide, Newcomer says, “We are hiring.” 

At employee benefits specialist CBIZ, President Polly Thomas believes hiring is the bigger challenge. “It takes more time to do it correctly and truly get a sense of whether the opportunity and person is the right fit for our culture.” One reason shedding staff may be easier, she says, is that “more often than not, people who aren’t a good fit make the decision to leave” on their own.

The key to hiring correctly, Emery Sapp & Sons co-CEO Tim Paulson, is learning to navigate the hiring process effectively, which requires “discernment and experience. As a leader, I feel that hiring is more challenging because candidates will always bring their best presentation, references and impressions at the time of the interview.”

At Honeywell FM&T’s National Nuclear Security Campus, president Eric Wollerman sees the unique challenges in each function, but says the more difficult test is in hiring. “When you hire an employee, you have a vision of how you see that role operating and what you, your team, and the company need and want for a cultural fit. Finding that right person isn’t always easy, but when you do, great things can happen.”

In the sales world, says Sun Life senior vice president Marc Warrington, “Finding the right match between our company and new sales candidates is harder. So many individuals apply to be in sales, but very few understand the ups and downs of the occupation. Sales is a profession that takes dedication to be successful, and it allows the most talented in the field to shine. This also means it’s not meant for everyone, so we really dig deep when it comes to building out our sales teams.” 

Consider the hiring task of a higher-turnover organization, as Marc McEver faces with Olathe Ford, and it is easy to see why he believes hiring is the tougher nut to crack. “With 370 on board and approximately 10 coming and going each month, it takes a huge effort from the HR team,” McEver says. “The amount of time spent to onboard and train is enormous.”

With 2,000 area employees—more than seven times McEver’s staffing challenge—U.S. Bank’s market president, Tim Petty, points to what should be an obvious part of the equation: the time demand that goes with hiring. “We take a lot of time to do this right,” he says. “We believe in ‘team hiring’—that way, the candidate can get to experience the culture before they even accept the position. We also get to determine if they will be the right fit. If we get that right, people are happy and they stay, reducing turnover.”

At B-corporation Global Prairie, where the mission statement oozes a societal level of compassion, firing may be anathema, but it’s not as hard as bringing new folks in. “Hiring,” says co-founder Anne St. Peter. “Identifying leaders who have the right skills, are a cultural fit, and have the potential for growth over the long-term is a complex process.”

Philip Sarnecki, CEO and Managing Partner of RPS Financial Group has his irons in a number of fires with various holdings. But experience has taught him which dynamic presents the bigger task for him: “Hiring,” he says. “It’s more of an unknown.”

Two Sides, Same Coin

Then there are those who see the issues as indistinguishable in complexity.

That’s the view of Midwest Health’s president and CEO, Jim Klausman: “Both hiring and firing are equally difficult, particularly if you make the wrong hire, and understandably parting ways when the fit is not right,” he says. That’s something top of mind for Klausman, whose holdings include a number of golf courses along with his multiple senior-living properties—with 900 employees regionally and 5,000 overall, hiring issues are frequently on his daily calendar. 

At JE Dunn Construction, a family-owned company for 85 of its first 100 years, chairman Tim Dunn reflects on how that dynamic still comes into play with a nationwide team of 4,500 people.

“Making sure we have the right employees in the right positions is vital,” says Dunn, who also serves as the construction giant’s chief investment officer. “Our focus is always on supporting employees and their families. Hiring is extremely important to make sure we have the right people on our team. Because we are a family-first company and there is a human element with it, having to manage people out of the business is extremely challenging.”

The company’s president and CEO, Gordon Lansford, also sees firing as more difficult. “We care deeply about our employees and their families,” he said, “so it’s hard to let somebody go, but you have to do it in a high-performance organization.”

Steve Bernstein says the family dynamic is a part of the corporate culture at the advertising agency his father co-founded 60 years ago, Bernstein-Rein. “We consider ourselves a family business; as such, we are slow to hire and slow to fire,” he says. “It is easy to answer that firing someone is harder for a leader, but the truth may be the opposite. A family is made up of its members, and who you bring in shapes that family. Those decisions to hire, although the most fun, are also the most important.”

Charlie Tetrick, who views the world through a similar ad-agency lens, points to successful hiring and the role it has played in organizational growth for the past decade. “This allows us to attract some impressive talent, and our culture keeps them with us for many years,” he says. “Our average tenure for total employees is four years, eight months. Leadership’s average tenure is 11 years, three months; 54 percent of our employees have 15-plus years of experience in the advertising industry.”

Numbers like that take a lot of the air out of the tires when it comes to firing.

Adam Hill, president and CEO of logistics services provider The Scarbrough Group, says, “Hiring the right person for the right job is so difficult. The wrong hire can set you and the organization back a year or more, along with impacting your culture in ways you didn’t want or can’t explain.”