Clients, Prospects, Candidates, and others we speak with are asking us a timely question: now that many senior-level/high-performing executives are available in the marketplace due to a myriad of mostly cost-saving factors, is today’s battle for world-class talent easing?
We would love for that to be the case, yet our real-world experience dispels this myth. On the contrary, 2023 continues to be an extraordinarily hot market for A Players who thrive in private equity-backed businesses. Just because companies like Salesforce lay off 8,000+ employees, we often ask the question – “How many of those affected people are candidates for the middle-market C-Suite and functional leadership roles we recruit for?” The answer is somewhere close to zero. Numerous challenges face those who are hiring today, such as increasing compensation, multiple competing offers, a strong reluctance to relocate, uncertainty regarding financial forecasts, and the economy.
Despite these difficult conditions, we have acquired and incorporated many valuable lessons learned to enable our clients to successfully land their desired candidates. Listed below are several proven recommendations to yield “win-win” outcomes when recruiting senior executives:
Sharpen Your Value Proposition
Why should a gainfully employed high-performing executive want to join your firm? You must ensure you have a compelling story and create differentiation for your brand. It must be communicated by all stakeholders with consistency and messaging that “cuts through the clutter” of the many other opportunities presented to these candidates. Without 100% alignment, you will fall short.
Everyone’s time is precious and positive initial impressions (regarding trust) are a must. When discussing your opportunity and needs, be upfront about all key issues and pressing challenges at hand so future surprises are avoided. Without trust, you will run off great people and lose momentum.
Get Creative with Compensation
Staying within one’s budget is a reality for most and it means certain people will be too expensive and fall out of your process. However, there are many ways to attract strong candidates if one gets creative. Here are some of our recommendations:
- Add performance-based kickers to year-end bonuses to reward for over-achievement
- Agree to sweeten the equity at a later date once important milestones and critical value-creation goals have been attained
- Offer a cash incentive on top of one’s initial pay package if your exit sale exceeds the original targets
- Offer to bump one’s Base Salary when higher EBITDA levels are attained (non-cash rewards can help too, including expanding a finalist candidate’s duties over time to round out their skillsets, elevating titles without more compensation, and/or discussing future roles at the time of exit. These are impactful examples of levers that can be pulled.)
Apply Flexibility with In-Office & Relocation Requirements
This is a complex subject and, for many, their #1 challenge. COVID has forever altered the employment landscape at all levels. It’s not just the Millennial and Generation Z employees who want/need more freedom from traditional work schedules; others do too. Often the difference between working in an office 4-5 days a week versus 2-3 days is the deciding factor for some Executives.
Mandatory relocation has become increasingly difficult in the post-COVID world and relocation percentages have never been lower. Many of those senior leaders have issues on the home front that forbid them from easily uprooting, including elder care, a spouse with a great job that can’t be replicated or moved, children in school, etc. Also, a short time horizon to exit is another reason many of them say no to relocation.
If you want to hire the best talent, progressive firms consider “committed commuters”: those who are proven in these situations and can successfully create value without being “in the office” every day.
Of course, there are instances where being on-site every day is a must (i.e., manufacturing firms, those rebuilding their culture and requiring a steadying leadership presence, or ones with mission-critical needs, etc.). For these, relocation is a must. Yet for many others, compromising can work. We advise clients to focus on what’s most important: hiring the person they want who can achieve and drive desired results versus being too rigid, settling for one’s second or third choices, and facing painful opportunity costs.
Fresh Thinking Will Rule the Day
Our most successful Clients know hiring the right executives is the most valuable investment they can make and the determining factor for great results. Those who fail to adapt often lag well behind their peers. In today’s fast-paced business world, constant change is a certainty. Many of yesterday’s approaches no longer fit every situation.
Authored by Tom Shahnazarian, Kevin Hahn, and Jay Lane, Founders of Spectrum Search Partners, a Denver, CO-based retained executive firm that specializes in private equity. If you wish to reach out to us, please write to: email@example.com, firstname.lastname@example.org, or email@example.com.