The high cost of leaders who stay in the weeds
Most recruitment boards can tell you exactly how their consultants are performing. They know placement numbers, billing targets, conversion rates and pipeline metrics down to desk level. But when I ask that same board how their leadership team is performing, the room goes quiet.
“They’re doing fine.”
“We have good people.”
And when I push for evidence, few can articulate what good leadership looks like, let alone measure whether senior people are genuinely adding value.
This gap is dangerous. Leadership teams consume major salary costs and have disproportionate influence over performance, yet they face far less scrutiny than the consultants they manage.
The belief that senior people must be performing because they are experienced and well-paid is just that: a belief.
Don’t reward poor leadership
Most agencies evaluate senior team performance through proxies that reveal very little. They treat:
Team outcomes as proof of leadership success
Tenure as a marker of capability
Activity (meetings, reports, decisions) as evidence of value
None of these tell us whether leaders are actually improving the business, or simply managing what already exists while adding overhead.
The firms that address this blind spot recognise that leadership requires different metrics from consultant performance. Leadership is about building capability, executing strategy, and creating the conditions for sustained operational and commercial improvement, not making placements.
In many firms, leaders “drop down” into comfortable operational tasks instead of building capability. Managers then get dragged down another level.
The result? Role compression. Everyone operating one layer below where they should, with no one actually leading.
Leadership metrics must reflect what leaders are actually paid to do: improve capability, execution and performance. Bonuses tied to revenue alone reward headcount growth rather than efficiency. This masks weak management. Guardrails must ensure that leaders only hire when efficiency improvements justify it - and personal billings can’t camouflage poor leadership.
Leaders must also develop successors or lose the right to promotion. And where multiple leaders operate at the same level, shared metrics should break silos and force collaboration.
Three indicators that leadership is adding value
Strategic clarity: A clear direction, consistent priorities and decisions aligned with long-term goals.
Operational capability: Productivity goes up. Processes become efficient. Quality becomes consistent. Key-person dependency reduces. These are measurable outputs, not abstract values.
Commercial performance: Better retention, higher deal values, stronger win rates, more efficient conversions. Good leadership enhances commercial performance; it doesn’t just protect it.
A standout example comes from a mid-tier engineering recruitment agency I worked with. Their leaders were perpetually anchored to the “here and now”, obsessing over hitting the current month’s fees, despite having agreed a multi-year strategy. Leadership meetings became firefighting sessions, instead of focusing on forward planning.
We introduced future-only leadership sessions: no discussion of the current month allowed. Leaders now focus on technology, sales strategy, pipeline development, headcount planning and capability-building.
Without this, the business had been stuck in a monthly crisis cycle that prevented strategic movement.
The hidden cost of leaders who don’t lead
When leadership teams fail to deliver real value, the damage runs far deeper than their salary cost.
The business begins to stagnate because nobody is pushing for innovation or improvement. Consultants notice quickly; resentment grows as they watch senior people earn significant money without meaningfully lifting the business. Strategic opportunities slip past unnoticed because leaders are absorbed in day-to-day operations rather than shaping market position or building competitive advantage. Over time, a quiet tolerance for mediocrity emerges. If senior people aren’t held to high standards, it becomes almost impossible to expect them from anyone else.
I’ve seen agencies where leadership accounted for 15–20 percent of total revenue yet delivered almost no measurable performance improvement. The opportunity cost in those situations is enormous. That same investment, channelled into technology upgrades, staff development, or market expansion, could have accelerated growth and fundamentally changed the business’s trajectory.
Hold leaders to the same standards as consultants
The firms that get leadership right start with a basic but rare step: they define what good leadership means. Then they map it to measurable outcomes.
Examples of leadership KPIs include:
Reducing time-to-competence for new consultants
Increasing cross-selling rates
Improving client retention in specific segments
They implement mechanisms to evaluate progress and then, most importantly, they act when leaders don’t deliver. In most agencies, senior underperformance is tolerated far longer than consultant underperformance.
Fix leadership gaps without burning down the house
When performance issues emerge, replacement isn’t automatically the right answer. Sometimes the challenge is as simple as unclear expectations, a leader who lacks sufficient authority to act, or a mismatch between their capabilities and the demands of the role. In other cases, the gap comes from underdeveloped strategic or operational skills rather than lack of potential.
One of the biggest traps I’ve seen repeatedly is the promotion of “big billers” into leadership. The assumption is that exceptional deal-making naturally translates into leadership capability. It doesn’t. In fact, it often backfires. Top billers tend to retreat into doing deals because that’s where they feel most confident, leaving the actual leadership responsibilities like coaching, capability-building, process improvement, long-term planning largely untouched.
Compounding this is the industry’s habit of “grandparenting,” where knowledge and behaviours are passed down informally from one leader to another. What gets shared is often outdated, subjective, and rarely adjusted to reflect new market realities or evolving client expectations. Instead of developing modern leadership capability, it recycles what worked years ago, regardless of whether it works now.
This is why looking beyond the obvious choices matters. Some of the most effective leaders I’ve worked with came from L&D backgrounds or were individuals with particularly high emotional intelligence. They understood people, performance, and development far more deeply than traditional billers. And because they weren’t fixated on personal revenue, they were far better at building capability across teams.
High-performing businesses treat leadership development as a strategic investment. They also accept when the business outgrows its current leaders. Like sports teams promoted to a higher league, recruitment firms need leaders with experience performing at “higher altitude.” As businesses scale, the leaders who got them there may not be the leaders who can take them further.
This is even more critical during valuation or sale. I’ve seen acquirers interrogate leadership teams as aggressively as they examine numbers. Weak leadership will depress valuation multiples where exceptional leadership increases them.
Your leadership team is either an asset, or a liability
Companies with strong leadership teams do more than improve current performance. They can execute strategy with discipline, adapt quickly to market change, scale more efficiently, and attract better talent and command higher valuations.
Strong leadership reduces risk, increases margin potential and accelerates growth. And investors know that leadership quality is one of the biggest indicators of whether a recruitment business will continue to grow or stall out.
