The High Cost of Getting It Wrong
When a senior leader fails, the consequences extend far beyond severance and recruiting fees. Research shows that a bad executive hire costs 3–5x their annual salary once you account for lost productivity, stalled initiatives, reduced engagement, and reputational damage (SHRM, 2022).
At the Director level, with average base pay of $220K (Salary.com, 2025), a single failed hire could cost around $660K–$1.1M. At the VP level, with average base pay of $320K (Glassdoor, 2025; SalaryExpert, 2025), the potential cost rises to $960K–$1.6M.
How Potential Losses Add Up
Traditional executive hiring methods (résumés, interviews, gut feel) are only about 50% predictive of performance (Schmidt, 2016). This means you have a coin-flip chance of choosing the wrong leader. For an enterprise organization commonly hiring 50 Directors and 20 VPs per year, the risk exposure accumulates quickly.
- Directors: Out of 50 hires per year, about 50% (25 leaders) could be mis-hires. Each Director mis-hire could cost about $660K–$1.1M, which would at the enterprise level add up to $16.5M–$27.5M in potential losses.
- VPs: Out of 20 hires per year, 50% (10 leaders) could be mis-hires. Each VP mis-hire could cost about $960K–$1.6M, which would at the enterprise level add up to $9.6M–$16M in potential losses.
Without an assessment, the total annual risk exposure for Director and VP level roles at an enterprise organization can be around $26.1M–$43.5M. That’s the downside of running executive hiring as a coin flip.
Why Pinsight Changes the Odds
Pinsight’s behavioral science assessment gives you a 70% chance of choosing the stronger finalist, and so changes those odds by reducing the probability of a bad hire to just 30%. At enterprise scale, this shift translates into about 21 wrong hires instead of 35 per year, cutting risk exposure to $15.7M–$26.1M. The difference—$10.4M–$17.4M avoided every year—represents the direct financial value of reducing the risk of costly leadership mistakes.
Learn more about the science behind the Pinsight assessment.
How the 70% Edge Converts into Performance Gain
Research has shown that top-performing leaders create outsized business impact. A landmark study found that top performers deliver an additional impact equivalent to 40% of their annual salary above the average performer (Hunter, Schmidt & Judiesch, 1990).
For Directors, whose average base salary is around $220,000, the performance gain between an average and a top performer is roughly $88,000 each year (40% of their annual salary). Without an assessment, hiring decisions are essentially a coin flip—there’s only a 50/50 chance of picking the stronger finalist. With Pinsight, however, that probability rises to 70%, representing a 20% lift in accuracy. When you translate that predictive edge into dollar value, it means companies can capture about a quarter to a third of the $88,000 performance gain, resulting in $22,000-$26,000 in additional business impact per Director hire, per year.
The story is similar at the VP level. With an average base salary of $320,000, the gap between an average and top-performing executive is worth about $128,000 annually. Applying Pinsight’s 20% accuracy lift, organizations can capture a quarter to a third of that difference. In real terms, that translates to $32,000–$38,000 in added impact per VP hire, per year—value that compounds over the executive’s tenure.
The Combined ROI: Protect and Grow
Pinsight delivers value on both sides of the equation:
- Risk Avoidance: Cutting the probability of costly mis-hires nearly in half.
- Performance Uplift: Increasing the likelihood of selecting leaders who outperform.
Here’s what that looks like when we scale it across the enterprise that hires 50 Directors and 20 VPs per year, and assesses three finalists for each role with Pinsight.
Enterprise Example (Hiring 50 Directors and 20 VPs per year.)
| Category | Without Pinsight | With Pinsight | Net Value of Pinsight |
| Potential Mis-Hire Losses | $26.1M–$43.5M | $15.7M–$26.1M | $10.4M–$17.4M avoided |
| Added Annual Performance Impact | – | $1.74M–$2.06M | $1.74M–$2.06M gained |
| Assessment Cost (70 roles × 3 finalists per role) | – | $600,000 | Investment required |
Total Net Annual Value: $12.1M–$19.5M
ROI Multiple (Year 1): 20x–33x
Beyond Year One
The ROI in year one is already compelling. But top-performing executives usually stay more than one year. Over a 3–5 year tenure, the avoided risk and performance uplift compound dramatically, turning a $600K annual investment into tens of millions of dollars in value creation.
The Bottom Line
- Without Pinsight: Executive hiring is a coin flip, with $26M–$43M in potential losses annually across the enterprise.
- With Pinsight: Risk of bad hires could be cut nearly in half, while $1.7M–$2.1M in new business impact could be created annually.
- ROI: Even accounting for assessing three finalists per executive hire, Pinsight delivers a 20–33x return in the first year alone, multiplying with every year of tenure.
