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.
As the leading independent CFO executive search consultant, I’m interviewed about my search process and approach to search by prospective clients many times a year. But frequently I’m not asked some of the questions that I know to be the most critical, based on my 20+ years of experience in the search field. Given the key role of the search consultant in the hiring process, and the importance of making the right management hire to the bottom line, you wouldn’t think this was the case. I chalk it up to the idea that most executives only engage search consultants for exceptional hires so they do not have a lot of experience in this area. So, as a public service to any company contemplating hiring a search firm to assist on ANY executive level assignment, here are some key questions to ask.
What is your percentage completion rate for searches you (not the firm) undertake?
The answer can be hard to verify, but it’s critical to understand the completion and stick rate of the search consultant you’re considering hiring. Publicly-available industry estimates indicate that only 70% of searches are completed. It would be outrageous to pay 100% of the fee to a certain search firm if there’s a 30% chance that you don’t get a great hire, right?!
Look for an executive search consultant that is in the 90%+ range for completions. Our completion rate at Arnold Partners is 98%. The way to verify this is through the tone and sincerity of the consultant’s answer and by doing in-depth reference checks. The corollary to completion rate is stick rate: how do the placed candidates perform once in the seat, for how long, and how much value did they create? This can be verified by checking older references. I am FREQUENTLY asked how many searches I’ve done in the last six months. This is not nearly as important as: “Tell me about a placement you made two years ago, and what is happening with that placement?” Or “Tell me about a difficult search you completed, and what made it difficult?”
Who will be representing me and my company to the marketplace?
In most search firms, even boutique firms, the role of “sourcing candidates” is usually performed by the most junior people on staff. Partners, even in boutique firms, are incentivized by bringing new business into the firm. This means the person you meet when interviewing a prospective search firm is probably not the person that would represent you (initially) to potential candidates. The “sourcing” person may not really understand the nuances of you, your culture and/or the unique elements of the role. That situation is kind of like the game of telephone: you tell the partner/executive search consultant all the subtleties of your needs… they return to their office and have someone else write a specification… then yet another more junior associate reaches out to prospects. This is part of the reason for the 70% industry completion rate. In the case of Arnold Partners, while we use very sophisticated, data-driven research, ONLY Dave Arnold contacts prospects to ascertain interest and then qualifications — more on this in question 5.
Are you willing to “shoot for the moon” for me?
What I mean by this question is that every company has a level of executive they can realistically attract to their C-suite based on various factors unique to that company. Is your executive search consultant willing to push that threshold, to try to attract a pro-level player to a Triple-A club? There’s no harm in shopping at a level above your current team but this actually causes fear in most search consultants, because if the bar is set too high in terms of client expectations, the role may never be filled, and mutual frustration can result.
My approach is to shoot for the moon out of the gate, and have a realistic agreement with my client that if we don’t land that moon-shot after an agreed-to amount of time, we agree to re-aim our expectations. This can make for more work, but why try to land the executive you dream about?
What is the specific expertise of the search consultant handling my search?
There are two ways to go: the consultant is an expert in your industry, or they’re an expert in the function of the role to be hired. Obviously in my case, I’m a CFO expert and industry agnostic. Part of the reason for that is my belief that CFOs are industry agnostic because their skills and abilities cross over industry lines. That is not typically the case in other C-suite functions such as marketing or engineering. It’s OK to go one way or the other, but don’t hire a generalist. Your executive search consultant needs to answer to your liking to the question, “Tell me about your expertise in…”
What is the specific approach you will use to attract candidates to consider our opportunity?
It’s my opinion, based on many years of studying recruitment practices and training other recruiters, this is a good question because it will separate the wheat from the chaff. If the search consultant answers the question by saying they will sell your opportunity to candidates by telling them about you, and expounding on what a great opportunity it is, they have the cart before the horse. In my experience, a skillful search consultant will get the candidate to talk about themselves, their accomplishments, and aspirations BEFORE launching into a pitch for your company’s opportunity. Gaining this insight about the candidate is key to successful recruiting. By listening closely to the candidate’s words, a seasoned search consultant can determine whether it makes sense to go the next step. And if your executive search consultant regurgitates the spec as an opening salvo, take note, you may have the wrong search partner.
There are several other key considerations such as: current work load of the partner you’re considering hiring, fee structure, guarantee terms, conflicts of interest or “hands off” target companies, geographical reach, follow-up post placement, etc. But in my opinion, the five questions above will bring about the most important discovery, leading to the right partner for a successful search.
Let me know what you think about the best questions to ask when hiring a search firm and your own experience by contacting me at moc.srentrapdlonra@evad or call 408-205-737. For more great tips, check out the rest of my blog!
Recently my friendly competitor and colleague Cliff Scheffel published a white paper titled, “When is the right time for a tech startup to hire a CFO?” What I really liked about his report, which was co-written by Jeff Epstein of Bessemer Ventures, is that it gives analytical support to what all three of us have experienced as search executives and as investors. It provides a CEO, board, or founder with specific metrics that signal when to hire a CFO. The key markers cited are 100 employees, $25MM in revenue, and/or revenue growth of 100+%.
The report was well done. Let me know if I can send you a copy.
I got thinking about a related question: what factors or changes call for changing the CFO? I believe that in some cases, the first CFO, perhaps at the stage of company that Cliff and Jeff outlined above, can grow his/her skills along with the growth of the company. In other cases, a change in CFO is needed as the company changes.
IPO Stage
It’s common for companies to contemplate a change in CFO when they start to seriously look at an IPO. In a VC-backed company, the investors are always looking for ways to minimize risks in their portfolio. If the CEO doesn’t have previous public company experience, that is also an important consideration on when to hire a CFO – the investors will almost certainly want an experienced hand in the CFO. If the incumbent CFO can demonstrate the ability to communicate the story to investors, they may be considered a candidate, but this situation will frequently prompt a CFO change.
Pre-Revenue to Commercial Stage
What about a company that goes from pre-revenue to commercial stage? This too can prompt a CFO change. We see this in the Life Science sector of our technology practice at Arnold Partners. If a bio or pharma company is successful in getting a drug approved, they have a major decision to make about bringing that drug to market. If they plan to build out a commercial organization, the role of the CFO changes materially. I actually had a CFO tell me a few weeks ago, just as his organization with going through this change, that he wanted no part of being in charge of a revenue-producing company!
Beyond IPO and Commercialization
Beyond IPO and commercialization, other changes in a company can affect options for when to hire a CFO. For many tech companies, international expansion is happening earlier and faster than ever before as tech goes to the cloud. In the med-tech side of things, sometimes getting a CE mark of approval is a better strategy to prove product acceptance than trying to fund a US-based study for FDA approval. These considerations affect the role and requirements for the CFO big time.
In an earlier blog, I wrote about how most CFOs get their first chance in the seat through a battlefield promotion. This can be a big break for a Controller or VP Finance that significantly changes the trajectory of their career. However, CEOs need to be careful in making a choice out of convenience over careful consideration of a slate of curated candidates while also considering the company’s stage of growth. Running a search process in parallel to a temporary promotion of a number two can pay dividends for all the parties: the CEO, the board, and the person in the seat. It can provide an objective test of the market to make sure the right person is running the show and that careful consideration is taken for all parties.
In only a few occasions have I seen a CFO go from pre-public company CFO to passing $1B in sales. It’s rare. CEOs need to be diligent to make sure they have the right CFO partner as their companies evolve in complexity and size. If you would like a consultative review or even more information about when to hire a CFO, please contact me at moc.srentrapdlonra@evad or call 408-205-7373. As a corollary to this subject, my next blog will be about the importance of agreeing upon a good position specification when starting a search, “The Spec!” Stay tuned.
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