Hiring misjudgement? What to do when strong credentials don’t translate into performance

In the next of our hypothetical HR dilemmas for financial firms, we explore what to do when a new recruit – who looked excellent on paper – isn’t meeting expectations.

Imagine the scenario

As the COO of a hedge fund, you were delighted when your latest recruit joined you. They brought impressive academic credentials, strong experience and positive references. The decision to hire them felt straightforward.

A few months in, though, you have concerns.

This employee is missing deadlines. Their analysis lacks depth. Your team is quietly compensating for their gaps.

Nothing has gone drastically wrong, but confidence in this person is waning.

What do you do?

First thoughts

Before assuming this is a capability issue, it is wise to pause.

A new employee’s performance may not be about incompetence. Even highly capable professionals can be affected by hidden personal circumstances such as bereavement or a family illness.

In high-performance environments, people sometimes try to ‘push through’ rather than disclose their difficulties – and maybe even more so when they’re new to a role and keen to prove themselves.

At this stage, experienced HR input can help you navigate the situation calmly and proportionately. Call FeMan Consulting for support.

“In financial services, leaders must often hold two truths at once: performance standards matter - and people are human. A measured, structured approach now can prevent a more difficult outcome later” 

– Mike Clyne, FeMan Consulting. 

Next steps

If you have capability concerns after an initial discussion, your response should be structured and considered, but don’t be tempted to put off any action. Factors such as the employee’s length of service, probationary status and role seniority – as well as your firm’s regulatory exposure – will influence your approach.

1. Clarify expectations Ensure that the role’s performance standards were clearly defined and discussed from the outset. Were clear objectives agreed? This is where having an external HR provider can help you: right now, and through future recruitment processes.

2. Gather objective evidence It is important to separate perception from fact. This is easier if you can document missed deadlines, quality concerns or behavioural issues.

3. Review your employee’s probationary status If the employee is within probation, check what your contract and policies say about review processes and notice periods. A well-managed probation review can be an effective and fair reset point, for both parties. (This will be particularly relevant when the new six-month unfair dismissal period comes into force in 2027.)

4. Have an early, structured conversation Outline the gaps, invite the employee’s perspective and establish whether this is a capability issue, a knowledge gap, or a misunderstanding of expectations on either side.

   
   

It is helpful to address your concerns directly while being constructive. Vague feedback such as ‘not up to scratch’ will not help you or the employee: instead give specifics wherever you can.

Future considerations

If performance concerns persist, your firm may need to enact a more formal capability process for this employee. In regulated environments especially, poor performance can affect client outcomes or compliance standards.

However, any formal capability process must be handled carefully and consistently.

“After more than 35 years in HR, I can still remember the one occasion when a manager said ‘I did that too quickly’ in handling a performance issue. Virtually every other time, after I’ve helped a business manage such issues, they say they wish they’d addressed the matter three,six or even nine months sooner” – Mike Clyne, FeMan Consulting.

Do consider:

• Whether your employee needs additional training or supervision

  Sometimes a technically strong candidate may struggle with firm-specific systems, pace or culture. Mentoring, coaching or additional training may be valuable here.

  
  

• Cultural or behavioural misalignments

  In smaller hedge funds especially, a technically competent but poorly integrated employee can upset team dynamics. In such cases, targeted mentoring, coaching or clearer behavioural expectations can often resolve friction before it escalates.

  
  

• The business risk of continuing - versus exiting

  Underperformance in trading, operations or compliance roles may carry different levels of exposure. Employee exit should only follow a fair and properly managed process. In many cases, improvement, redeployment or managed transition will be more appropriate.

  
  

Throughout, maintain clear documentation of the meetings you held, the objectives you set, and the support you offered to the employee. This will help to protect both the firm and the individual.

As Mike Clyne advises: “Don’t allow the situation to drift. In financial services, unresolved capability issues can quietly escalate into operational or reputational risk.”

Establish best practice recruitment from day one

While not every hiring mismatch can be avoided, you can significantly reduce risk for your firm by:

• Strengthening competency-based interviewing

• Setting measurable performance milestones

• Implementing structured onboarding plans that all relevant people have agreed with

• Conducting thorough background screening and reference verification

• Carrying out an ongoing formal review of performance during probation, not informally or retrospectively.

  
  

With experienced, independent guidance, you can address people issues early, fairly and confidently. FeMan Consulting helps financial firms to strengthen their hiring processes, manage performance constructively, and protect both culture and compliance.

Contact us to find out more.