If human capital is the most essential factor in organizational success, then the executive search committee, guided by its chair, plays a pivotal role in the future of any organization. This article fills you in on ten cost-free ways to ensure that the search committee closes on everyone’s first-choice candidate.
IDENTIFY A CLEAR AGENDA FOR THE EXECUTIVE SEARCH COMMITTEE
The search committee must negotiate with the board of directors to pin down the agenda. In this way, you ensure that all members of the search committee are focused on the same goals, and that they clearly understand the key competencies required for the new hire.
AGREE ON A PRIORITIZED SOURCING STRATEGY
The executive search committee should agree on a well-defined yet diverse sourcing environment to build an adequate pool of potential candidates. Search committees that are willing to accept a broad, prioritized sourcing strategy will have the most success uncovering the best talent.
As you develop this prioritized strategy, picture the concentric circles on a dartboard, where the bull’s-eye represents your sweet spot and the concentric circles are closely aligned industries.
ARTICULATE THE ORGANIZATION’S RETURN ON INVESTMENT FOR RECRUITING
All too often, organizations view the acquisition of staff as a simple byproduct of expansion. But the acquisition of key executives is an investment, like any other — and every investment should be measured by its return. That is, every new hire should have a demonstrative return on investment (ROI) that clearly justifies the time, effort, and cost involved. For executive-level hires, that ROI will be tied to strategy. Knowing how the executive will contribute to the bottom line is critical to understanding who to hire. It also helps to ensure that you tie hiring decisions to business needs, not candidate availability.
SET REALISTIC EXPECTATIONS
Many boards want to hire executives who have held an equivalent position at a similar-sized or larger company — and rightly so. The problem? Most current executives are interested in taking on a new opportunity only if it’s a move up the organizational hierarchy or with a company of greater size. That way, they know they’re not simply making a lateral move.
The executive search committee must set realistic expectations for candidates. That means identifying what will motivate an executive to move to a new position. Motivators include the following:
- The new role represents a move from a lower-potential opportunity to a higher-potential one.
- The new job represents a move from a general manager or functional role to a higher position, such as CEO. (This situation is common with multinationals, where general managers often act as division presidents.)
- The executive will be compensated more, including a complex equation of cash, equities, net present values, and opportunity costs.
- The executive perceives a strong cultural fit between herself, the board, and the company.
- The executive shares the founder’s passion or vision for the company.
DO A REALITY CHECK
The challenge of every organization is to give top executives a compelling reason to join — and a compelling reason to stay. In other words, finders must become keepers. To help with this, the search committee should do a reality check. Specifically, it should ask:
- Does the company have a captivating story that will appeal to the best and the brightest executives?
- Does the existing executive team inspire confidence?
- Does the company have a robust recruitment and interview process that enables you to move quickly when qualified and interested candidates are found?
- Is the company willing to adjust the position requirements if you can’t find or attract what you had hoped for? If so, agree on those adjustments before you begin your search.
- If members of the search committee were in the place of their top candidates, would they accept the job? If the answer is yes, then proceed. Otherwise, continue working on the front end.
BE CONSISTENT WITH THE MESSAGING
The executive search committee’s message to prospective candidates about the company and about its mission is vital to the project’s success. As such, that message must be consistent, well supported, and attractive to the target audience. Accordingly, if you use an executive search consultant, that person must be highly informed regarding the key elements of the company, including personalities of the senior management team, strategy and competitive position of the company, profit and loss, and corporate strengths and weaknesses. Be prepared to invest time in educating the search consultant.
CREATE AN EMOTIONAL LINK
Your prize executive will almost certainly become aware of other opportunities out there when he becomes engaged in your search — even if he wasn’t actively looking when you first approached him. It’s critical for your success that you recognize and plan for this eventuality from the start. In the end, the candidate will choose the company he feels most connected to. Your job is to make sure it’s yours.
CONDUCT A DISCERNING CANDIDATE ANALYSIS
Understanding an executive’s value system, prior achievements, and leadership qualities is part art and part science, and it requires complete commitment and participation. Here are some sound techniques and strategies to achieve this goal:
- Define criteria and best practices for determining leadership qualities, past performance, key competencies, and value systems.
- Observe candidate behavior during the courtship and interpret it to identify strengths, weaknesses, and motivations.
- Conduct reference checks, including early spot checks, to confirm a candidacy throughout the search, not just at the end of the process. You want to know sooner rather than later if there is a valid reason to exclude a candidate.
NEGOTIATE A SUCCESSFUL OFFER
The lead consultant is responsible for ensuring that all necessary data is available to structure an appropriate compensation package. This includes five critical categories of information:
- The candidate’s current employment terms, including cash, bonuses, timing of payouts, equity overhangs, noncompete agreements, and other disengagement liabilities
- The compensation structures in the competitive marketplace, which is valuable for the board as well as the candidate
- Other career options that the candidate may be considering
- Expertise to create terms that work, taking into account personal needs, taxation advantages, the trade-offs of equity strategies that hit the P&L versus those that do not, severance and employment contract terms, and so on
- The candidate’s hot buttons, so as to present an offer that satisfies her complete hierarchy of needs
Don’t let the candidate think — even for a second — that you’re looking for a deal. Move quickly when you’ve made your decision.
LET THE SEARCH CHAIR CLOSE THE SALE
In the final analysis, the search chair is the one who convinces the candidate there is a fit; articulates why the background, skills, opportunities, and challenges align; and explains how there is wealth to be made. This last point is critical, especially for funded ventures. Cap structures are often complex, and it’s hard for newcomers to anticipate how much additional funding will be required and in how many tranches. Only the search committee chairperson can tell this story.