Ralph Protsik
BSG Team Ventures
224 Clarendon Street, Suite 41
Boston, MA 02116
617-266-4633
ralph@bsgtv.com

The call to me typically begins, “We’re thinking of replacing a CEO. But we need this to be done in confidence. Can you do it and still be effective?” The answer, of course, is, “Yes, but first give me one good reason why you don’t sit down with your CEO and discuss why the change is needed.”

Answers vary, but the most common is, “We don’t want to lose momentum or cause uncertainly within the company,” i.e., “We’re afraid that news the CEO is being replaced might affect morale and revenues.”

This may be true, of course, but before embarking on a sub rosa search for a replacement, consider these issues–

•    Are you sure the situation cannot be resolved without the CEO being deposed? Have you tried everything to turn him/her around? Is the problem focused on a few concerns–work ethic, slow decision making, failure to address a single overriding market challenge, etc.–or is it overall leadership?
•    Are there intermediate steps you might take to at least put the CEO on notice? “Probation”? Come to Jesus? Sabbatical? Revisiting compensation?
•    Could the problem be resolved by bringing in the right support, e.g., a COO or new CFO?
•   Could the CEO be moved into a different to position, allowing you to bring someone in above him/her? Would your CEO accept demotion to President and COO, for example? Could the CEO be moved into a Chairman role?
•    How can you present the decision to replace in such a way that the CEO sees the wisdom in your decision? Obviously the CEO has a financial stake in the company’s success. Might it be that he or she will be relieved? See this as a win-win?
•    How valuable could the CEO be in the process to find the replacement? Do you want him/her to play an active role, and would s/he be effective in this role, if properly motivated?
•    What are the risks if word gets back that a search is being conducted for a new CEO?
•    What are the risks that a disgruntled CEO could sabotage the search process? Agree to participate in interviewing, then blow candidates out of the water?
•    What effect will conducting the search in confidence have on the overall quantity and quality of candidates? On your ability to secure the best among these?
•    How and when do you expect to inform the CEO what’s going on?
•    What role will the departed CEO have in the transition process once the new CEO is named?

If your decision remains to conduct the search sub rosa, your first line of attack should be internal. Do you or others on the board already know the right replacement? Could that replacement be the COO or someone else within the company? Someone from another portfolio company? Someone you interviewed for another position, or in a previous CEO search? Someone from a major competitor whom you have reason to believe could be lured away? The fewer the people who know of the replacement process, the better.

If you engage a search firm, make sure you are comfortable that they are comfortable–and have experience with this type of search. Have them share their stories of similar assignments: the scenarios, the specific challenges, the process, the outcomes. Unless they are truly confident they can succeed with “one hand tied behind their backs,” they won’t. Also make sure they use a Confidentiality Agreement with all prospective candidates, and that, in addition, they enforce confidentiality with candidates throughout the process through constant reminders. Some candidates love to brag–or just back-door reference you and the company.

And keep asking yourself, is now the time to sit down with your CEO?

So how hard is it for an executive search firm to conduct a quiet search? Not so, if they’ve done it before. Being presented an opportunity in the abstract–without knowing the “who”–can be enticing to a candidate. The idea of replacing a sitting CEO can also be enticing. The key to how enticing can depend on how much latitude the recruiter has in profiling your company. If it’s “an industry leader in LED technology,” then the appeal may be high…but the exposure equally high. If it’s “a profitable, private equity-backed company with EBITDAs > 20% and a market cap of $1B,” then the appeal may be equally high but without the downside of exposure. A good recruiter knows how to set the hook without naming the fly.

Where it can and does affect the recruiter’s performance is in sourcing others for leads. You no doubt know from your own experience that recruiters are on a constant hunt for referrals. Now think about the reasons you do and don’t respond. If I called or emailed you that I was looking for Eric Schmidt’s replacement at Google, you might just take time to reply. If instead my message was, “Doing this search. Can’t tell you much other than it’s a CEO position in the K-12 curricular market,” you might well not. More than half of the executive placements we make come from such referrals. Starve the lead process, and you starve the search.

Willingness to relocate the candidate can also be a factor. The wider the geography of the search–the more candidates from outside your region–the less likely is it that word will circulate back to your CEO or to others in the company, and the more latitude your recruiter has.

Give serious thought to how and where you intend to interview prospects, and to how many you expect to interview. It may be relatively easy to bring candidates into your office, and to the offices of others on the search committee. At some point, however, they may want to “smell the paint”–meet others in the company, see the offices, gauge the culture (and the commute). This may be the point of no return. Is now the time to reveal?

In the best of all possible worlds, your CEO will be your biggest and most powerful advocate for change. He or she may be the critical factor in a candidate’s decision to accept an offer. The deposed but relatively content CEO can also be instrumental in the transition process. Be thinking about what you can do to secure the CEO’s cooperation. Extra equity? The right spin on how the replacement is announced? Promise to plug into the right future portfolio company?

Confidentiality can be a problem. But it does not have to be–if you think through the alternatives, work hard to get the CEO’s buy-in, and work with a search firm that has the right expertise.

Ralph Protsik
BSG Team Ventures
224 Clarendon Street, Suite 41
Boston, MA 02116
617-266-4633
ralph@bsgtv.com

Egret Consulting Group announces recent survey results on Employee Retention

Mundelein, IL (April 15, 2010).  In the March issue of “The Buzz” Egret asked readers to respond to the following statement “Yes, I would quit my job for more money, but I would need to make at least…”

The respondents said:

5.5% said 10% more money
11% said 15% more money
16% said 20% more money
20.5% said 25% more money
28% said 30% or more money
19% said No, I would not quit my job for more money

Ted Konnerth believes the numbers indicate that over 80% of currently employed people would leave their job for the opportunity to make more money. 16% of the respondents would require a relatively modest financial incentive to leave (less than 15%), 64% would leave for 20-30% more money. In light of complementary research indicating historically low levels of employee engagement, the survey results appear to substantiate other research indicating US companies will face significant retention challenges in the coming months as we exit the recession.

Egret Consulting Group is a boutique search and consulting firm that specializes solely in the electrical industry. Egret sources talent for electrical manufacturers, electrical wholesale distributors and lighting design firms. Egret’s consulting services include organizational development, channel strategy and Mergers and Acquisitions.  For more information on Egret Consulting Group, please go to www.egretconsulting.com.

Ted Konnerth PhD, is President/CEO of Egret Consulting Group located Mundelein, Ill.   Prior to founding Egret Consulting in 1999, Konnerth was with Cooper Industries for 16 years and served as vice president of sales for 4.5 years for the $1 billion lighting division before starting his search firm.

Contact:
Christina Parhas
Egret Consulting Group
cp@egretconsulting.com
www.egretconsulting.com

The challenge of recruiting engineers is as difficult as it has ever been. Demographics plays a role in driving the demand for more innovative orthopaedic products, however, the counter-pressures of pricing and the looming fears of a healthcare takeover by the U.S. government has industry fighting to mitigate their risk. This means you must do more with less, translating into more responsibilities on your plate and less time to do them. Compound that challenge with a seemingly endless onslaught of new start-ups within the industry competing with the once-invincible OEMs. These small companies can still offer more excitement, autonomy and potential rewards if they can manage to either get acquired or go public. While the industry is still growing, due to all this new competition and pricing pressure, companies are stretching resources further than ever before. The growth of the supplier market has also proven that while it may benefit the OEMs, suppliers essentially compete for the same engineering talent with the very customers that they serve.

None of these challenges is going away. Your only option is to compete for talent by using creative means and strategies to start sourcing, attracting and screening the right candidates. The companies and hiring managers who will succeed are those who will adapt to the market and devise new ways of attracting quality people to their companies and building their benches. There are several ways this can be done, but what is clear is that the more of these strategies that you employ, the greater likelihood of your success.

If there was one means of recruiting that trumps all the rest, it’s networking. Everyone must be concerned about exploiting his network to broaden his competitive reach. This can be achieved several ways. First, actively network with strong college engineering programs and recruit on all local campuses. This can be done by attending job fairs and advertising your company in engineering newsletters and college job boards. Secondly, promote your company’s Employee Referral Program. Most companies have them, but few promote them and truly benefit from them. You must convey to your team that the company is “always looking for talented and experienced engineers.” Create a culture of seeking the best people to join ranks. One of the most effective ways to incentivize your current team is with cold, hard cash. Alternatively, you can offer extended vacation time or other benefits. If you decide to stick with cash, pay half of the sum upon the new hire’s start date and the balance upon the new hire’s one year anniversary to incentivize your team to protect their company from “job hoppers” and under-performers. A culture of referrals and team-building must be as prominent as one of innovation and engineering excellence for you to effectively leverage your employees’ connections.

Another effective method of networking is tapping into your own network of former colleagues. Since we know that “birds of a feather flock together,” your former colleagues are likely to know your needs and the kinds of people who would fit your team. If they are not an ideal candidate for your position, they may know someone who is.

Additionally, these people should give an honest assessment of the person’s talent in an effort to keep the trust in your relationship. This is especially true if you are the one to initiate the conversation, since their loyalty is generally to you first and the potential candidate second. The best place to do this is at one of the many shows and expositions such as OMTEC or AAOS. If you are not seizing these opportunities to broaden your reach, work your network and meet new people in the industry, you are missing out. The best hiring managers are using these shows not only to connect with old friends, but to step outside of their comfort zones and network with friends of colleagues, and to introduce themselves and their company to as many engineers as possible.

The next strategy using the internet and job boards in search for candidates. By making good use of the internet, you should attempt to cut out the “middle man,” especially in the early stages of your search. Most contingency recruiters, i.e. middle men, rely heavily upon job boards to find active job seekers. While these recruiters are happy to charge a full fee for sourcing your next hire from one of these websites, it seems pointless to me to pay a fee for candidates who are available online. That is unless, of course, you have no time and bunches of money. It is undeniable that recruiters typically have a better yield from the internet. There are two main reasons for this: they have the time and they have the knowhow. They tend to write a more compelling job posting that entices the right people to apply online.

Engineering managers tend to focus too much on screening people out when they should be drawing them in. The highly technical side of your brain wants to only post the position’s “requirements” and “must haves” on the web, hoping to attract someone with the right talent and experience. The reality is that anyone with the type of experience you are seeking is sifting through dozens of similar jobs, and it is now that you must “set the hook.”

What will improve the likelihood of convincing them to respond to your posting? You must make the job posting sizzle! It must be compelling to the reader. It should read more about what they will become, the things that they will be able to do and the impact that they will be able to have upon the company, industry and patients. This is the type of posting that gets people to apply, not a dry list of duties and responsibilities. Whether you are talking to a prospective candidate or posting an online job, always remember to sell first, and then screen. Especially in the interview process, it is typical for managers to “cut to the quick” in the interest of time and look for the candidate’s Achilles heel. This may be a huge turn-off to the candidate, so try to be more creative in getting the answers you seek. Build rapport first and sell your company. After they have begun to show interest, then screen them to the specifications of your position.

Another common mistake in posting a job is to only post when you have an immediate need to hire. In this market, you must keep your “line in the water” and maintain a constant presence on the web. If you are concerned about any consequences of leaving a job posting up, most of the sites allow you to post jobs “confidentially.” Recruiters also have knack for finding the places where people “park” their resumes. These are generally the same job posting sites, and they have robust databases of “passive candidates” who may be currently seeking new opportunities. These sites are far less expensive than paying a recruiter, and everyone who hires in orthopaedics should maintain a formidable web presence aside from their own company’s website. By investing some time and effort online, you will save money on fees paid to recruiters.

Of course, finding a candidate is only the beginning of the process.  Keep in mind that if these candidates are online, there is a very good chance that other companies are pursuing them too, so you’d better have multiple candidates to process simultaneously. Don’t put all your eggs in one basket.

To remain competitive in the war for talent, these techniques are essential to any engineering manager’s job. However, if time is critical and you must get results within a short timeframe, it is appropriate to partner with a search professional.

Vetting the recruiting firm is every bit as important as the engineer that you hire. Be careful not to hire a recruiter who will merely repeat what you’ve already done on the internet. Find a recruiting partner who can guarantee the results of her search work. Don’t fall for a good sales pitch. I’ve found that almost any recruiter who is in business can sell herself and close a search deal. You are not looking for a good sales pitch, but a professional who can deliver experienced talent on time. In order to accomplish this, you need someone who has a proven track record and truly knows your specific needs. It is not uncommon for a recruiter to make audacious claims of expertise with little (if anything) to support those claims. I’ve found it entertaining that while claiming to be expert in the field of orthopaedics, upon further inspection on the web, they usually also “specialize” in other fields that are completely unrelated to orthopaedics. Just be judicious in conducting your “due diligence,” or else you may find yourself stuck with regrettable consequences.

You will do well to find a respected orthopaedic industry specialist you can trust, and with whom you can build a long term relationship. In doing so, you will eliminate the learning curve for assessing soft skills and chemistry fit.

It is critical that you find a recruiter who cares more about your success than making a placement and earning a fee. I cannot over-emphasize this point. Your success is in the hands of someone else. Make sure you’ve done extensive reference checks and feel completely comfortable entrusting so critical a responsibility to your search partner. You need someone you can count on to deliver every time.

The difficulty of finding experienced orthopaedic engineering talent is here to stay. To be effective in recruiting talent, your company must be committed to this effort as an ongoing endeavor and not simply an event. Make every effort to cut out the middle man before the need becomes critical. You can save thousands of dollars by using the same niche job boards and medical device candidate databases as the contingency recruiters do, so why pay more? When all else fails, do your homework and find a recruiting partner who you know will deliver in the clutch. The time spent in advance will help you sleep well at night knowing that they are on the job and have your best interests at heart.

Drue De Angelis has more than 22 years in the orthopaedic and spine industries. For the past ten years, he has built The De Angelis Group into the premier search firm exclusive to the musculoskeletal industry. For more information, please visit www.thedeangelisgroup.com.

The De Angelis Group
8145 North 86th Place
Scottsdale, AZ 85258
USA
877-416-0377 (toll free)
www.thedeangelisgroup.com

If the BLS is right, this shortfall of 10 million workers (the largest since World War II) is expected to precipitate a crisis that will affect every industry, suggesting that an increase in demand for your products will not, by itself, be enough of a driver to ensure future corporate success.

The economic boom of the 1990s showed us that a shortage of skilled talent causes salaries to rise, which in turn leads to a climb in the costs of goods. As competitive pressures serve to drive prices downward, the increasing cost of labor will dictate that companies do more with less (human capital). As smaller companies fight to remain competitive and profitable, they are often doomed to acquisition, merger or going out of business.

Today’s corporate challenge is not just about competing for business; it is also about competing for TALENT that can drive your business INTO the future as well as IN the future.

How do companies compete for talent within a shrinking pool? Progressive-thinking companies are hiring consultants to help them develop processes that counter employee perceptions of corporate apathy. Many companies are lulled into a false sense of security (regarding employee satisfaction) because, in a soft labor market, many employees are content merely to have a job. Companies attentive to this reality can avert impending trouble by keeping their employees challenged and fulfilled.

Companies apply countless resources toward development of Customer Value Propositions; similar effort should be applied to attract and retain your employees. NOW is the time to develop your company’s Employee Value Proposition. “An Employee Value Proposition is the sum of everything the people in your company experience and receive while they are a part of the organization; from the intrinsic satisfaction of the work, to the environment, leadership, colleagues, compensation and much more. It’s about how well the company fulfills people’s needs, expectations and dreams.”*

Assess whether your company has what it takes to identify, recruit and retain the most talented individuals by asking: Why would a highly talented person choose to work here? In your answer, focus upon three key areas: Relationships, Infrastructure and Compensation.

Relationships represent the adhesive bonds that “connect” employees to an organization: corporate culture (do you really have a handle on yours?); management style (do you really understand the strengths and weaknesses of yours?); institutionalized values (do all or most levels within your hierarchy share similar perceptions?); policies and procedures (do they send the messages you want to convey?).

Most employees understand and accept that “job security” relies primarily upon their personal talents, and not upon their having earned a key berth within a “corporate nest.” However, as employees read and hear about corporate staffing cutbacks (seemingly on a daily basis, across all industries, within companies large and small and affecting individuals with skills and expertise that were apparently “in-demand” until the day of cutback), it is no surprise that employees sense a lack of loyalty on the part of employers. In turn, many talented workers feel little loyalty to
their employers — a dynamic that leads to a rise in the number of job changes that the average person will likely make during his or her career.

With rare exception, employees no longer retire from the same company where their career began. Why? Generally speaking, employees believe that most employers do not “care about people” in the way they perhaps did twenty or more years ago. They sense that shareholder “bottom line” is more important to management than is the idea of “taking care” of those employees who dedicated their lives to generating that bottom line. As employees see profitability become the sole corporate keyword, they sense (despite corporate protestations to the contrary) that relationships are basically a non-issue.

In terms of hiring practices, many companies are beginning to view a candidate’s work history differently than they might have only a few years ago. “Within a few short years, the old taboos against job-hopping had evaporated and it has become a badge of honor to have multiple companies on one’s resume.”* It was once perceived a negative to have multiple jobs on a resume; today there is a quite different phenomenon.

More than ever, it is essential that employers take a different attitude toward their employees. Managers must begin developing their employees rather than merely monitoring their productivity and measuring their performance. The tired attitude that “managers are served by their subordinates” must be replaced with one of “service to their internal customers.” As the cost of replacing talented people becomes higher than ever, only those managers who can transition their thinking will be able to help retain the absolute best employees.

Infrastructure describes the processes and procedures that your company uses to manufacture or sell its goods. To compete for talent, companies must utilize state of the art equipment and techniques to keep their people challenged and fulfilled.

Human nature being what it is, dedicated employees will become dissatisfied if they believe that other companies offer products that are superior to theirs. This example highlights one reason why companies race to attain the “latest and greatest” ISO certification. The issue is not only about meeting regulatory standards or about providing the best quality for the customer — it is also about creating an environment where employees are motivated and proud to be associated with forward-thinking, professionally driven organizations.

Example: Twenty years ago, Synthes dominated the bone screw market. It was difficult for other companies to compete in this arena, as Synthes had achieved an unmatched reputation for precision machining. Other companies’ sales reps felt that they could not compete because theirs was a lesser quality product. Zimmer addressed this “infrastructural” issue by purchasing a particular brand of lathe that dramatically enhanced the quality of their bone screws. This seemingly small action did more to increase Zimmer’s sales of trauma products than any marketing strategy or
commission-raising could have accomplished. The quality improvements became a key component in attracting, motivating and retaining top performers.

Compensation includes income, benefits and equity or profit sharing. Although many people believe that money is the most powerful motivator, according to Management Recruiters International, compensation is not the leading reason that people make a job change (money is third on the list). Instead, the relationship that employees have with their company is consistently ranked as the top reason given to “stay or leave.”

Most people leave their job for an opportunity to do something new. “Talented people want exciting challenges and great development opportunities. They want to be in a great company with great leaders. They want an open, trusting and performance oriented culture.”*

However, income and benefits are important motivators, and every company needs to be competitive merely to stay in the game to be able to hire the right people. Equity and profit-sharing are “velvet handcuffs” that companies can offer to
demonstrate interest in rewarding their employees at a level commensurate with their contribution.

In a competitive compensation program, rewards are proportional to the risks. In start-ups or relatively new companies with unproven track records, a significant compensation plan is critical to attract the right people. The risk is great, but the upside potential must be greater if they want to attract and retain the best. Larger, more established companies can (and tend to) offer smaller compensation plans with stronger benefit packages, because they have perceived stability and thus can rely upon name or brand recognition to attract candidates who might be more risk averse than others.

A company that executes well in these areas of an Employee Value Proposition is poised to attract and retain its best people. The degree to which any of these areas is ignored is proportional to the potential vulnerability of losing the talent a company needs to succeed and secure its growth in the years ahead. Begin now to develop a winning Employee Value Proposition and insulate your company from the likely effects of the coming crisis.

*The War for Talent, Harvard Business School Press, 2001.

Editor: Drue De Angelis is President and Managing Partner of The De Angelis Group, a search and consulting firm that provides search and recruitment services exclusively to the medical device, biotech and pharmaceutical industries. Prior to establishing The De Angelis Group, Mr. De Angelis served at Zimmer and Stryker Howmedica Osteonics for 13 years. He has consulted with hundreds of small- to medium-sized companies within the medical device industry. His team places special emphasis upon building relationships with industry leaders and solving complex organizational problems.

The De Angelis Group
7950 East Redfield Road, Suite 280
Scottsdale, AZ 85260 USA
877-416-0377 (phone)
877-588-0439 (fax)
www.thedeangelisgroup.com
drue@thedeangelisgroup.com

Strategies in Light is the longest-running and largest business conference and exhibition of high-brightness LEDs and solid state lighting.  This conference is heavily attended by Lighting Designers, Specifiers, Architects, Luminaire Manufacturers and Investors.  The conference is produced by Strategies Unlimited and the Penwell Corporation and will run February 10th through the 12th at the Santa Clara Convention Center.

Egret Consulting Group is a boutique search firm that specializes solely in the electrical industry. Egret recruits for electrical manufacturers, electrical wholesale distributors, lighting design firms and industrial wholesale distributors. As the largest recruiting firm dedicated exclusively to the electrical industry, Egret regularly works with firms of all sizes.

Ted Konnerth PhD, is president/CEO of Egret Consulting Group located in Mundelein, Ill.   Prior to founding Egret Consulting in 1999, Konnerth was with Cooper Lighting for 16 years and served as global vice president of sales for 4.5 years for the $1 billion lighting division before starting his search firm.

Contact:
Christina Parhas
Egret Consulting Group
cp@egretconsulting.com
www.egretconsulting.com

A V-shaped recovery is expected for these countries, including Malaysia, which had been affected by lower export demand, especially from the developed world, during the peak of the global economic crisis. The US-led financial crisis has hit countries that are dependent on the US economy hard. Malaysia’s manufacturing sector has been one of the hard-hit victims.

Just how important is China to Malaysia? China’s share of Malaysia’s exports climbed to 8.8% in 2007 and 9.5% in 2008. In the first nine months of 2009, China became Malaysia’s biggest export market, overtaking the United States. Last year, the two-way trade volume topped US$53bil and Malaysia has become China’s largest trade partner among Asean countries.

China is now the largest market for many of Malaysia’s major exports, especially commodity products. This is important, as there were instances in the past when the exports of Malaysia’s electrical and electronic products have been reduced. Commodity exports have historically played an important role in avoiding adverse impacts on the economy.

Apart from trade, China has become an increasingly important market for Malaysia’s tourism industry. In the 1990s, Japan used to be Malaysia’s largest source of tourist arrivals outside of the Asean region. Now, the role has been taken over by China.

Malaysia is also an education hub in the region. In the early 2000s, a large number of Chinese students came to Malaysia to pursue their higher education. In fact in 2002, close to 40% of all foreign students in Malaysia were from China. Today China is still the second biggest contributor of foreign students in Malaysia.

Industrial and Commercial Bank of China (ICBC), the worlds most profitable bank, has just been granted a consumer and commercial banking licence to operate in Malaysia. Their first outlet is targeted to open in Q1 2010.

US fund managers, including those who represent huge pension funds worth trillions of dollars in the United States, have expressed interest in investing in Malaysia but want the Government to ensure continuity of its liberalisation policy. The US financial community welcomed the re-listing of Maxis (largest local mobile telco), saying it gave them the opportunity to invest in a major company. They also indicated interest in investing in companies with big market funds, good potential and governance.

Two American companies are expected to make substantial investments in the local beverage and gas sectors soon. Exxon Mobil Corporation expressed its intention to venture into high CO2 content gas extraction while beverage giant Coca-Cola wants to build a new modern plant in Malaysia. For Exxon, this will require additional investment as it is a new form of technology. They will need to build new turbines as they plan to use them to generate electricity. As for Coca-Cola, a new bottling plant will be built using advanced technology. The value of the investments will be announced later as the Government is still working out the details on tax incentives to the companies.

A world class US premium factory outlet centre will be open in Malaysia by 2011. Chelsea Premium Outlets is owned by Chelsea Property Group, which is the world’s largest owner, developer and operator of upscale outlet centres in the United States, Japan and South Korea. Its centre in New York, Woodbury Commons, lures millions of shoppers to its discounted items of designer brands like Coach, Gucci, Zegna, and Burberry. Items which are a season old are between 25% and 60% cheaper.

ABOUT FOSTER PARTNERS

Foster Partners is a global retained executive search firm focused on senior level professionals for US, European and Chinese corporations. China headquarters are located in Shanghai, with operating offices in many of the other major cities in China mainland and Hong Kong. Additional Asia operating offices include Kuala Lumpur. U.S. headquarters is located in New York, New York.

For more information regarding Foster Partners, visit our website http://www.fosterpartners.biz/ or contact:

Trevor McCormick – trevor@fosterpartners.biz
John Chen – johnchen@fosterpartners.biz

Overview

When a company is looking for a new CEO or senior leader, they often start with a plan to hire an individual who has previously done what their organization is looking to achieve today. This is generally an excellent strategy since past behavior and achievement are the best measures of future success within a similar sector. The key is to find leaders that not only have the right talent, personal traits and abilities but also have the “fit” and chemistry needed to work effectively with the owners or founders of the company. A shared vision and the ability to collaborate on important business issues are essential to the empowerment of the CEO or senior executive to drive the business forward.

The key to success is to locate people who can go well beyond the basics of the job – individuals who demonstrate true leadership. Not just any kind of leadership will do. Leadership that produces results is what is needed. Given the unique demands of the situation, what kinds of leaders using what methods will produce top results?

The Effective Leader

Starting with the person, leadership depends on people who are in control and under control. Good leaders are smart and demonstrate a high level of emotional intelligence. They are self aware, manage themselves well, are socially aware and have good social skills.

•They have the ability to read and understand emotions and to recognize their impact on work performance and relationships.

•They demonstrate self-control, trustworthiness, conscientiousness, adaptability, a need to achieve – to take the initiative.

•They are empathetic, organizationally astute and have a strong service orientation.

•They demonstrate visionary leadership, influence and team well with others while providing feedback and guidance, good conflict management and the development of a web of relationships in the organization and with important outside constituencies.

The effective leader usually has a leadership style which is especially effective in certain situations. For example, coercive managers are good in crises and turnarounds while managers who provide clear direction and feedback are helpful in organizations looking for better performance in their mainline businesses. Friendly managers are useful in conflict situations and democratic managers are helpful in getting more and better ideas for improvement from their people. Pacesetters are usually the most expert in the company’s business and lead via strong personal leadership and superior knowledge. Finally, managers who are good coaches excel in the development of people and in the building a good bench for the future.

A Moving Target

Every effort should be made to match talent with need but the real world is complex and constantly changing – even in a single organization.

Truly effective leaders have the capacity to use more than one style to get the job done. When the leader lacks the specific style needed to succeed they need to call on the right style from one of their people or even an outside consultant.

In a start up operation there is a need to wear a number of hats at one time, to operate with scarce resources and to be very action-oriented. Strong, directive leadership is usually the norm. In second stage companies capitalizing on early success by driving more volume or reaching out to new markets the need turns to knowing about business basics and how to run specific departments where expertise is needed in disciplines like accounting, personnel, production, marketing and sales, R&D and the like. The general manager’s job changes from a totally hands-on do it now mode to the need to plan, structure, and set goals while relying on knowledgeable managers to build departments, to reduce errors and to build the carrying capacity of the organization. In third stage companies looking to further growth and success more emphasis is placed on long range planning, better ways of dealing with complexity and the need for better communication and feedback systems.

A Sobering Reality

The illusion of certainty and steady progress causes some in business to assume that what works for now will work in the future. Obviously, that is not the case nor is it the case in other facets of life like our families, our hobbies and our interests. It can be difficult for those inside a company to see subtle but steady change and the need to upgrade the organization, to plan for the future. Which of your people have really developed recently and need more challenge? Which people have reached a plateau in the face of increasing demands for innovation and leadership in new methods and products? And, which people are retired on the job or totally failing?

A review by an objective outsider with broad knowledge of business, the needs of companies of differing sizes in a range of industries can be a helpful starting point in plotting the kinds of leaders who will take the company the next mile. Attached is a scorecard you can use to assess the needs of your organization. Call us if you want to compare your notes with our insights and we can work with you to provide the kinds of leaders you most need while making sure that your organization is not only being effective today but developing the leadership talents and styles needed to provide enhanced results in the future.

Dan Dieck, CEO
Dieck Executive Search
February 2, 2009
608-238-1000
www.DieckExecutiveSearch.com
Dan@DieckExecutiveSearch.com

LARGE FIRMS

Large firms often make impressive initial presentations by presenting slick brochures, upscale offices, well educated professionals and extensive client lists. However, the first contact is often with an Office Manager or Senior Partner and not with the people that will actually be doing the search: people who scan directories and files and other sources to get preliminary lists of candidates, others (often people in training) who make the initial telephone contact and do the preliminary screening of possible candidates and then the principal assigned to the search. It is extremely important to find out and to get to know the person who will actually be the contact and to have a strong voice in selecting that person.

REGIONAL or MID-SIZE FIRMS

Regional or mid-sized firms typically have a three tiered approach in which partners and senior consultants handle large clients; associates and people yet to have ownership or a partnership deal with medium-sized clients, and the trainees handle lower level searches and smaller clients. When these firms are busy they can get overloaded and may not provide timely or thorough service.

BOUTIQUE FIRMS

Small firms which rely on one to four key people are usually staffed with a couple of very experienced people and then others who have solid exposure and experience. Such firms usually have specialists who are industry specific and are well known within their specialty or generalists who can work on searches in a variety of industries and the recruiters provide very personalized hands-on service. But, if there are needs for many searches at once they may have trouble meeting the demand or may need to get other smaller firms involved and this can present administrative demands which are challenging for such firms.

Step Two – Learning the Firm’s Approach and Processes

Ask these key questions:

•Who will be meeting personally with the hiring manager and key executives at my company and who will be involved in the hiring process?

•Will a written and comprehensive summary of the position requirements be provided and by when? This document elaborates on the company, scope of the position, expectations, etc. and should always be pulled together by the search consultant who met with the hiring team from inside the company.

•Which companies are off-limits? These are companies that retained the firm in the past and have agreements in place that preclude or limit them from directly recruiting company employees. Typically, these agreements are in place for two years beyond the last retained search project with a company. With large global firms this could be half of the companies that you would like the search firm to penetrate.

•Who will actually conduct the research efforts on the targeted companies and individuals? Will this be done by administrative people or by the actual recruiter?

•Who will actually contact the candidates in the direct recruiting efforts? Will these be trainees in recruiting or experienced people in the firm or the actual senior recruiter managing the assignment?

•Who will conduct the interviews with the candidates? Will they have a good feel for the chemistry and fit issues which are the number one criteria to a successful hire?

•Who will handle the reference checks and will they know the vital questions to ask to ascertain candidate expertise and fit issues as well as future advancement potential?

Step Three – Evaluate the person actually doing the work

•What is this person’s background and how relevant is it to our needs?

•Do they show evidence of curiosity and interest in our company, our industry, our people and this assignment?

•Do they have the capacity to listen effectively, to learn our needs rather than simply trying to impress us with the attributes of their company?

•What is their actual track record? In what ways have their candidates performed well in meeting or exceeding the requirements of the jobs they have filled?

•How effectively does this person meet others and will they work effectively with our people? Will they be truly hands-on, involved and fit in?

•Will this person be able to do the work in terms of their know-how, schedule and resources?

•How effectively will they structure and schedule the work to be done? Will they provide us with clear benchmarks for progress and provide us constant feedback regarding their progress?

•Will they help us expand our knowledge, insights and perspective? What can we learn from them?

•Will we want them to be a part of our team and to come back repeatedly for additional work in the future?

•Are they professional? What ethical and professional standards do they adhere to? Are they experienced, well-trained and involved in professional networks and ongoing professional development? Can they keep confidences and do they respect the needs of their clients and candidates?

•Are they well-educated and experienced in business in general? Do they offer clear fee arrangements and professional accounting and billing standards? Will they treat our money and resources as carefully as we do?

Step Four – Ensuring that the Candidate makes a successful transition

After the slate of finalists is interviewed by the hiring team, the post interview feedback from both the company and the candidate is crucial. Keep in mind that the search consultant is retained and acting as the company’s agent and he/she should work diligently to address every issue uncovered through feedback.

To assure success, the search consultant should be intimately involved with the actual offer and package being extended to the successful candidate. Always be sure to get an acceptance letter in writing. Doing this promotes buy-in and conviction.

The search consultant needs to stay in touch with the successful candidate once or twice a week to make sure that the resignation from his employer is going smoothly and to keep the client in close touch with the candidate.

The search person needs to make sure that more than one candidate is qualified for the position and stays involved in case the lead candidate chooses another offer from a different firm or decides not to make the change. Should you be unable to get the #1 candidate, for whatever reason, you want the #2 candidate excited and interested.

The Bottom Line

The actual search consultant is the most important component for a company to consider when picking a search firm and consultant to serve their needs. This relationship evolves and is incredibly important to success – assisting your company in putting a world class team together. We highly recommend that you do references with the managers and professionals who have used the search consultant under consideration. Success and effectiveness require that you select and evaluate your recruiter and firm as carefully as you do the people you want to join your company.

Dan Dieck, CEO
Dieck Executive Search
January 12, 2009
608-238-1000
www.DieckExecutiveSearch.com
Dan@DieckExecutiveSearch.com

Overview

When you are glancing through the business section and see that an individual who you think highly of has joined a startup or smaller company, do you ever just wonder why? Why leave a secure position with a major player in a specific market sector to join a company which has promise but lacks the resources of the bigger company?

Many have realized that this is an opportunity to play a pivotal role in a leadership capacity and to truly leave an imprint. Sure, the risk and reward components are present; but the bottom line is the internal drive the individual has to make a difference and the desire to be the architect of an organization.

Attracting World Class Talent

First and foremost, early stage companies need to understand that key executives aren’t interested in using their own financial resources for normal living expenses! The following example may clarify this point. John Jones is currently the CEO of a biotech company and was one of the two founders of the company that was started 12 years ago. His eyes light up when he tells you about how the organization was founded based on sound science. He is proud of the federal grants they attained and how they were able to get key members of the team on board. He does not gloss over the trials and tribulations they went through. After all, whatever doesn’t kill you makes you stronger.

John describes how the funding took hold – early angel investors, then going to venture capitalists when the timing was right. He describes how the company worked at positioning itself for purchase or maybe an IPO and the path to the initial stock offering. He is proud of where his organization is today – a biotech company with a market cap value of $450 Million dollars.

Today, John’s company is probably at the 3rd stage or early 4th stage of size and maturity. They have over 200 employees. Exciting, right? The problem is he finds the structure, the departments, the quarterly reports, and all of the other aspects of a large company don’t offer the same excitement as when the company was a smaller growth company.

As one of the two founders, he is financially set and has a comfortable life. John Jones finds himself the founder and CEO of a successful company and the key leader and visionary of the organization, yet you can sense that he’d be open to new opportunities. A Stage 1 or Stage 2 company with proven science or technology would be attractive enough to investigate from his perspective.

So, you have a potential candidate expressing some interest. It is important now to evaluate where he is at from a total compensation perspective.
•Base salary: $465,000
•Bonus up to 50% of salary based on clearly defined performance targets
•Executive vehicle program of $900 per month
•Health club membership at $400 per month
•6% match on 401K up to 15%
•Stock options tied to performance that could be 0 – 10,000 shares per year with 3 year vesting and a 10-year exercisable period

As one of the founders of your company, your background is in science or technology and you realize that you need a CEO to take your company forward. (This same situation could be for a COO, CMO, CTO, CSO, CFO, or a key VP). Can you attract this type of talent? You know this is exactly what you need at this stage of your company’s life. Is your exit strategy to sell your company or do an IPO? If it is, how can you attract a proven individual who has done this before?

It is human nature to reflect on your own position in the company: your base is less than half of what the potential candidate is earning; you have no car program, no health club, and haven’t even thought about a 401K; you participate in a group health plan through a national association you belong to. “Whoa,” you think, “this is never going to work!”

You not only need this type of talent, you have to have it and can attract it! If your vision is to be a company with a $250 Million market cap in 10 years or be sold for $250 Million, then bring on the individual who has done it already.

Here is where the risk/reward component comes in. What base salary will it take? Do you have to match the $465,000 base salary? No! No! No! Do you have to put a base salary target range in place? Yes, with flexibility. The base salary will need to be at a level where the new CEO will be able to meet all of his/her financial obligations. Here is where it can get tricky. The potential CEO wants you to provide every iota of information on the company from conception to where the company is at today. He or she will want to review all financial statements, tax returns and other private and privileged information. You may need to bare your company soul, but this needs to be mutual. Without this open disclosure, things will not move forward. If the potential CEO balks, run for the hills as it will never work. If the potential CEO states that he wants to be “kept whole”, it is the wrong person as she is more than likely with a Stage 3 or Stage 4 company and that financial equation will only work to go to a similar-sized or larger company.

Putting Together the Right Offer

Putting together the right offer is more complicated than most founders ever think but surprisingly this process only requires only one key component – honest communication!

What are the key components to the right offer?

This may be less complicated than you think as there are just a few keys to the right offer:
•Base salary
•Bonus with clearly defined performance goals, objectives, timeline and measurement methodology
•Benefits (health, life, and disability insurance)
•Association memberships (Clearly defined criteria on what organizations the company feels the CEO needs to participate in)
•Allowable expenses – business travel (no Motel 6 or Red Roof Inn, but no Ritz Carlton or Four Seasons, either)
•Car allowance or mileage

(Now, the hook)

Working collaboratively, you inform the “new potential CEO” that together you will design the desired program on rewarding the executive management team going forward. (Remember he/she has been here before and knows what does and doesn’t work.) Bringing this individual on as the new CEO and a board member, how will he/she play the pivotal role going forward in laying out the executive compensation strategy? Only he/she can fully understands what drives the individual with the track record desired and what it will take to add these key executives to the team. It is the shared risk/reward component along with the empowerment and autonomy to do the job.

Now you know the key for attracting a CEO for your 1st or 2nd stage company. This similar methodology will work with any senior executive who will be a direct report to the CEO.

Again, key leadership individuals desire to be a part of a great team. They are incredibly bright people with a passion and zeal coupled with the energy, drive and commitment to succeed. Attracting this talent is paramount to any organization’s success.

Dan Dieck, CEO
Dieck Executive Search
February 20, 2009
608-238-1000
www.DieckExecutiveSearch.com
Dan@DieckExecutiveSearch.com