Four Factors in Evaluating a Bad Hire – Commercial Director

By Human Capital Group

28th November 2020

Hiring the wrong person for a pivotal role in your company can be catastrophic in any industry. Many of us have experienced this at some point – you’ve chosen someone for a role in the hope they will make a difference, but that difference comes in exactly the opposite way you were hoping.

In a regional property division, a bad hire can make all the difference to the success of a development, could cause a loss in profit or even destroy a previously functional team. A senior leader like a Commercial Director can be the lynchpin in a team or can be the thread that pulls it apart.

So how do we know if we’ve made a bad hire?

In recent months, we’ve had the pleasure of talking at length to two industry experts on the very subject of bad hires.

Andy Beasley spent upwards of 40 years in the housebuilding sector and was previously Regional Chairman of Bellway Central. Darren Humphreys was the CEO at SME Rectory Homes, Divisional MD at McCarthy & Stone and has spent extensive amount of time working at with big players CALA and David Wilson.

In our most recent webinar with them, our Managing Director Gerard Ball spoke to them specifically about Commercial Directors, and what factors you can use to evaluate whether you have made a bad hire.

They covered:

•What % to the overall profit do the Commercial Directors contribute?

•What interview stage attributes should you be looking for?

•What is the reason behind why Commercial Directors often step up to MD level?

•In 3/6 months’ after the hire of a Commercial Director, what markers should you be looking for?

You can see the webinar in full here (the position of Technical Director is discussed in the same session) but read on for the key points.

1. If the team a Commercial Director ‘acquires’ is working well and efficiently, what % do you think to the overall profit do they contribute?

Andy: “It’s difficult to put a specific percentage on a Commercial Director’s performance. I would always describe the Commercial Director as part of the ‘boiler room’ which meets that it’s a hidden necessity for the division – you can’t necessarily see the impact of it but without them the team doesn’t function. A poor Commercial Director can soon be spotted as you’ll be likely to hear complaints from all part of the business.”

Darren: “I agree – It really is a role that is fundamental in pulling all the functions and everyone together, finances, supply chains etc. If something goes wrong, then the implications can be huge.

“They have a whole host of challenges to deal with every day – delays, cost overcomes etc – and that can be catastrophic if they go wrong.”

2. What attributes are we looking for at interview stage?

Andy: “Realistically, you need someone who can communicate well with their teammates while also overseeing them. When I came into housebuilding in the 80s it was a relatively simple model whereas the expectations on people today are so much more.

“They need to be able to check and chase abilities to make sure multiple elements are delivered on time and simultaneously be on site to deliver units on time. This means you’d be looking for someone who comes across strongly who can keep their team together, deliver on time, get enquiries and orders out and someone who can report monthly on valuations.

“Ultimately, you need somebody with a fairly strong personality who can convince the interviewers that they can run a good team of people, deal with a lot of tasks and hit timescales under pressure… not much then!”

Darren: “You’ve really got to make sure you get someone who appreciates value rather than just cost, which is a common mistake. This could mean maybe choosing to put a cheaper but unknown subcontractor on a job which results in losing money and value in the long-term, which massively takes away from the short-term costs that may have been saved.

“At director level I really want to test whether someone can see the bigger picture and understand what the company is trying to achieve on a value level.”

3. What is the reason behind why many Commercial Directors often step up to MD level?

Andy: “To be a Commercial Director, you have to be quite a practical person who is used to seeing things on a monthly basis, as well as being quite numerate and detail focused. All these attributes are similar with someone who has the potential to be a good Managing Director.”

Darren: “The role of Commercial Director often touches every discipline, from technical, finance, construction, and even customer care. The fact that Commercial Directors deal with a very wide spectrum of the business and often see how much of it fits together can then make the transition to MD much easier.”

4. In 3/6 months after the appointment of a new Commercial Director, what achievements would you be looking for?

Andy: “Ideally you’d be looking for a high standard of monthly reports and valuations. Getting them in on time and consistently is key here. A new Commercial Director needs to make their mark without upsetting others – they need to find a good balance without upsetting the apple cart.

“Specifically, battles between the Building Director and Commercial Director need to be avoided, so good feedback from their fellow directors would be a great sign.”

Darren: “There’s often a healthy tension between the Building and Commercial teams – Interestingly, no tension means one is always winning and too much tension can be damaging to the whole division

“A good Commercial Director might be able to slow things down slightly and get involved in the design process before technical and infrastructure designs are finalised. This is really where they can add significant value.

Andy: “That’s a good point. Sometimes in the rush to get on site, costs can grow, whereas a brave and confident Commercial Director can slow the site design down slightly to find some savings.”

Darren: “If a Commercial Director is picking up a good-performing site, then it should be becoming obvious within 3 months, whereas poorly performing sites can take longer as they will be finding skeletons and dealing with them constantly. You would need someone who can communicate clearly, flag any issues and be able to propose constructive solutions.”