Economic and Employment Outlook for 2018 (i.e. How Long is the Commute?)—and Impact on CFO Demand
It’s not just the CFO market that is RED HOT in Silicon Valley, it’s the entire economy. According to the California State Employment Development Department, as of March 7, 2018 the overall unemployment rate in Santa Clara and San Benito counties is currently at 2.9%. That’s the overall rate. For degreed professionals it is under 1%. That means more jobs, including CFO jobs, are out there.
For those of you commuting anywhere in the Bay Area, you instinctively know this. A look at the unemployment rate from 2010 to 2018 is telling — it’s a straight down and to the right line:
What’s Driving All This?
The economy in Silicon Valley is firing on all cylinders. It’s a very different expansion from what we saw with the dot-com bubble in the late 90s. For starters, the push is extremely wide in terms of the industries within tech: AI, Autonomous Vehicles (can you guys hurry up with this, we need them now!), SaaS, Consumer, even Semiconductor is seeing some revival due to the AI boom. On the Life Science side of things, CFO jobs are opening as both Biopharma AND Medical Device companies are getting funded and doing very well. This expansion is about revenue generation —- real dollars (not just ICOs, which is a whole other topic).
From everything I’m reading there’s still a lot more fuel to throw on these flames. Where we’ll house and transport additional workers is a real problem, but the epicenter of tech is still here and not disappearing anytime soon.
IPOs Drive CFO Demand
There are a number of high profile IPOs that really will happen in 2018 and 2019. DropBox, Zscaler, AirBnB, and Uber have all announced. IPOs directly affect the CFO market in that when high flyers go out into the public markets with success, others will follow. We saw this happen in 2012 in the Biotech market with dozens of IPOs, some of which probably should not have gone out. Most companies will not go public without a CFO, and those that do soon realize they need one.
What does this mean specifically for the CFO market in 2018? It means competition for employers. It means candidates for CFO jobs can be picky. It means there are very few people on the sidelines. It means if you are seeking to hire a CFO it will be hard work and you will need to dig deep into your contacts and or work with an executive recruiter who can really help.
Changing Demographics Impact CFO Availability
There’s an additional factor facing the CFO market this year and the coming years as well — the Baby Boomers are retiring. This is noticeable at the CFO level and will force companies to look at planned succession and look at candidates who haven’t previously been in the CFO seat. Our clients have been more receptive to looking at “step-up” candidates than ever before, and I think this is at least part of the reason.
So enjoy the ride as slow as the traffic may be, it’s going to last a while. And take stock that full employment is a lot better than the alternative. Remember 2003?
When the CFO market is this tight, you need a search partner with proven success in this type of environment. Contact me at moc.srentrapdlonra@evad to discuss your objectives and we’ll work together to land your ideal candidate.– Dave
Have you ever been presented with a counter offer after resigning a position? Or, have you presented a counter offer to an employee who resigned?
Let me clearly state that one should (almost) never accept a counter offer, and why companies as a policy should (almost) never make them. None of the CFOs I’ve placed have accepted a counter offer. This dreaded possibility is always discussed prior to my making an offer on behalf of my client.
I was recently interviewed by FierceCEO for an article about counter offers, and as is frequently the case, the reporter only used a few of my words, so I’m jumping on this soapbox as a public service and as a refresher on this important issue!
Explore Your Motivation
It’s easy for a company to make a counter offer. Much easier than trying to get the work done without you and experiencing the pain that would be felt in your absence. But the truth is, as soon as you walk into your boss’ office and resign, a critical line of trust has been broken and will most likely never be repaired. Typically, counter offers include an increase in pay and perhaps a title boost. In my many years of recruiting CFOs and C-level executives, it’s clear to me that people don’t change jobs merely for money. There are a whole host of other reasons. Usually it’s because they don’t like their direct boss, they don’t agree with the strategic direction of the company, they don’t see a route up the ladder, they are bored with the work, they hate their commute, or their benefits are lousy and getting worse. Or a combination of some of these factors.
If you accept a counter offer for more money, the root cause of your unhappiness will still be in place. And, your increase in pay could be an annual increase just given early. Calculate the after-tax value of that increase. Is it really worth it? My cynical side also says that if you accept the counter offer, you’ve just provided cover time for your employer to start looking for your replacement!
Band-aid Solution
Most counter offers only put a band-aid on the wound. They usually start with praise about your important contributions or they present some big project that is coming up they plan on giving you. They almost always include some increase in pay. I don’t have research to back this up, but conventional wisdom says 80-90% of people who accept counter offers end up leaving within a year. I made that mistake myself once and missed out on joining my next company when the stock was much cheaper. I was fairly low level and the counter offer included a call from the CEO. Talk about being swayed to stay! I stayed ten months after accepting a counter offer. Lucky for me, the offer I accepted and turned down was still available!
People make a change because they’re moving away from things, or moving towards something — a better company, a better role, a shorter commute, etc. Usually people have some items on each ledger, a combination of moving away and towards. If you’ve lost trust in your current company and considering an offer elsewhere, think through what accepting a counter offer really means. If you take the counter offer, you have to tell your new company that spent weeks/months getting to know you that you will not be joining them. Good luck going back to them when your root problem returns in your new role! Making decisions is largely what executives get paid to do. If you second guess your decision to leave, what does that say about you?
The Exception!
I can think of one instance where a head of engineering resigned to the CEO having accepted a large role as division general manager in a new company. The new role was bigger than his current one and paid significantly more, but the company was not as exciting or successful as the company he was working for. This savvy CEO got to the root cause of this executive’s motivation for change — he wanted a more strategic rather than an execution role. The CEO didn’t make a counter offer to keep this exec in his role, he actually created a new position as head of strategy that fully enabled the potential deserter to remain with the company, reputation intact! So this was not a mere title change, it was truly a new job. (The reason I can tell this story is that the executive is my brother. He stayed in the new role for several years and later retired.)
If and when you do resign, do so with dignity and thanks to your current employer. Make a good hand-off and leave as quickly as you can without burning any bridges. Back up your verbal resignation in writing. You will need your references down the road. We are in an incredibly tight labor market, so be sure-footed and clear about your reasons for moving on. To steal from the Kona Brewing ad, “One career bro, don’t blow it.”
I invite you to share your experience with being offered or offering counter offers. Or if you’d like to learn more about our process and how it supports successful career decisions, email me at moc.srentrapdlonra@evad.
In celebrating the end of another successful year here at Arnold Partners, I gave thought to what happens once we shake off the satisfaction of completing a search, and the real work begins for our clients and placed candidates. As a general rule, I’m not personally involved in the details of on-boarding the new hire. I have an important regimen of follow-up with the executives involved, but certainly I’m not on-site to see how the new CFO is brought into the fold to maximize success. So, I reached out to some of my clients to educate me (and maybe you too?) about successful methods of on-boarding for success.
My client Shari Simpson, Head of Global Human Resources at Shockwave Medical, points out that while on-boarding a c-suite executive is different than an entry-level employee, “It’s very important that everyone deserves attention and respect from day one.” She says much more information is shared at the executive level about the business plan, company goals and objectives, and the timelines to achieve them, but the contribution of every employee is critical. Shari also states, “If the employer’s expectations of the new hire aren’t met in the first 60 days, the new hire is likely to leave. You don’t want any surprises in the new hire’s experience. You want their expectations of what it’s like to work there to be right in line with reality.” She goes on to say, “On-boarding is more than a check-list, it needs to be real and based on empathy for all employees and focused on mutual success — no surprises!”
John Owens, Chief People Officer at Sentient (and long-time client of Arnold Partners), chimed in as well on some important factors at the CXO level. He emphasizes the culture of the company during the interview process, specifically how the executive staff interacts with one another. How are meetings conducted? What are the key behaviors? Is communication tight and crisp, or is it long-winded and heavy on details? John says, “What you really don’t want is a new executive to fall on their face in their first executive meeting!” He also takes a lot of time in the interview process to explain the culture of the company, because, he says,“If you don’t get the cultural fit right from the start, it’s highly unlikely it will ever be right.”
Ms. Andy Danforth, former client of Arnold Partners, has some even stronger thoughts on the importance of on-boarding: “All new employees really want to have a formal orientation process, especially executives. The complexities of the executive role require that they learn the lay of the land before they dive into any form of execution. They need to know the who, the what, the where, and understand the expectations from all parties.” She added, “The on-boarding process builds momentum and is absolutely critical for retention. It’s really not an option — it’s mission critical to have a formal and well-systemized process for all employees.”
Finally, I had the pleasure to speak with Jennifer McKay, VPHR at Hercules Capital, placed there by yours truly. She had a couple of unique ideas to add: “The big thing is to communicate with new hires before they even start, and to set their schedule for them so they know what meetings they will be in, and with whom. Then, the critical part is getting feedback on their initial impressions. They bring a fresh set of eyes and ears to the company at a high level — they can offer some truly novel and unique ideas about what seems to be working well and what’s not. It’s like having a free consultant!” Jennifer also likes to meet with the new exec during the first week to talk about the star employees from their previous job. She keeps a list for future hires.
So, while I may hand the baton off to my clients after we have sign-off on an offer, I do believe our process is in lock step with the advice from above. It’s about respecting all the parties involved in the search process, it’s about getting the cultural fit right, it’s about being as clear as we can about the current situation in our client company and sharing the vision of where the company wants to go. Most importantly is long-term success. My speculation is that the long-term success of any hire may begin with the first recruiting call, and how the opportunity is presented to a potential candidate. For a refresher on this point see my video, https://youtu.be/eLdprDG_3Uw. There are many steps from there.
I’d like to hear your perspectives on on-boarding. Or if you would like to learn more about our process and how it supports on-boarding, email me at moc.srentrapdlonra@evad.
If you’re a CFO candidate, how many times have you seen a job specification and only casually glanced at it? I had a CFO candidate tell me just the other day that he had no reason to read the spec, because, as he said: “I already know very well what a CFO does.” I’ll admit as a writer of detailed position specifications, it’s easy to give less attention to the finer details, but that’s a mistake when you’re getting started with executive recruiting.
Being focused on one discipline as I am in the CFO role, it would be possible to become complacent and not dig into the nuances of the specifics in each client situation. But it’s critical to not fall into that trap! The round peg-round hole does not apply to executive recruiting, and the spec should carefully represent the uniqueness of each client we represent. Yes, there may be some similarities in CFO roles at different organizations, but experience has taught me that focusing on the subtle differences in each client situation is what enables us to find an exceptional match—vs. finding an also-ran.
Making the Deep Dive
The specification is a product of the deep dive into the company we are representing that reflects hours of diligence to understand the specifics of our client’s situation. Here’s an example that illustrates the benefit of this approach. My firm Arnold Partners was recently hired by a CEO to perform executive recruiting for a CFO following a meeting that was 99% about Arnold Partners—our approach, successes and past clients. As he was leaving for vacation he asked us to meet with his entire executive team. After an in-depth conversation with just the first person we realized that they didn’t need a CFO given their stage of development. We cancelled the rest of the meetings, no spec was needed, at least not for now.
We incorporate into the spec the unique qualities of the company and the strengths and weaknesses of the CEO so we can target the CFO who will bring complimentary skills and style. The spec is created in a way that can’t be duplicated robotically, and sets the tone for the partnership between company and search consultant, and the value that will be created with the right hire. Gaining an understanding of an IT’s company’s core technology and what makes the company tick is not a trivial undertaking, and we expect a few back and forths until we nail it.
Enticing the Candidate into Action
A spec should entice the candidate by sparking an interest in the specific opportunity or an idea for action. The goal is to have a prospective candidate think, “Wow, this was written for me!” or “This is not exactly right for me, but I know Joe would love to hear about this opportunity.”
I have said to clients in the past: “the spec goes out the window after the first meeting.” There’s some truth to that, but only because so much thought was put into the spec in the first place. The spec serves as a guidepost and may need fine-tuning after some interviews meetings take place, as “nice to haves” become “must haves” or vis versa. The spec can be a dynamic tool over the course of the search. The spec is worth obsessing over, and at Arnold Partners, we do. Clients should take a serious view of the creation process and CFO candidates should mind the details.
What’s your experience with specs in executive recruiting? I’d like to hear your thoughts or have the opportunity to help create one that creates extraordinary value for your company. Email me at moc.srentrapdlonra@evad or head over to our About page to learn more about how Arnold Partners can help with the process.
The quick exit of Anthony Scaramucci as the Whitehouse communications director was the catalyst for this article on how long should one stay at a company if you hope to still have an effective resume. The question isn’t an easy one to answer to in an effort to get the best answer possible Dr. Tracey Wilen, author of Employed For Life: 21st Century Career Trends and Dave Arnold, who runs the executive search firm Arnold Partners, LLC were asked to provide their advise. Arnold calls it “a balancing act of tenure and time past.” They suggest that the standard isn’t what it used to be and that maybe the “minimum” time required to list a job isn’t quite as long as you think it might be.
Click here to go to LEVO and read what Dr. Wilen and Dave recommend in terms what job length is “good enough” to still have an effective resume and what to do about moving forward.
Already read it? Check out Dave’s advice on How to Get on a Board of Directors – a job that is definitely worth keeping on your CV. Being on the other side of the hiring process in this situation can be just as tough. If you spot a job on a candidate’s CV that stands out to you as being too short, don’t be too quick to rule the them out. It is entirely possible that the person was a poor fit with the previous company but a great fit with yours. Whether or not they’ve lasted longer at their jobs than Scaramucci did at his, Dave has some excellent guidance on differentiating between a great “On Paper” CFO and a great CFO. You can find that guidance on his post: A Great CFO Hire on Paper vs. a Great CFO Hire: A Tale of Two Clients.
