Chapter 2
Architects of Success
Setting Up the Search Committee
One of the tests of leadership is the ability to recognize a problem before it becomes an emergency.
—Arnold Glasow
Next, all of us assembled for a tour of the facility. Fred stopped frequently to greet employees along the way. It was clear from the top floor to the shop floor Fred was the patriarch of Tulip. Well respected and admired, his would be big shoes to fill. As we observed them interact it became obvious the staff were almost like family. Many people had been with the company for decades.
That type of loyalty and respect can't be bought or faked. Fred knew his employees' families well, and frequently referenced children and events that were important to his employees' lives as we toured the office and manufacturing floor. Whomever we hired needed to understand this intimate relationship Fred had with his people, along with realizing they couldn't replace Fred. Rather, they needed to appreciate how to nurture these relationships for the benefit of the business.
Before heading to lunch with Fred and the board, we explained what else we needed to know, why we needed to know it, and how we were going to proceed. At lunch Michael and I focused on two objectives: assessing how Fred and his board members worked together, and choosing a Search Chair.
Michael focused on assessing relationships among the board members themselves, since they would comprise our Search Committee. It was his job to gauge how they interacted. Was there a dominant board member? Did they have a healthy respect for Fred? How did they discuss ideas among themselves? Talking about politics normally brings out any differences and shows any rigidity in thinking.
I was most interested in identifying a Search Chair because I was not going to report to Fred for the duration of the search. I know my character all too well, and thought our personal working styles would clash. I've met many Freds over the years: brilliant, high functioning engineering types who want to know every single detail—every day—so they can help. Of course, I couldn't blame him for wanting to keep a close eye on me and his money. He wanted to be successful the third time round, and help out wherever possible … at least until he was comfortable we knew what we were doing. I would have done the same thing in his shoes, but I don't work well that way. I certainly didn't have the time to call with daily updates, nor did he have time to deal with them. As I would explain to them later, you don't want to have the CEO (or whomever becomes the ultimate hiring authority) distracted from running the business. In these cases, a Search Chair is clearly the best way to go.
At lunch, it quickly became apparent that board member Carl Albert would make the best Search Chair. Carl was a lawyer by training with a business leadership pedigree of which most executives can only dream. Over lunch he demonstrated his aptitude at asking probing questions and gently following up on them to get at the heart of the matter, an incredibly important attribute for a Search Chair. The ability to ask the right questions and dig out information without appearing too obvious is a learned skill.
So at lunch I asked Carl if he'd be the Search Chair. Fred, Carl, and the other two board members quickly discussed among themselves before Carl asked me what was involved. I gave him a general overview, and he agreed. I think he was more than happy to keep an eye on what he probably considered a young pup, because he's got at least two and a half decades on me.
Normally we could have completed everything we needed that day on-site, but in this case the manufacturing facility where the COO was to be located was in Milwaukee, Wisconsin. Before we left that day, we made arrangements to tour the facility with Fred and Carl. It is absolutely critical that as a recruiter you see the hire's proposed working environment if it's not local. You can't assume the company culture is consistent across multiple facilities if they're more than a half-day's drive away.
Michael and I returned to our hotel, unpacked, had dinner, combined our notes, and prepared to head back home.
How to Form a Functional Search Committee
After a combined 45 years of recruiting we can guarantee one thing: On the client side, managing an executive search project is a full-time job.
Generally speaking, boards of directors rarely have the requisite experience, detailed operational knowledge, and, more importantly, the time to commit 100 percent of their effort to recruiting an executive—crucial though that may be. Most board members are unaware of the amount of time that's required up front—and throughout the process—to locate, court, and win over great candidates. This isn't a part-time activity. It's simply too time intensive and critical to the organization's success. So the first step the board should take is to appoint a Search Committee to oversee the project, no different from establishing an audit committee.
When selecting a Search Committee, you should carefully weigh the answers to these five questions:
- Which outside board members have been successful CEOs in their respective careers?
- Who is best positioned to invest the appropriate time into the process?
- Who is in the best position to evaluate and persuade candidates?
- You may want to have peer level executives on the Search Committee: Just make sure there are no conflicting agendas, or you risk being sabotaged.
- Who has successfully conducted CEO- or executive-level searches in the recent past? This is a key issue. If no one on your board has the experience, consider bringing someone in from the outside who has. (Success should have a heavy weighting toward exit and shareholder value and not just who got a bargain on entry compensation.)
NOTE: Keep the Search Committee small. Five to seven committed people is ideal. That is small enough to have animated discussions while large enough not to be swayed by one person.
It's important to recognize both the public and private reasons behind the search, discuss the overall parameters of the strategy, and agree on the charter and deliverables of the Search Committee. Depending on the circumstances, the current CEO may or may not be a part of this committee. There are pros and cons to both: Consider what may be most appropriate if you need help closing on your most desired candidate.
The charter of the Search Committee is straightforward:
- Confirm the real needs.
- Create a critical path and/or timeline for the complete end-to-end recruitment and hiring process.
- Build board consensus on strategy and agenda.
- Help create a detailed, competency-based job description that realistically defines the role, critical skills, and experience and ties it to the business plan. (This is the one activity that the chair must get right or you will fail BUT for random luck.)
- Ensure the legal requirements for due diligence are met.
- Manage the candidate selection and search process.
- Land the best candidate.
Next, we're going to select a Search Committee chairperson.
How to Select a Search Committee Chairperson
The Search Committee should appoint a chair during its first meeting. Who should you choose? While evaluating the potential chair, it will become apparent who has the relevant experience, as well as the time and interest to invest in the project. It's highly recommended that the chair of the Search Committee be an outside board member detached from the organization's internal politics.
The chair is responsible for leading open discussions, promoting honest communications, and gaining member commitment and consensus with the goal of bringing new talent and expertise to an organization. More challenging and equally important, the chair must be able to develop personal relationships with candidates. This is critical in the closing process. And above all, the chair needs to be extremely accessible and proactive in the pursuit of candidates throughout the entire search process.
The correct Search Committee chair is vital to the ultimate success of the search. He or she keeps everyone and everything moving forward by leading the process and guiding decisions. The chair must allow everyone on the committee to be heard without letting dissenters and detractors hijack the group. The chair's major challenge is to gain consensus from the group, remembering that you can't always please everyone all the time. A successful search is dependent on a myriad of variables that the chair must manage, while ensuring the following basic components are in place with the ESP before the search begins:
- A detailed process.
- Realistic expectations on timing and costs clearly defined.
- A concise and descriptive timeline.
- A competency-based profile of the ideal candidate based on KPIs the executive to be hired will be assessed against.
- A rigorous sourcing and recruiting process.
- An organized and coordinated interview and final selection process.
The Search Chair should also appoint an internal coordinator to work with the committee. This coordinator is responsible for managing the calendars of the participants, interview logistics, and feedback loops. On a daily basis the coordinator ensures all elements of the search process remain on track, while also being the vault and central repository of all documentation and reports sent by the ESP. I've found the Search Chair's most trusted executive assistant works best for everyone, because he or she likely already has a working relationship with the board members and can get to them quickly.
Duties of the Search Committee Chairperson
- Build an emotional link with the right candidate (this is absolutely crucial).
- Work with the ESP—help create and manage an appropriate timeline.
- Serve as the “voice” for the Search Committee in the creation of position profiles.
- Drive the process with the search firm.
- Manage information flow between the Search Committee and board.
- Help the ESP gather data about recommended candidates from all board members and “friends” of the company.
- Evaluate and manage any internal candidates with the ESP.
- Drive the creation, development, and presentation of the appropriate offer.
- Play “good cop” if the ESP needs to step aside in the negotiation phase.
- Be personally involved in checking references, ensuring due diligence, negotiating the offer, and closing the candidate.
- In the final analysis the Search Chair is often in the best position to convince the candidate there's a fit and articulate why his or her backgrounds/skills/opportunities/challenges align, along with explaining why there's wealth to be made. This last point is critical—especially for funded ventures. Cap structures are often complex and it's hard for a newcomer to anticipate how much additional funding will be required, and in how many tranches. Only the Search Chair can see and tell this story.
Bringing a new senior executive into your company implies change, and change, when managed well, creates opportunity. The attention you give to a search project, and your interactions with your ESP and candidates, provides the foundation for success. If you both work at the process together, the probability of attracting your ideal candidate is almost assured.
Let me illustrate what we mean by this. One task of the Search Chair is to make the best use of the points of contact a company has with the ESP and candidates. Even the best opportunities—much like the best investments—don't sell themselves automatically to the best candidates. They need to be explained. It's the consultant who breathes life into your opportunity and makes it real and desirable for prospects. The keys to maximizing your results follow.
How to Manage the Process
Be in the moment and fully engaged whenever you're speaking with the ESP and candidates. This is the number one rule for success. Show your interest, stay involved, and actively manage and participate in the search. Your subordinates need to see your stamp of approval on the search, so they appreciate the value of its success. Engage your top management team. Where advisable, seek their opinions. Confirm their buy-in. Let them know what it is you want the new executive to accomplish, then make the search a priority on your agenda. Make it absolutely clear you want the search to succeed and your new person to be brought on board. Make your schedule available to the ESP and candidates.
Expect Greatness
Be realistic in your expectations about the time required to find and screen appropriate candidates and determine compensation, but expect your search to produce high quality candidates. In turn, the ESP should be realistic with you. If their promises are too glowing, be wary. “Chemistry,” for example, is the leading reason candidates are rejected. You should insist on a Benchmark Interview with a candidate the ESP deems close to your requirements, if they know anyone. This benchmarking exercise will give you and the ESP critical insight about the chemistry being sought.
Be Ruthless
You have a right to know what's going on, so be inquisitive. Ask the ESP about their search strategy, status, problems, market feedback, and other elements of the search. Monitor their progress. Require the ESP to speak with you directly by phone every week to ten days so you stay on top of the project. If the search runs into a strong headwind, ask to talk with them twice a week.
Be Paranoid
Thoroughly check out the finalist before an offer is extended. Contact some (or all) of the references yourself. We have found that executives are less apt to lie to business peers. (There is no harm in having two people call the same reference, especially if something isn't clear. More on this later in the chapter on referencing.) In this day and age of extreme makeovers, it's wise to be prudently skeptical lest you find someone has put lipstick on a pig. As Andy Groove said, “Only the paranoid survive.” A hiring mistake at this level is not easy to fix and may cause a great deal of harm before it's discovered.
Your Rapport with the Executive Search Professional
It's your company, so let the ESP know how you like to operate and your expectations. The best ones are flexible and will work to match your style. Treat them as you would your best staff. Openly communicate your company's situation, needs, problems, and objectives. Make the search a partnership. Communicate an attitude of trust and teamwork and listen to your consultant with an open mind. You may disagree with their advice, but their experience can save you a lot of time and trouble. (Remember: Executive search is as much an art as it is a science. So if your consultant has a gut level feeling about an issue, you'd be wise to listen carefully.)
Let the ESP evaluate candidates identified through internal sources and candidates just as they would those found through their own sources. Above all, openly discuss your selection biases and the qualities that just don't work in your company—and there will be some. Ask the ESP what their biases are, too. (For example, political animals drive me nuts, and I need to ignore my bias in most cases.)
Question the ESP on the “whys” behind their conclusions. Why are the people presented as final candidates? How closely does each candidate meet the most important criteria? What has each candidate really accomplished? What does the ESP see as potential problem areas with each candidate? What has the ESP learned from references?
If you sense problems during the search, be open and candid with the ESP. Create a problem-solving environment. This is what I meant by the “we're all in this together” attitude I mentioned earlier, which can be a strong motivation for the consultant. Finger-pointing may kill their incentive to work hard on your behalf.
Confer at predetermined intervals on whether the job specifications have changed, or priorities have been reordered. Rarely is a spec static throughout a search. It's always a work in progress, and it's natural to reorder skills and experience on the fly.
But above all, being accessible is the simplest and most effective way of demonstrating your commitment to the search's success. The vast majority of interactions with candidates happen after the dinner hour when most nine-to-fivers are watching TV or reading bedtime stories to their children. Exchange home telephone numbers. Introduce your administrative assistant. And keep the ESP in the know regarding major blocks of time when you'll be unavailable, like board meetings and vacations. Being both up-front and accessible demonstrates how serious you are about the process, which in turn inspires the ESP's confidence in you and your firm, leading to a more effective search overall.