In the previous post we looked at the executive search process and what you should be looking for in your appointments. Now it’s time to look at the roles you need to appoint in a little more detail and how you can achieve an executive team when resources are tight.
Probably not the first role that popped into your mind, and especially if you are reading this as the CEO of your company.
In small companies, the founder is often the best person for CEO as they have the vision and drive to grow the idea and establish a culture. However, once grown to a certain point a founder’s skills and previous experience may not be sufficient to do the growing business justice. It’s important to determine if you have the skills to take your business to where you want it to be in 5 years’ time. You should assess yourself in the same way you determined the skill sets required for your other C-level appointments, and if you decide you aren’t the best person you’ve just taken the first step to strengthening your company.
Instead, you should establish a role within your company that reflects the strengths you offer. This may be a different C-level role such as CTO if you have a technology background or an ambassadorial role if it’s your passion for the company that external stakeholders will value.
The Chairman is commonly the first C-level appointment made by a start-up. Often this person is selected based upon personal recommendations and the desire to get someone involved in an advisory capacity to strengthen a young team. However, the phrase “marry in haste, repent at leisure” isn’t too far off the mark with a lot of Chairman appointments. Experience shows the Chairman is often appointed using an ad hoc process rather than the executive search process covered in the previous post. Inevitably this means no search has ben carried out to identify a shortlist of candidates so no-one else to benchmark the appointed Chairman against. Therefore the best person may not have been appointed for the role.
The second weakness in going on personal recommendations is these come from people who know the person, but not necessarily your business. Your Chairman should be appointed based on the strategic requirements of your business over the next few years, and the gaps in your skills that need plugging. You might want a Chairman with particular industry contacts, international experience or sales/marketing experience. Whichever skill you need to plug, it is likely only you know your business in depth enough to know which skill that is, and not the person making the recommendations.
When you are a fresh faced founder with lots of people offering advice and support it’s very tempting to feel pressured into going with a recommendation because you don’t want to offend someone you consider important, or you feel you should be grateful for someone wanting to get involved in your business. This is not the case though. Your company is your prized asset, you’ve been working hard to get it going and you deserve it to be successful. However, that success is dependent on the team behind it so don’t undo all of that hard work by making one of your most important executive appointments on a whim, that may be hard to undo.
A good Chairman will guide your business, be a sounding board and prevent you following the wrong strategy. They will tell you when you’ve made a wrong call when no-one else will and be the glue to hold your executive team together once appointed and get the best out of them. This is why the Chairman appointment should be treated in the same way as any other C-level role and you should assess who will be best for your company and not just go with the first recommendation.
Cash is king and anyone investing in your company will want to know you are in control of, and can maximize its financial health. In the recent iVTuesday talk with Alex van Someren he recited the tale of his best hire which was his CFO at a very early stage. The CFO went on to secure his company, nCipher, $14m over 5 investment rounds. However, it was the fact that the CFO provided credibility to “two pony tailed entrepreneurs” that was most significant.
As an early stage company a full time CFO may be beyond your reach and instead there could be the temptation to hire a newly qualified finance manager for the role instead. However, the role of the CFO is very different to the day to day management accounting of your business. The CFO has to deal with investors, banks and private equity firms for example and must be able to demonstrate a robust financial plan is in place. They have to think in terms of 3 – 5 years and line up the appropriate resources to achieve the strategic objectives of the business.
Therefore it’s important to get a CFO with the right level of experience to do the job and bring credibility. For a small company the solution may be a part time position or enlisting a CFO on a consultancy basis in tandem with the day to day finance manager which may be newly qualified accountant already identified. On limited resources a balance can be achieved.
Within an early stage technology company this role can often be filled by one of the founders, if they have a tech background, or an early technical recruit. Remember though that C-level executives must be strategic and comfortable participating in high level strategic board meetings, which not everyone may be comfortable with.
Should your company move into production this would be the time to assess whether your CTO has the experience to handle the logistics of a production facility, which may require very specialist experience depending on the nature of your business.
Other senior appointments to consider which can become C-level are:
A business is not a business without revenue so developing your customer base is crucial. Unfortunately early stage companies wishing to pursue investment can overlook revenues, which is the wrong approach and one that will cost you money in the long term. A revenue generating business is a more valuable proposition and gives you more leverage when negotiating terms with investors. Therefore bringing in a sales executive early can really pay off financially.
The type of sales executive required will depend on the nature of your business. You may require someone with a sales background or account management background, which are different skill sets. In the previous post we discussed the need for an executive level appointment to a small company to be flexible and willing to get their hands dirty. This is perhaps most poignant with the sales director who will have to be incredibly operational initially when they may be the only sales representative but able to transition as the sales team grows.
The role of the HR executive is often the most underrated executive function. In an early stage company it can be sufficient to have an HR assistant or outsource HR as most activity focuses on personnel operations. However, as the business grows and your executive team becomes complete it would be wise to consider bringing in an HR executive at some point. Having a heavyweight HR exec can be very useful as they can manage the relationships between the different executive functions and assist in the execs transitioning from big corporations to smaller businesses.
Swallowing the pill early and bringing in an HR executive allows them to put the necessary processes in place to allow your business to scale smoothly. Bring them in once issues have already started to arise and the exec could be bogged down in sorting the day to day problems rather than being able to operate on a higher level.
The order in which you appoint the above roles will depend on the nature of your business and the key milestones you need to reach in terms of your strategic objectives or investment milestones. Resources do not need to be a limitation when building your executive team as consultancy and part time positions are both viable solutions. So armed with the best exec team for your business, what’s to stop you taking on the world?
Join us for the final blog in this series which covers what to do when a hire goes wrong.
FWB Park Brown is an executive search company which advises and supports its clients on how to identify and recruit Board level (Non -Executive and Executive (c-level)) and Senior Management talent. The company consists of executive search professionals, researchers and administrators who have considerable experience of executive search across a range of disciplines, functions and geographies. Within each office are specialists who operate in the global energy and infrastructure sectors.