Like Olympic athletes, search committee veterans understand that forethought is critical to winning gold; there is no reward for coming in second. At a time in history when human capital has been identified as the most essential factor in organizational success, the executive search committee, guided by its Chair, holds a pivotal place in guiding the future of the organization.
Here are 7 no-cost steps to ensure your executive search committee closes their first choice.
1. Create a clear, consistent agenda for the Board
It’s important to negotiate the Board’s agenda with all its Directors, and ensure all members are focused on the same goals and clearly understand the key competencies required in the new hire.
2. Create realistic expectations
Many Boards are looking for executives who have been a CEO/executive of a similar-sized or larger company, and rightly so. Likewise, almost all current CEOs would be interested in taking on a new significant opportunity with a company of greater size to ensure that they’re not simply making a lateral move.
There are five situations which will motivate a CEO to move to another position:
- They perceive that they will be moving from a lower potential opportunity to a higher potential opportunity;
- They will be moving from a general manager or functional role to a CEO position. This is very common in Canada where general managers often act as division presidents for multinationals;
- They will be compensated more, including a complex equation of cash, equities, net present values, and opportunity costs;
- They envision a strong ‘cultural’ fit between themselves, the Board and the Company; and
- They share the Founder’s passion or vision — for the company.
3. Agree on a prioritized sourcing strategy
The executive search committee should agree on a well-defined, yet diverse source environment to create an adequate pool of potential candidates. Search Committees with the willingness to accept a broad, yet prioritized source environment strategy experience the most success at revealing the best talent.
[Picture the concentric circles of a dartboard where the bull’s-eye represents your sweet-spot and the concentric circles are closely aligned industries.]
4. The Executive Search Committee Must Agree on the positioning of the company and the role
The “message” delivered to sources and prospective candidates about the company and the mission of the assignment is vital to its success. It must be consistent, well supported, and logically attractive to the target audience. If you use an executive search consultant they must be highly informed regarding the key elements of the company; personalities of the senior management team, strategy and competitive position of the company, P&L, and corporate strengths and weaknesses.
5. Conduct a discerning candidate analysis
The consultant should be a key asset in directing, advising, and listening during the committee’s analysis of candidates. Understanding the value system, prior achievements, and leadership qualities of an executive is part art, part science, and requires complete commitment and participation. Sound techniques and strategies to best capitalize on the evaluation process are essential.
An Executive Search Committee needs to address these goals:
- 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 for strengths, weaknesses, and motivations; and
- Conduct reference checking, including early “spot” referencing to confirm a candidacy throughout the search, not simply at the end of the process. You want to know sooner – not later – if there is a valid reason to exclude a candidate.
6. Negotiate a successful offer
The lead consultant is responsible for ensuring that all of the data is available to structure an appropriate compensation package. Five categories of information are critical to this process:
- Knowledge of the candidate’s current employment terms; including cash, bonuses, timing of pay-outs, equity overhangs, non-competition agreements, and other disengagement liabilities;
- Knowledge of the compensation structures in the competitive marketplace, which is valuable for both the Board as well as the candidate;
- Knowledge of other career options that the candidate may be considering;
- Knowledge and 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, etc.; and
- Knowledge of the candidate’s ‘hot buttons’ so as to present an offer that satisfies his or her complete ‘hierarchy of needs’.
7. Create an emotional link
It’s almost guaranteed that your prize executive will become aware of other opportunities “out there” once they become engaged in your search – even if they were not actively looking when first approached. It’s critical for your ultimate success that you recognize and plan for this eventuality from the start. In the end the candidate will choose the company to which they feel most “connected”. Make sure that it’s you.
A final thought on what makes an executive search committee successful
In the final analysis the search chair is the one who convinces the candidate there is a fit, articulates why the backgrounds/skills/opportunities/challenges align, and explains why 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 a newcomer to anticipate how much additional funding will be required and in how many tranches. Only the Search Committee Chairperson can tell this story.