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!
For those CEOs and HR folks who rely on salary surveys to help determine the right range of base and bonus pay for a new CFO hire…or for candidates who are looking for the right CFO compensation offer, consider the following.
Salary surveys are notoriously outdated and generally don’t reflect the current market. Most surveys use data that’s at least two years old by the time it’s printed or available on-line. If unemployment decreased in the subsequent months, which it certainly has in our current environment, there is upward market pressure on compensation. I know some of the government data on the lowest paid workers in our economy doesn’t reflect this trend, but for executives, there has been real wage gain in the last few years.
The Value of the Right Executive Search Partner
It’s one thing to look to a salary guide; even the best are only OK. But if you are using the right retained executive search consultant who understands the market and your value, shouldn’t you expect to be in the top quartile when you get to the offer stage?
I had an interesting call last week about this question with a CFO. She wanted to know what the current going rate is for someone with her abilities. I gave her some real examples of actual offers (client/candidate names removed of course!) presented to CFOs whom we’ve placed in the last 12 months. She was at first a bit surprised. Then, as if a bolt of lightning struck, it became clear to her that the salary data for CFOs we’ve placed shows they are consistently in the top quartile of the available salary survey range. Why? Because our clients want the top tier candidates through our search services, not the 50 percentile candidates. And we deliver!
The CFO Compensation Equation: Cost vs. Value
If our clients are hiring the very best, then they should expect the CFO’s performance to reflect that premium, right? Our placed CFOs, who are in the 90th percentile salary, have created over $10B in value in the last nine years. This far outstrips the minuscule difference between the 50th and the 90th percentile salary. In case after case, our client CEOs appreciate our ability to find CFOs who outshine their peers by not only running a tight ship, but helping to drive revenue and margin growth by innovating sales programs, and being personally involved in customer negotiations. We consistently take on client assignments that result in direct contributions by the CFO to growth, profitability and increased enterprise value.
A CFO’s Pay is Only One Measure
Of course most CFOs are only partially motivated by their annual cash compensation. Their pay needs to be in the ball park, but it’s usually not the primary driver to acceptance. (Although in a recent placement, the base pay changed upward by $50K from the initial offer to the accepted final offer.) When we think about what would motivate a CFO to make a change, the same considerations seem to come back time and again: The CEO relationship/reputation/personality, the ability for the CFO to make an impact and believe in the business, and pay is usually the third leg of the stool.
Finding the Top Tier
It’s not easy to find the best of the best, but when it comes down to it, the value a really great CFO delivers far outweighs the difference in hiring downstream, or the fee for service with the right search partner. If you want in on getting the right CFO compensation or finding a CFO that fits your company, contact me at moc.srentrapdlonra@evaD or call 408-205-7373. You can also see some of the companies we’ve placed CFOs on our CFO Placements page.
Very interesting conversation with a current board audit committee Director and a former Big4 partner last week. He currently sits on three boards: two public, one private. We had a far-reaching conversation on the role of an independent director, and his thoughts on how to get on a board of directors. Given his long career in public accounting and having faced many challenges, I was surprised to hear him say that landing his first director role was “the hardest thing I’ve had to do in my professional life.” Wow. What are the implications of this if you are a sitting CFO with board aspirations? Or a retiring partner from an accounting firm?
Landing a CFO Position vs Your First Seat on a Board
Making the leap to CFO is one thing; it can happen for a variety of reasons, either by planning your career very carefully, working hard and proving yourself. Or, as in many cases, it can be a battlefield promotion because of a business change or departure of an incumbent. It’s not a slam dunk to land your first CFO role, but getting your first director role is a degree more difficult for a number of reasons: the battlefield promotion is probably out. The role is not a natural extension of your current day to day duties. The dynamics of a board are completely different than that of an executive team. So just what’s the ticket for landing a seat on a board?
Strategy for Making the Leap
For frequent readers of my blog the answer won’t surprise you. The strategy for making a big leap in your career, whether you are planning out how to get on a board of directors or land your first CFO role for that matter, is really very much the same. You need to create a game plan to get in front of “people of influence” and consider taking a bit of a risk. (hint: executive recruiters are not the people of influence!)
When No One is Calling
In the case of this former partner, the aha moment was acknowledging that the likes of Apple and Google weren’t calling for him to join their boards. In fact, nobody was. He had been in a relatively strong position of influence, helping major public technology companies on important business strategies. As a sought after opinion leader, he was accustomed to getting calls from CEOs and investors. Once retired from that position, it came as a shock to him that no one came seeking his council any more. This turn of events could be disconcerting and even depressing for some in this position.
Putting Together a Plan… Who Ya Gonna Call?
So he put together a plan for how to get on a board, which sounds simple, but requires a certain amount of discipline and confidence to undertake. He began by identifying people in his former sphere of influence, including investors, board members, CEOs, and former partners. He then started reaching out to these folks to make his intention clear about joining a board. The initial response wasn’t what he wanted: he was invited to join a public company with business complications and a strategy that was not all that exciting. As he said, “It certainly was not an “A” company.” But by trusting his source who led him to this opportunity, he ultimately joined the board. As with anything in life, things suddenly become more attractive once you are involved! A second directorship followed after a couple of years at the invitation of a fellow director. Once his second seat with a more attractive company was secure, his phone starting ringing more often, and he was able work out of the initial seat.
Ready, Set, Go Boarding
So put your most influential and trusted professionals in a cohesive spreadsheet. Select the top10. With persistence, patience and professionalism, get a face-to-face meeting with those 10 influencers. Make clear what your goals are and why you are a compelling asset. Have your elevator pitch down to three or four concise sentences. Ask each of the 10 people for specific referrals within their network. Also, very importantly, offer your assistance to help them solve a problem on their desk.
Next up, a bit about the Audit Chair role as independent director and the relationship to the CFO and other members of the Board.
As always, happy to chat about the next steps in your career or to give more tips on how to get on a board of directors. Visit our site for more information on how we can help CFOs or, if you would like to discuss the ideas in this blog further, please contact me at: moc.srentrapdlonra@evaD.
According to the Silicon Valley Business Journal (10/30/15), Silicon Valley has had 55 companies IPO since Q1 2014. Arnold Partners placed 10% of the CFOs in those companies, creating over $7B in market capitalization. While only half of the 55 companies are trading above their IPO price, all but one of the Arnold Partner client companies are above their IPO price, with two being significantly above. We are helping to form lasting value creation with the top technology and life-science companies in the Valley and throughout the country.
If you are seeking a CFO in this market, Arnold Partners is ready to help you attract a world-class leader to help drive value no matter your capital strategy or location in the U.S.
The really remarkable thing is that only 55 Valley-based companies went public in the last 21 months. If you take out the biotech blast, that cuts the number to 31.
The Value of the Right CFO—for Every Financing Event
Our observations over the course of the last few years is that finding a CFO who can help chart the course of his or her company in a collaborative way with the CEO and Board is the most valuable addition a growing company and can make a huge impact—no matter the course the company takes. IPOs are rare and may be really important steps in growing a company. But as seen in this most recent data, a CFO who can help the CEO manage the Street post-IPO is even more important. The only way to do this is by having a highly predictable business model where expectations can be managed, met and exceeded. Most emerging tech companies are highly unpredictable! The best CFOs are able to put all the business metrics in place well before any IPO talk, so that the transition to life as a newborn public company is a smooth one.
Many of the CEOs we meet with are thinking that an IPO is the next big event in their company’s trajectory. Most of those companies do not go public. That said, having a stalwart CFO in place in a growing private company is a smart investment. The best CFOs are also instrumental in positioning their companies for every conceivable financing event: M&A, growth capital, strategic partnerships, debt financing, etc.
Trouble Ahead in the IPO Market? I Think Not.
The gist of the SVBJ article was that the slowing of the IPO market and the fact that only half of the companies that went public are above their opening day price is a signal for trouble ahead. I disagree. The majority of companies we have been meeting, all over the country, have growing top-line revenue and positive outlooks for the coming year. Focus on growth and getting predictable about that growth and good things will follow.
Arnold Partners CFO Placements: 100 % Success Rate
With 100% placement success rate, we are proud of all of our CFO placements, and happy to have a spot on the roster of recent technology IPOs. More important is our measure of lasting results. The CFOs we have placed over the last 10 years have an incredible tenure in the companies they have joined. So if you are looking for a great technology or life-science CFO, no matter your stage, industry, or location, we are ready to help. Shoot me an email at moc.srentrapdlonra@evad or call 408-205-7373.
The Silicon Valley Business Journal ranked Arnold Partners #10 for number of placements (11) made by executive search firms in the Bay Area for 2014. The firm, which specializes in CFO searches and Board searches, was ranked #23 in 2013.
An active venture investor and client told me about a conversation at a board meeting he recently attended. The question was asked, “Does anyone know any CFO recruiters?” Everyone around the table said yes, but not anyone they would use again! This is where the growth and success of Arnold Partners differentiates us from other executive search firms. All of our clients in 2014 (and continuing in 2015) were from previous client relationships. Whether it is a relationship with an investor, former CEO or CFO, we maintain our standing in the marketplace because we consistently deliver results.
The new rankings of the Business Journal are all about integrity. Many of the firms listed in previous years did not submit their placements for 2014 because for the first time the Journal validated the numbers. For each placement we had to submit the actual client name and the person we placed. But no problem for Arnold Partners; we have nothing to hide. We never inspired to be the biggest firm—in fact our small size is part of our appeal. But we do what we say we will do, and in looking back we are proud of our results and are happy to share them.
Arnold Partners Track Record for Placements Continues
We are on track to perform as well this year as we did last. The market in Silicon Valley remains very active for CFO recruiters and the supply of top talent does not seem to be getting any easier to find. The market does not seem to be overly frothy as some are speculating. It seems to us that the market is healthy across a wide spectrum of industries with real revenue and real customers and real growth. We are engaged in searches from manufacturing, SaaS, BitCoins, Medical Devices and Biotech and the Internet of Things.
Our laser focus on CFO and Audit Committee search results in timely searches with lasting results, and we are committed to taking on a limited number of searches at any given time. As a result, the name Arnold Partners is being bantered about in more and more board rooms when there’s discussion about what executive search executive to call. We thank our clients for the trust you show in us. We value our relationships with you above all else.
