Building a World-Class Management TeamA couple of months ago, I reluctantly agreed with my wife to endeavor on a relatively small home improvement project, which failed miserably.
Our plan was to add to our backyard patio area using hexagonal bricks. Unfortunately what should have added to the beauty and symmetry of our backyard, only added headaches and more work. My ego was bruised as my neighbor, a general contractor, took some time afterwards to explain some of the subtle nuances and tricks that ensure a successful outcome. After receiving the training we realized how our seemingly insignificant mistakes had a substantial impact on the result.
Many entrepreneurs fail miserably at building and retaining a dynamic management team due to a lack of basic knowledge of some key executive search strategies, costing the company much more than a few battered egos.
A recent Human Capital Index study performed by Watson Wyatt confirms that successfully attracting and retaining a sophisticated and highly qualified management team is an essential function of any startup entrepreneur. In fact, companies that implement best Human Capital (HC) practices provide 3 times the shareholder value as companies with weak HC practices.
With unemployment rates at a healthy 3.2 percent right now, the war for talent is as rich as it has ever been. But this just means that sifting through the noise is as difficult as it has ever been. Try this. Post an ad in the newspaper or online for a VP of Sales in a technology startup company. Within two weeks, you'll receive 300 to 400 respondents, which will include everything from sales guys to plumbers (seriously) who believe that they're qualified to run your company's sales organization. About 100 of the resumes will include folks who have actually been a VP of Sales at one point in their career, but in an entirely unrelated field. Now if you've properly crafted the job description and matched it carefully against the wish list, about two individuals will appear on paper to meet all of the necessary criteria to run this mission-critical function in your company. Bottom line; there are still plenty of job seekers, but few qualified "A" individuals.
This brings us to the classic strategy/ execution dilemma. First, as the talent seeker, you need to know how to build a search strategy. Then once your strategy is in place, you need to know how to effectively implement the plan.
Building an accurate and detailed wish list is arguably the most critical component in launching and completing a successful search. It's an age-old "diagnose before you prescribe" problem. I suggest a few considerations in building your wish list.
Alignment means ensuring that everyone who has a voice in the decision is on the same page. It's a crucial function that frequently gets overlooked. Yet, especially in a mission critical management position, failure to effectively create alignment will invariably stifle (if not kill) a deal. What's worse, the realization of this failure is usually after several weeks or months of search work and several top candidates have been screened and interviewed.
Obtaining alignment is a process of gathering and distilling data from many sources. This is usually best achieved by appointing a single person to oversee the search process. In seeking alignment, one will be required to requisition data from all influencers and decision makers, and generate feedback and insight that creates accountability and consensus. The objective is to create a concise, obtainable, and rank-ordered set of candidate requirements in which buy-in from all parties can be obtained. This prevents two huge pitfalls. First, you'll avoid looking for the wrong type of person. Second, you'll create a set of criteria that every candidate can be measured against, preventing any one decision maker from derailing an otherwise great candidate.
No doubt an entire article can be written on the "how to" of obtaining alignment, but what matters most is that those who weigh in on a final decision are accountable for what they originally envisioned in a candidate.
Understanding the Market
Understanding the talent market is crucial in any search strategy. Many companies have spent time and money searching for something that either doesn't exist, or worse, they can't attract. Conversely, settling for a lack-luster candidate has a potentially devastating long-term financial impact on your company. In fact, a Watson Wyatt study showed that hiring the right people was the third most important Human Capital function of any organization.
The best way to obtain an understanding of the constantly evolving talent market is to make a few calls to outplacement firms, headhunters and other firms in the employment industry. This will provide mounds of insight.
Working the Timeline
Keeping a grip on the allotted time-line is essential in measuring progress in the search. In a perfect world, you would afford at least four months to complete a search for a senior manager. The reality is that time-to-market is still a key issue for many companies.
I'll often create a Gantt chart that delineates the search timeline. This can be especially useful in managing the expectations of those involved in the search.
There are several data points that can influence a projected optimal timeline. That data is discovered by asking questions such as: "What unique challenges does our company face that will constrain the timeline?" "Are we looking for a needle in the haystack?" "Is domain knowledge critical, or will someone with just discipline knowledge suffice?" "What do the investors expect?" "What are the consequences for going over, or under our timeline?"
The builder's rule is measure twice, cut once. If you have properly structured your search plan, you will have avoided at least two-thirds of any potential problems. Though there's simply not enough space in this article to detail every component of a sound executive search methodology, following are a few essential items that will guide you in the process and successfully avert disaster:
Effective networking always has, and always will be the way business gets done. This is great news for the cash-poor company since networking is nearly cost free. However, of all the executive-search strategies, networking is the most time intensive, which can be bad news for the time-strapped entrepreneur.
The best way to avert spending needless hours of networking during the search is to network when there is no search. If you haven't learned the value of networking at this juncture in your career, then you will become painfully acquainted with its importance as you attempt to fill a critical hire in your company with little contacts to leverage.
Please, if you get nothing else from this article, learn that networking should be part of your life's strategy. It will pay big dividends in hiring, sales, building alliances, and creating an exit for your company.
Start With the Board
Your board of directors is the best place to start, which means that you must build a sophisticated and robust board. Before they're appointed, you should assess a board member's willingness and ability to create relationships with world-class executives. In fact, for early-stage companies, the board should be the epicenter of a company's network.
Use Free Online Databases
Many of the larger outplacement firms have searchable databases of newly downsized individuals that are free. Though it's true that usually there's a reason that some of these folks were let go, often times a downsizing takes place regardless of an employee's abilities. Additionally, these databases can provide you with names of folks that worked in great companies, and they can point you in the right direction÷again, a great place to begin your networking efforts.
Find the Wound
People generally change jobs for three reasons: 1) locale; 2) professional opportunity; or 3) money.
Often it's for a combination of the three. Your job in qualifying candidates is to find out why he/she would have any motivation to leave their current position, and why they are attracted to your company.
Just as in sales, we are well advised to "Always Be Closing." In recruiting, you should be continually seeking to understand the true motivation of your candidates for wanting to join your company.
One important note: Beware that of the three reasons mentioned above. Money, specifically cash compensation, is the weakest. If your candidate's sole reason for leaving their company and joining yours is to make a better base pay, then consider this a red flag. Candidates rarely stick with an opportunity for money alone.
Discussion of Money
This can be delicate, but it's important for a two reasons. First, it's an important qualifier and you don't want to waste time pursuing a candidate that won't make the move. Second, you'll need this data when finalizing a negotiation. The two questions you'll want answered are: "What are you currently making?" and, "If the right opportunity were to present itself, what kind of compensation would you be looking to make a move to?"
The answers to these questions are then applied to information regarding their "wound," and you can then make some decent assumptions about how much it will cost you to successfully attract the candidate.
People seem averse to asking these questions as it can be awkward. Remember, you're not trying to close the deal here. You're simply trying to pre-qualify the mutual opportunity.
Keep the Buckets Full
Finally, never stop looking for more candidates until your newly hired manager has actually started. I often see people halt the process because they believe they found the right person. Weeks later, after an exhaustive (and usually exhausting) negotiation has failed and all other candidates were let go, it's back to the drawing board, which can painfully extend the timeline.
I've learned the hard way (like through my doomed hexagonal brick patio improvement project) that some things require more expertise than they appear to at the outset. Such seems to be the case in building a world-class management team. But proper planning and a skillfully managed search process can ensure a successful outcome.