As we saw in the previous post, executive appointments require a different mindset to regular recruitment so be prepared to dedicate the necessary time and money to get it right. In this post we’ll look at the executive search process through using a search agency, what you should be looking for in your appointments and how to put together a remuneration package to attract the right person.
1. Internal vs. External?
This is probably the first question you’ll ask yourself. Do I really need to look outside the company, which costs money and will take longer, when ‘John’ who has been with me from the start knows the business, has the right attitude and I’m sure can do the job? Er, yes! Why? Because you would be doing both your company and John a dis-service if you take this approach.
First of all it’s great if you have internal candidates that you think would be right for the job, they know the business well and already have a relationship with the rest of the team. However, as we discussed in the first post, a C-level role is all about strategy. They should be appointed based on being able to take your business to where it needs to be in 3-5 years’ time, based on the experience and skill set they have. If your internal candidate has the ability to do this then absolutely yes they should be considered….but only alongside an external set of candidates.
Going through the external search ensures you are appointing the best person for the role after reviewing all of the available options. If this does turn out to be the internal candidate then what a boost that would give them knowing they got the job based on merit against credible competition rather than getting the promotion because it saved money? Think about it.
2. Appointing an executive search agency
It’s very important that you choose the right agency to conduct your executive search. The process can take many months and you will need to be in frequent dialogue with your search specialist so it goes without saying you need to be comfortable with them on a personal level.
You will need to invest a considerable amount of time discussing your business and strategic goals with the recruiter. They will need to know the business as well as you in order to find the right candidates so again it is crucial you are comfortable with the person. The relationship with the recruiter will often become long term, for once they know your business they are best placed to assist in future appointments, so choosing the right agency in the first instance can save you time in the long term.
It is also worth acknowledging your potentially limited resources compared to their usual corporate clients. Don’t think this rules you out of using a search agency, instead look for the ones who are accommodating to your circumstances and can offer flexible payment terms. The ones not willing to do this are probably not a right for fit for you anyway so this can be a good acid test when shopping around.
3. Use networks – yours and theirs
An executive search agency will have access to global networks of talent which are far beyond the reach of your own. However, don’t discount the value of your own connections. A good recruiter will explore these too and incorporate them into their search along with the external candidates identified.
4. Shortlist and Interviews
Once a shortlist of candidates has been established, the interview process can begin. This can range from a single interview to full psychometric testing conducted by the search agency so there really is a lot of flexibility in terms of how in depth you can make this process.
Ultimately you want to choose a level of interviewing that you feel is appropriate for the role you are appointing and the skills & experience you want to establish from the candidate. Over testing could waste time and resources so really talk through your options with your search agency who will be able to advise you on the best course of interviewing based on their experience and understanding of your business needs.
5. What should you be looking for in your appointment?
Your shortlist should have identified the candidates with the appropriate skills and experience to deliver on your strategic objectives. Therefore the interview process should be used to confirm their ability to do the job and assess their cultural fit with the management team.
Scaling businesses need executives with the experience of either growing a business or having worked in a large organization in order to benefit from their knowledge and contacts. However, working in these situations is very different to working in an early stage company and there’s no guarantee that a candidate will then fit into a small start up business. In order for it to work the candidate must be flexible. In a small company they will not have the luxury of a full support team and generous budgets, instead they must be willing to roll up their sleeves and get their hands dirty as they will have to be operational as well as strategic. This will mean transitioning from the nitty gritty operational tasks one day to high level strategic external meetings the next, and this isn’t something everyone will be comfortable with.
In a small business executives will be expected to work very closely with the different functional heads, much more so than in a large organization. You have to assess whether the person will add value or upset the balance. In a large organization it’s much easier to get away with personality clashes at this level but in a small organization there’s nowhere to hide so you have to listen to your gut on whether they will be a good fit.
Culture is often the ‘secret sauce’ of start-ups so cultural fit is incredibly important. Don’t expect a candidate to demonstrate your culture from the outset, remember they will have been used to very different environments in their previous roles. The important thing to establish is when they could become part of the culture? If their values and principles in life are opposed to that of your company’s then the likelihood is it isn’t going to work. However, if you share a similar moral compass and they do appear flexible then a cultural fit could be developed.
The final aspect to consider when choosing your executives is diversity. The best boards are diverse ones and that is in terms of age, gender and the right mix of skills and experience. For a while there was a trend towards younger and more inexperienced executives but following the dot com crash the value of experience was recognized and the ‘grey’ candidates were sought instead. So bear all this in mind when creating your executive team.
6. How should you remunerate?
Share options are what executives commonly expect nowadays over a large salary as they understand a smaller organization simply cannot offer such terms. However, it is important to manage their expectations as dilution will occur as the company goes through future investment rounds. Therefore other options are bonuses linked to growth, revenue or profitability. Whichever way you choose to approach it candidates will expect the salary to be the smaller part of the package.
The recurring theme of this blog series is be prepared and start early when building your executive team. Talk to your search agency to establish approximate timescales for the whole process which will vary in each circumstance depending on if you opt for a global vs national search and how many rounds of interviews. You need to know this in order to complete an appointment for a specific milestone such as an investment round. As a rough guide though, creating a shortlist from a global search will take approximately 4-6 weeks, add another 4 weeks for interviewing, making an offer and the candidate then serving a notice period and you could be looking at anything between 4 – 6 months.
However, it is possible to expedite the process should an exceptional candidate be identified during the search. In this situation you may choose to interview the candidate whilst still completing the search and then bring in some from the shortlist as quickly as possible to benchmark the first candidate against. This can reduce the whole process by a few months. This course of action though should only be deployed where there is an exceptional candidate who appears to be the best person for the job from the outset.
Appointing an executive is a two way process so expect to be in regular communication with your agency to keep things progressing. The process will be tiring but appointing the right executives will be well worth it and the best business move you can make.
In the next blog we will be looking at the executive roles to fill and the often overlooked importance of your Chairman.
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.