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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Tips and strategies to fill executive-level positions Recruiting for high-end executives requires a special skill-set, and Executive Recruiting For Dummies is here to help you add this niche talent to your arsenal. Whether you're an in-house human resources manager or a professional recruiter at a search firm, this friendly guide walks you through each step of filling that senior, executive, or other highly specialized position. This book covers the globalization of talent and the advantages of executive recruiting. It provides expert guidance on finding the right candidates, conducting hardy screening and interviewing processes, closing deals, and more. There are 10,000,000 businesses in America that hire at least one senior executive a year, and most turn to commissioning a third-party organization, such as an executive search firm. Rather than losing that next top-tier recruiting job, let Executive Recruiting For Dummies show you how to add this highly desirable and sought-after skill to your resume. * Learn to recruit with precision * Create a robust interview process * Close the deal with a winning offer * Find out how to work with professional recruiters Discover how to find the best talent and retain and attract clients with the help of Executive Recruiting For Dummies.
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Executive Recruiting For Dummies®
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Executive Recruiting For Dummies®
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Table of Contents
Cover
Foreword
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Beyond the Book
Where to Go from Here
Part 1: The World of Executive Recruiting
Chapter 1: 3, 2, 1, Blastoff! Getting Started with Executive Recruiting
What Is Executive Recruiting?
Ace of Case: The Business Case for Executive Recruiting
A Demanding Supply Issue
Oh, Grow Up! The Growth of Executive Recruiting
Chapter 2: Talent Show: Why Talent Matters
Value Pack: Redefining Value in the Knowledge Economy
Paradigm Shift: Understanding the New Recruiting Paradigm
Triple Play: Three Steps for Tapping Top Talent
Chapter 3: Rock and Role: The Role of Recruiting in Business
That’ll Cost You: The High Cost of Poor Hiring
Hocus Focus: Putting the Focus on Hiring
Fitty Cent: Fitting In … and Fading Out
Chapter 4: Key Club: Identifying Key Personal Characteristics
Work Your Core: 28 Attributes of Successful Executives
Super Fly: Avoiding Superficial Evaluation Factors
Flew the Coop: Building a Cooperative Culture
Part 2: Planning Your Search
Chapter 5: Plan Do! Devising a Plan
Plan Up: Putting Your Plan Together
You SLA Me! Hammering Out the Service-Level Agreement
Chapter 6: Team Up: Assembling Your Search Team
Who’s on Your Executive Search Team?
Search Me! Assembling a Solid Search Committee
Chair-y Picking: Selecting the Search Chair
External Affairs: Choosing an External Recruiter
Chapter 7: Dividing to Conquer: Parceling Out Your Process
Analyze This: Performing a Needs Analysis
What’s Up, Doc? Generating the Necessary Documentation
Research Engine: Researching the Market
Source Code: Sourcing Candidates
Recruit Pursuit: Recruiting Candidates
The Big Short: Interviewing Your Short List
Point of Reference: Checking References
Sound Off: Making an Offer
All Aboard: Onboarding the New Hire
Get Your Kicks: Hosting a Kickoff Meeting
Here Comes Trouble: Troubleshooting Your Hiring Project
Chapter 8: Don’t Be a Tool: Exploring the Tools of the Trade
Daily Digest: Our Everyday Tools
Recruitment Rock Stars: Following Top Thought Leaders
Even More Recruiter Tools
Part 3: Doing the Pre-Search Prep Work
Chapter 9: Resign of the Times: Reacting to a Resignation
Lizard Warning: Getting Control of Your Lizard Brain
Next Steps: Key Decisions after a Resignation
Chapter 10: Documentation Station: Generating the Necessary Documentation
First Things First: Who Is Your Client?
Order Up: Writing the Job Order
Detail Work: Detailing the Job Description
Styling and Profiling: Composing the Position Profile
Ad It Up: Writing a Solid Job Ad
No Résumé? No Worries! Collecting a Confidential Candidate Brief
Guidance System: Creating a Detailed Interview Guide
Chapter 11: Research Par ty: Conducting Candidate Research
Hope Is Not a Strategy: The Importance of Candidate Research
Texas Hold ’Em or Fantasy Football?
Your Step-by-Step Research Guide
Chapter 12: What Is This Sourcer-y? Sourcing Candidates
Back to the Future: Modern Sourcing
Sock It to Ya: Sourcing’s One-Two Punch
Wooly Boolie: Using Boolean Logic to Simplify Sourcing
Sample Size: Conducting a Sample Search
Keep It Going: Sourcing on an Ongoing Basis
Part 4: Locating and Evaluating Candidates
Chapter 13: Recruit Reboot: Recruiting Top Candidates
Passive Aggressive: Passive versus Active Candidates
A-Listers: Paring Down Your List
Bench Press: Benchmarking Your Search
Head Case: Headhunting Prospects
Chapter 14: Interview Interlude: Interviewing Top Candidates
Stage Right: Understanding the Progressive Two-Stage Interview Process
Preppy Handbook: Prepping for Each Interview
Afterburner: After the Interview
Face Time: Conducting the First Face-to-Face Interview
Chair Up! Conducting the Search Chair Interview
Hire Rise: Handling the Hiring Manager Interview
Finishing the Search Committee Interview
Present Tense: Carrying Out the Candidate Presentation Interview
Candidate as Customer: The Importance of Candidate Experience
Chapter 15: Point of Reference: Checking References
Identifying the Two Big Questions Reference Checks Will Help You Answer
Who Should Do Reference Checks? (Hint: The Hiring Manager)
Formulating a Plan
Who You Gonna Call?
Steering the Conversation
Chapter 16: Happily Ever After: Sealing the Deal
Pay Up: Calculating Compensation
Everything’s Negotiable: Negotiating Like a Pro
Special Delivery: Delivering the Offer
Counter-Intuition: Dealing with Counteroffers
Agree to Agree: Composing a Solid Employment Agreement
All Aboard! Onboarding
Finders Keepers: Retaining Top Talent
Part 5: The Part of Tens
Chapter 17: Ten Key Principles of Effective Executive Recruiting
Remember It’s Always a Seller’s Market
Sell First, Buy Later
Be Opportunistic
Use a Boutique Search Firm
Be the First to Walk Away
Build a Farm Team and Draft Only A-Players
Seal the Deal with Psychic Cash
Leverage Your “Manning Factor”
Qualify for Integrity
Don’t Hire a Liar
Chapter 18: Ten Keys to Working Successfully with the Search Committee
Identify a Clear Agenda for the Board
Agree on a Prioritized Sourcing Strategy
Articulate the Organization’s Return on Investment for Recruiting
Set Realistic Expectations
Do a Reality Check
Be Consistent with the Messaging
Create an Emotional Link
Conduct a Discerning Candidate Analysis
Negotiate a Successful Offer
Let the Search Chair Close the Sale
Chapter 19: Ten Reasons to Use a Professional Recruiter
Satisfying Stakeholders
Easing Your Burden
Reducing Opportunity Cost
Being Nimble
Building Trust
Being Discreet
Inviting Continuous Improvement
Bringing Competitive Intelligence
Increasing Retention
Getting Your Money’s Worth
Glossary
About the Authors
Connect with Dummies
End User License Agreement
Guide
Cover
Table of Contents
Begin Reading
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Foreword
When I first spoke with David Perry, it wasn’t by choice.
David had been harassing me on LinkedIn for weeks. Finally, I gave him two minutes. I figured he’d do his spiel, I’d get bored, and then we’d be done. I get a lot of calls from recruiters, and they’re typically over before they begin. Typically, they’re far more focused on selling an opportunity than on truly understanding the role their client is looking to fill. I assumed that when I spoke with David, it would be more of the same.
I was wrong. Those two minutes soon turned into more than an hour.
David’s approach was different. I could tell the minute he sent me the position profile, which was a detailed document that he himself had created, outlining the perfect candidate for the opportunity. The role he was recruiting for was in my wheelhouse, so he was talking to the right guy, but it was extremely rare to see it framed the way his client wanted.
David had already burned through nearly every company in the Fortune 500 without finding anyone qualified for the position — and now he was talking to me. I suggested my head of research and consulting — my second in command — for the job. I knew full well there was no chance he’d take it, and I told David just that. He must have taken that as a challenge, because within a few months — and after really getting to know the what’s-in-it-for-me (WIFM) that made my head of research really tick — he’d won him over.
David’s brand of raw determination shines through in Executive Recruiting For Dummies. This book is a game changer for anyone who hopes to attract top talent to their organization, but who doesn’t necessarily want to engage an executive recruitment firm themselves or, if they do, who wants to extract maximum value from an executive recruiter. David and his co-author, Mark J. Haluska, step readers new to the world of recruiting through some of its most important elements, including why talent matters, the importance of research and of properly defining a position, and key personal characteristics that will ensure a good fit not only with the position, but also within your organization’s culture.
Hiring the wrong person — especially for an executive role — is a critical mistake that at best can torch deals and at worst can sink a company. For proof, look no further than the anecdote relayed in this book about a meeting between Nike and basketball star Steph Curry, who at the time was a member of the company’s stable of athletes. Curry was set to re-up with Nike, but the meeting went badly. When the Nike official displayed a PowerPoint slide featuring another athlete, things went from bad to worse. Curry went on to sign with Under Armour, resulting in a $14 billion boost to that company’s valuation — all because of a (seemingly) incompetent executive at Nike.
This kind of result simply doesn’t happen with David’s executive searches. There’s a reason why the Wall Street Journal nicknamed him the “Rogue Recruiter.” It’s because his approach is refreshingly different. He’s not just concerned with ticking a box and filling a role; he’s also concerned with the long-term fit of the candidate he eventually puts forward. It’s why he guarantees his placements for one year after the hire date.
Even though it took David 11 attempts on LinkedIn to finally get me to agree to a call, I’m now very happy I did. Sure, he coaxed my second in command away. But he also made me realize that there are good recruiters out there — and if you read his book, you’ll realize it, too.
Timothy Keiningham, PhDNew York Times Bestselling Author of The Wallet Allocation RuleJ. Donald Kennedy Endowed Chair in E-CommerceThe Peter J. Tobin College of BusinessSt. John’s University
Introduction
When we told our peers in the recruiting industry that we were writing this book, they said, “You’re crazy! Why would you give away your secrets?” But we felt differently. We believe anyone tasked with hiring real leaders should have access to a handy reference filled with expert-driven insight and information. And that’s precisely what Executive Recruiting For Dummies is.
These days, strong leadership is more important than ever. Companies with great leaders significantly outperform their peers. At the same time, globalization, attrition, and changing demographics have led to a scarcity of executive talent. As a result, the competition for top leadership talent is fierce.
In spite of this, most recruiters attempt to draw the best talent by focusing on people who are currently looking for work — the ones posting on job boards or responding to job ads. But your goal in an executive search isn’t to find the best talent currently looking for work; it’s to find the best talent, period. And trust us: The best talent isn’t looking for work. They already have a job — a good job.
All this is to say that you need to look at executive recruiting a little differently than the average recruiter. That’s what this book is for: to help you make this important shift.
If you want to ensure your company’s survival by hiring great leaders, you’ll need some effective way to find them, to hire them, and to ensure they stick around. This book outlines everything you need to do to achieve this.
But that’s not all. Before you can hire well, you need to take a page from the playbook of the ancient Greeks and “know thyself.” That is, you must know who you are and what you want as an organization. You can’t give proper guidance to an executive recruiter until you truly understand your business. This book will help you clarify your needs.
If you’re ready to build a winning executive team, stocked with the best talent money alone can’t buy, then Executive Recruiting For Dummies is for you!
About This Book
The structure of Executive Recruiting For Dummies is designed to help you get in and get out of the text with just the information you were looking for. Consider this book your ultimate executive recruiting reference tool. Read it in any order you want and bookmark sections you expect to return to again and again.
You’ll notice several sidebars sprinkled throughout the text. (You can identify these by their gray shaded boxes.) These are simply extra tidbits that are interesting but not critical to your understanding of executive recruiting. You don’t have to read them if you don’t want to!
Within this book, you may note that some web addresses break across two lines of text. If you’re reading this book in print and want to visit one of these web pages, simply key in the web address exactly as it’s noted in the text, pretending as though the line break doesn’t exist. If you’re reading this as an e-book, you’ve got it easy — just click the web address to be taken directly to the web page.
Foolish Assumptions
As we wrote this book, we initially viewed it as a desktop and online reference for our clients. But we realized it would also serve the following types well:
C-level executives and search committees who want to understand how to best maximize their leadership recruitment return on investment (ROI)
Hiring managers responsible for building high-performance teams
Recruiters, both corporate and third party, whose mission is to keep up with the recruiting best practices that will enable them to deliver value to their clients and advance their careers
Icons Used in This Book
The little pictures in the margins throughout this book are designed to highlight information that’s special and important for one reason or another. Executive Recruiting For Dummies uses the following icons:
This icon points to pieces of information you shouldn’t forget.
Wherever you see this icon, you’re sure to find a good idea, trick, or shortcut that can save you time and trouble.
Make sure to read the paragraphs marked with this icon; it indicates information that can help you avoid disasters.
Beyond the Book
In addition to the material in the print or e-book you’re reading right now, this product also comes with some access-anywhere goodies on the web. Check out the free Cheat Sheet for info on conducting your own executive search, tools worth your time, and other handy info. To get the Cheat Sheet, simply go to www.dummies.com and type Executive Recruiting For Dummies Cheat Sheet in the Search box.
You can also go to www.executiverecruitingfordummies.com/downloads for templates and tools you can use in your next executive search.
Where to Go from Here
Where you start reading Executive Recruiting For Dummies is up to you. You can begin by perusing the table of contents and then hitting sections of interest. Or you can head to the chapter that addresses an area of executive recruiting you’re currently struggling with. If, however, you’re brand new to executive recruiting, we suggest you begin with Chapter 1. It provides an overview of why executive recruiting is important and how you can use it to connect with top talent and crush your competition!
Part 1
The World of Executive Recruiting
IN THIS PART …
Define and make the business case for executive recruiting.
Gain an understanding of the knowledge economy and its implications on executive recruiting.
Grasp the high cost of poor hiring.
Identify core attributes of top leaders, as well as attributes that don’t matter as much.
Chapter 1
3, 2, 1, Blastoff! Getting Started with Executive Recruiting
IN THIS CHAPTER
Defining executive recruiting
Making the business case for executive recruiting
Understanding why top executives are in demand
Tracking the growth of executive recruiting
If you ever studied the American Revolutionary War in history class, you may remember reading about Baron Friedrich Wilhelm von Steuben, a military leader recruited by General George Washington to serve as the drillmaster of the Continental Army. Incredibly, von Steuben managed to turn a ragtag collection of farmers and stable boys into an officer corps that led the Americans to victory.
“Okay,” you’re thinking. “But what does that have to do with executive recruiting?”
Simple. General Washington’s forces faced a well-trained army of British conscripts and Hessian mercenaries. If Washington was to level the playing field, he’d need to recruit a skilled outsider who knew the enemy and what it would take to defeat them — namely, Baron von Steuben. Washington knew he couldn’t achieve victory with second-rate people — and neither can you.
In today’s hyper-competitive environment, business is war! If you’re going to win, only the best executives can lead the charge. Locating and enlisting these executives is what executive recruiting is all about.
What Is Executive Recruiting?
Executive recruiting is the act of locating, evaluating, assessing, and attracting a top-performing executive to an organization or company. Executive recruiting applies when
The search for a new executive hire must remain confidential.
The search is for an executive who will serve on the board or sit in the C-suite.
The skillset needed is rare or in short supply.
The annual salary is $150,000 or more.
The position is in another country.
Most business decisions are small. A single sale, choice, or interaction doesn’t add much value to a company — or damage it much if it goes wrong. Recruiting an executive, however, is a big business decision — one that can add tremendous value or destroy a company altogether.
Recruiting an executive — the right executive — is the single greatest opportunity an organization has to improve both performance and culture in one stroke. The fresh thinking brought by a skilled leader can unleash innovation, empower employees, and generate wealth for the company.
Hiring the wrong executive is another story altogether. A bad hire can mortally wound an organization and cause ripple effects throughout the entire economy.
Recruiting an executive can make or break an organization.
Given its importance, it should come as no surprise that executive recruiting is, well, hard. Indeed, few initiatives are as demanding, disruptive, or strategically challenging as a leadership search. But when it’s successful, executive recruiting is the only initiative that can move an organization or group to the next level.
Ace of Case: The Business Case for Executive Recruiting
According to a study by BTS Group and the Economist Intelligence Unit called “Cracking the Code: The Secrets of Successful Strategy Execution,” companies with great leaders significantly outperform their peers. Great leadership is also a prerequisite for strong employee engagement. That’s a big deal, say David MacLeod and Nita Clarke, authors of a report called “Engaging for Success: Enhancing Performance through Employee Engagement.” Here’s why:
Companies with low engagement scores earn an operating income 32.7 percent lower than companies with more engaged employees.
Companies with a highly engaged workforce experience a 19.2 percent growth in operating income over a 12-month period.
A study by the Corporate Leadership Council called “Driving Performance and Retention through Employee Engagement” revealed similar findings — most notably that companies with engaged employees grow profits as much as three times faster than competitors with a nonengaged workforce. And a 2013 report by Gallup, “State of the Global Workplace,” finds that engaged workplaces
are engines of job creation around the world. Companies with highly engaged workforces outperform their peers by 147 percent in earnings per share so it should come as no surprise that the companies with the most engaged employees have excellent leadership.
The point here is that hiring the right executives can reap tremendous benefits. And yet, all too often, it’s the wrong executive who gets hired. No one knows this better than Kevin Kelly, CEO of one of the world’s best-known executive search firms. Kelly’s firm studied 20,000 executive searches and discovered, as he informed the Financial Times, that “Forty percent of executives hired at the senior level are pushed out, fail, or quit within 18 months.” This, he says, is expensive in terms of both the costs associated with hiring the individual and lost revenue. It’s also, says Kelly, “damaging to morale.”
Others paint an even darker picture. For example, according to one study by the Corporate Executive Board, 50 percent to 70 percent of executives “fail within the first 18 months of promotion into an executive role, either from within or coming from outside the organization.” Of those, the study revealed, “about 3 percent fail spectacularly, while 50 percent quietly struggle.”
In a word, “Yikes!”
A Demanding Supply Issue
In the early 1800s, our forebears witnessed the beginning of a colossal economic transformation with the onset of the Industrial Revolution. Within a single generation, old city neighborhoods and rich farmlands were cleared out to make way for the construction of steel mills, rail yards, warehouses, and office buildings. To fuel this economic boom, people migrated from the far reaches of rural America to take on jobs they would hold for the rest of their working lives.
Today, old city neighborhoods and rich farmlands are still cleared to make way for trade and industry. (China and India are prime examples.) But now, businesses exist in a completely different environment than they did during the Industrial Revolution. The tidal wave of economic change, pressure to increase shareholder value by the quarter rather than the year, outsourcing and right-sizing — all these trends have greatly increased the demand for top talent.
Recruiting top executives is hard. And in the years to come, it will only get harder. This is due to three key trends:
Demographics:
A lower birth rate in North America combined with the aging of the Baby Boomer generation has resulted in a contraction of available executives. In other words, when an older executive retires, few younger workers are qualified to fill his shoes.
Brain drain:
In the 1980s and 1990s, companies may have saved money by trimming senior management ranks. But that brain drain coupled with attrition robbed them of their ability to grow the next generation of leadership.
Globalization:
Companies in first-world countries have expanded their market around the globe. At the same time, countries that were once considered third-world nations have become economic powerhouses. As a result, the global need for executive talent has been pushed beyond our capacity to produce it.
Over the last three decades, demographics, attrition, and globalization have profoundly affected the labor supply — particularly for executives. The result: a scarcity of executive talent. This global shortage of leaders drives organizations to aggressively seek the best.
WHERE ARE THE YOUNG UP-AND-COMERS?
We mention that a lower birth rate — at least in North America — has made it difficult to fill the shoes of older outgoing executives. But that’s not the only reason. Another cause is that few companies provide young workers with the training they need to advance. In fact, according to a ten-year study of executive performance by a leadership consulting firm called Navalent:
Seventy-six percent of respondents indicated that “the formal development processes of their organization were not, or at best minimally, helpful in preparing them for the executive role.”Fifty-five percent of respondents indicated that “they had minimal, if any, ongoing coaching and feedback to help them refine their ability to perform in an executive role.”Forty-five percent of respondents indicated that “they had minimal understanding of the challenges they would face in an executive role.”Although young executives have begun to assume senior and C-suite roles, according to Navalent, they lack the “experience, knowledge, relational [maturity], and emotional maturity necessary to sustain success.”
In this talent-hungry environment, the rules of recruiting have changed. It’s no longer enough to passively collect résumés. The people who have the talent you need — who can design a top product, manage complex projects, perform marketing miracles, sell new customers, or lead your organization — are already employed, can take their pick of top opportunities, and will make a career move only if the opportunity is truly compelling.
Waiting around in the hopes that your ideal executive will miraculously become available precisely when you need her is foolishness. You can satisfy your requirement for people with talent, tenacity, and dogged determination only by pursuing them.
This is the impetus for executive recruiting.
Oh, Grow Up! The Growth of Executive Recruiting
Executive recruiting is a specialized branch of management consulting. The mission of an executive recruiter is to bring your opportunity to a candidate’s attention and assess his fit. That means reaching out to anyone the recruiter feels fits your needs — regardless of his current “availability.”
Back in the mid-1980s, when we launched our careers as executive recruiters, the profession was still in its infancy. Few people understood what it was. Honestly, we spent more time explaining to clients what an executive recruiter did and why they should use one than we did actually conducting the searches!
Since then, the profession has grown by leaps and bounds. Indeed, as the Association of Executive Search and Leadership Consultants notes in its report “2014 State of the Retained Executive Search Industry Part One: An Overview of Retained Executive Search Worldwide”:
The success of this professional service has been exponential in the past 50 years as the global economy has developed, industries have become transformed, and mobility has made executive talent available to all organizations as a key facet of competitive advantage.
According to that same report, what began as a $750 million industry in 1978 has exploded into one that pulled more than $10 billion in 2013. And projected numbers for 2016 were even higher: more than $12 billion.
Those numbers pertain to external executive recruiters — those providers hired by companies to help fill open positions. But in-house talent-acquisition teams are also on the rise. This is thanks in part to the cost of external recruiters, but also to the plethora of recruiters jettisoned by search firms during the Great Recession that began in 2007. These in-house teams have greatly lowered the cost of hiring executives under the $150,000 to $200,000 range.
Chapter 2
Talent Show: Why Talent Matters
IN THIS CHAPTER
Redefining value in the knowledge economy
Understanding the new recruiting paradigm
Tapping talent in three broad steps
In Chapter 1, we talk about how demographics, a brain drain, and globalization have led to a scarcity of talent. But that’s just the half of it. Just as top talent has gotten sparse, it has also become increasingly important!
In recent years, we’ve entered an economic phase that’s entirely new: the knowledge economy. In the knowledge economy, organizations rely on intellectual capital — knowledge — to achieve both tangible and intangible results. Indeed, companies in the knowledge economy often derive their value from intellectual capital — in other words, from the value of the knowledge possessed by their employees.
That’s not all, though. As this new economy has evolved, it has also placed a premium on people’s traits. According to Dov Seidman at Harvard Business Review, these traits include “creativity, passion, character, and collaborative spirit — their humanity, in other words.” Seidman continues, “The ability to leverage these strengths will be the source of one organization’s superiority over another.”
In this chapter, we tell you more about the knowledge economy and how it has affected the world of executive recruiting.
Value Pack: Redefining Value in the Knowledge Economy
In 1994, Steven Spielberg, Jeffrey Katzenberg, and David Geffen formed a new Hollywood studio: DreamWorks SKG. Although each invested $33.3 million, that was nowhere near enough money to get the venture off the ground. That meant the trio would need to attract investors — fast.
There was just one problem. As noted by Richard Corliss in an article published by TIME in 1995, “DreamWorks, which plans to make movies, TV shows, records, toys and computer software, has no film studio or recording studio, no products — indeed, no pedigree but its owners’ résumés.”
But oh, what résumés they were! Steven Spielberg was, of course, the Steven Spielberg — Oscar-winning director of such film classics as Jaws, Close Encounters of the Third Kind, Raiders of the Lost Ark, E.T. the Extra-Terrestrial, Schindler’s List, Saving Private Ryan, Jurassic Park … the list goes on. Then there was Jeffrey Katzenberg, who was credited with turning around Walt Disney Studios between 1984 and 1994. Films produced during his tenure included such family favorites as The Little Mermaid, Beauty and the Beast, Aladdin, and The Lion King. David Geffen was no slouch either, having launched several record labels during his career, including the eponymous Geffen Records.
DreamWorks SKG may not have had hard assets. But it did have the intangible value of its founders. Because of what these visionaries had done in the past, and because of what promise DreamWorks might hold for the future, investors from Seattle to Silicon Valley to Wall Street and beyond lined up — to the tune of $2 billion.
We’re not saying hard assets are no longer relevant. But today’s new knowledge economy is built more on the intangible value of people — who they are, what they know, and their ability to apply that knowledge. Instead of resources or land, capital today means human capital.
Unlike resources or land, however, human capital has control over its own worth. That is, human capital — knowledge workers — can continuously invest in their skills and training to drive up their price. In a world where practically every organization has access to a certain baseline level of technology, people are the difference maker. They’re the value adder. As a result, the best people are highly sought after. If they choose to leave a company in the morning, they’ll be hired by someone else by noon. They’re in the driver’s seat — and they know it.
You’ll find that today’s top performers have a couple things in common:
They’re competitive.
Like athletes, top performers are driven to improve. They want to be better and faster, to break barriers, to achieve things no one has ever achieved before.
They’re individualistic.
High-performing people want to be part of an elite team — but they also want to make a difference all on their own. The people you’re after need to know for selfish and unselfish reasons that they’ll be given the latitude to succeed both as part of a group and on an individual level.
Paradigm Shift: Understanding the New Recruiting Paradigm
Recruiting is and has always been an intensive process. But given the rise of the knowledge economy, how you compete for talent has changed.
In the old days, companies searched for talent by sending out requests for résumés. The candidates who submitted these résumés were then judged along two axes: price and performance. The process was so structured and simple, even the less-skilled members of your HR staff could handle it. And given the pace of business, there wasn’t any rush. Of course, this yielded only those candidates who were actively looking for work, but that was the way it went.
Nowadays, the world moves at a speed more resembling a video game. It’s zap or get zapped, in real time. And searching for talent isn’t just about assessing price and performance. It’s about gauging a candidate’s knowledge and value and knowing what motivates them. Oh, and you aren’t just focused on candidates who sent in their résumés, either. You’re trying to draw candidates who aren’t even looking to move. That’s no easy feat!
That’s not the only difference, though. Historically, companies have tried to draw top talent by offering financial rewards — large salaries and/or stock options. Google went the stock-option route, creating thousands of millionaires in the process. But these days, money is secondary. Yes, people want signing bonuses, options, salaries, and raises. But these are a given — the very least you have to offer. Once those pieces are in place, the issue of money becomes moot.
Some companies — tech companies come to mind — have tried to raise the ante by providing workplace perks that range from gift baskets to beer fridges to pool tables and beyond. These perks may help to foster a collegial culture — not a bad thing — but they won’t be the difference maker for a serious candidate considering a serious job.
So, what does motivate people? According to Daniel H. Pink, author of Drive: The Surprising Truth about What Motivates Us (Riverhead Books), today’s knowledge workers are driven by three key things:
Autonomy:
Pink describes this as “the desire to direct our own lives.”
Mastery:
According to Pink, this is “the urge to make progress and get better at something that matters.” (The importance of mastery explains why top talent often look to work at companies that offer training.)
Purpose:
This, says Pink, is the “yearning to do what we do in the service of something larger than ourselves.”
As work has become more knowledge based — more creative and conceptual — motivators have changed along with it.
All this is to say that if you want to draw top talent, you need to do more than dangle dollars. You need to be able to assess a candidate’s real value and speak to his “why.” And you’ll need to do it in such a way that the candidate chooses you over the countless other opportunities he has no doubt been handed from all over the world. That’s the new recruiting paradigm.
Triple Play: Three Steps for Tapping Top Talent
In this new economy, this new paradigm, any executive recruiting project boils down to three key steps:
Figuring out what types of knowledge and personal qualities are most important for the role
Figuring out how to find people with that knowledge and those qualities
Figuring out how to hire the person who best matches your needs
Step 1: Figure out what you’re looking for
Figuring out what you’re looking for — that’s easy enough, right?
Maybe. But maybe not.
In today’s knowledge economy, knowing what you’re after — what’s important — means looking beyond job titles and compensation tables. You have to be able to evaluate the real value of someone’s contribution. To do this, you must thoroughly understand
What contribution you want
How you’ll know when you find it
Especially for senior positions, companies rarely look to tick a box on a standard employee recruitment form. Instead, they’re looking for something more nebulous — and more important. They’re looking for someone who can deliver a quality rather than a quantity — a quality that creates value for the company.
Of course, key contributions and qualities may be difficult to identify. To help with this, Table 2-1 lists common contributions, or value requirements, and the qualities that drive them.
TABLE 2-1 Contributions and Qualities
Value Requirement
Corresponding Quality
Creating new intellectual wealth for the company or adding to its intellectual assets
A consuming desire to make something new — to cut a new path rather than take a heavily traveled road
Having high-energy enthusiasm for the job, regardless of the hours worked
The belief that work is a game and an integral, vibrant part of one’s life
The belief that the money is not only not the most important issue, but also beside the point
An internal desire to leave a “legacy signature” on her work rather than strive for a paycheck
Enduring performance
The desire and ability to finish the race — because not finishing is simply inconceivable
An ability to “think around corners” to creatively problem-solve
An inner voice that says, “There’s always a way to [create a technology fix/make a deal/and so on].”
The display of up-to-date professionalism at all times
The desire to grow professionally — to become the best person he can be and to invest in himself
An ever-increasing contribution
The knowledge that making an individual contribution is the key to inner pleasure
The ability to identify and develop value for your company
An instinctive grasp and ability to capitalize on real value, such as the intangible capital of brand image, staff talent, and customer relationships
As you can see, what you’re looking for goes beyond skillsets and résumés. You want someone whose qualities will drive the contribution you seek. When you share a vision, you ensure a successful fit.
Step 2: Find people with the knowledge and qualities you seek
In the knowledge economy, companies leverage smart ideas to generate huge value. Not surprisingly, the people who think up those ideas are more valuable than ever before. They almost certainly already have jobs — good jobs — and they’re not looking for new ones.
The talent you’re after is busy winning. They’re not surfing job boards, registering with employment agencies, or updating their LinkedIn profiles. The best of the best aren’t likely to respond to — or even see — your job ads. So, how do you find someone who isn’t raising her hand saying, “Here I am”? That’s what this book is about.
Employee surveys reveal that most people don’t particularly like moving to a new organization. They’d rather change jobs within a company than leave the company altogether. This is especially true for people who believe they already work for and with the best.
Step 3: Hire the person who best matches your needs
Earlier, we talked about how, in the knowledge economy, money is a secondary driver. Sure, it’s important, but when you reach a certain baseline, it’s not that big of a deal. Instead, knowledge workers are driven by autonomy, mastery, and purpose.
Take companies like Facebook, Google, and Tesla. The people who work at these companies aren’t driven by money; they want to change the world. That’s their purpose. Or consider Google. When Larry Page and Sergey Brin founded that company to life in 1998, they didn’t do it to cash in. They did it to organize the world’s information and make it universally accessible and useful. (In fact, that’s the company’s stated mission.) And of course, there’s Apple. It wasn’t merely money that drove Steve Jobs to build the world’s most valuable company and transform seven industries — personal computing, animated movies, music, phones, tablet computing, retail stores, and digital publishing — along the way. It was his obsession with simplicity.
Not surprisingly, top talent flock to the aforementioned companies. Indeed, these companies (and a select few others) offer tremendous cachet. People who work for them do so proudly.
Although it’s true that you need to pay an appropriate wage to draw top talent, that’s just the price of admission. You also have to foster a work environment that gives them what they really want: the freedom to lead, the ability to succeed, and the opportunity to work toward something they care about. In addition, you must conduct your executive recruiting project using only proven methods, including the following:
Micro-targeting the competition’s executives
Treating each potential prospect as an individual by providing a customized approach tailored to his needs
Connecting with candidates on both a logical and an emotional level
Speaking to the candidate’s values (
Hint:
It’s not always about money!)
Delivering a value proposition — similar to an elevator pitch — that focuses on the candidate’s needs, not yours
These and other methods are covered throughout this book.
Companies position themselves with top talent by making both a logical and an emotional connection.
As Skip Freeman, author of Headhunter Hiring Secrets 2.0, says, “Top talent is scarce — and it’s likely to stay that way. That means smart organizations do everything they can to retain their key people. If you’re going to persuade people to take on new opportunities, you’ll need to make sure that the opportunities you’re presenting are good ones … and woo them like they’ve never been wooed before!”
Chapter 3
Rock and Role: The Role of Recruiting in Business
IN THIS CHAPTER
Grasping the high cost of poor hiring
Focusing on hiring
Finding “different” leaders
Do you have kids? If you do — heck, even if you don’t — you’ve probably noticed the ubiquity of “participation awards.” These are the trophies and ribbons handed out to children who play sports, take part in academic contests, or perform in music competitions, just for showing up. These days, it’s not just top performers who get recognized; it’s every darned kid on the team.
We get it. It’s important to foster a kid’s self-esteem. There’s just one problem: In the real world, participating isn’t cause for a celebration. Indeed, in the real world, participating — showing up — is the very least you can do. If you want to be successful in life or in work, if you want to win, you must do more than participate — much more. You must perform. And not just some of the time, but all of the time.
To quote legendary football coach Vince Lombardi, “Winning is not a sometime thing; it’s an all the time thing. You don’t win once in a while; you don’t do things right once in a while; you do them right all the time. Winning is a habit.” (And unfortunately, as Lombardi goes on to point out, “So is losing.”)
In the world of work, achieving high levels of performance in order to win is more important than ever. Why? Lots of reasons. Here are just a few:
Globalization:
Nowadays, you’re not just competing with organizations in your region or even in your country. You’re competing with companies all over the world — most notably developing nations, where resources are often plentiful and labor is cheap. And if the recent past is any indication, it’s reasonable to assume that the economies of developing nations — such as Brazil, Russia, India, China, and South Africa, often referred to as BRICS — will only continue to expand. Take China, for example. In 2006, just 20 Chinese companies made the Fortune Global 500, which ranks corporations worldwide. By 2016, that number grew to 106, including three of the top four. (In contrast, the number of American companies has fallen, from 197 in 2006 to 134 in 2016.)
Demanding shareholders:
It used to be that shareholders expected results on an annual basis. Now, they think quarterly. Companies that can execute at the speed of a Bugatti will enjoy a significant advantage over ones that operate at the speed of a buggy.
Advances in technology:
Changes in the technological landscape have driven an ever-faster business cycle — one in which only the highest-performing companies and employees can keep up.
Disruption:
Today’s businesses are disrupting yesterday’s businesses, and tomorrow’s will disrupt today’s. Indeed, radical innovation is the force that sustains long-term economic growth, even as it destroys the economic value of established enterprises. This cycle of “creative destruction,” a term coined in 1942 by Austrian economist Joseph Schumpeter, explains the rapid rise of companies like Apple, Facebook, Airbnb, Uber, and thousands of other knowledge-based businesses — as well as the precipitous plunge of companies like Kodak, Blockbuster, and Yellow Cab.
Oddly, even as business has become more competitive, requiring higher and higher levels of performance, it seems as if the culture has shifted from one that emphasizes performance to one focused on mere participation — not just for kids, but for adults, too. For proof, look no further than the tendency of most companies to distribute the same minimal raise to all employees each year, whether they deserve it or not. (“Trophies for everybody!”)
That’s not the only example of this troubling trend toward mediocrity, however. Here’s another one: Companies spend billions of dollars on applicant tracking and talent management systems. And yet, the nation’s turnover rate has remained virtually unchanged, millions of jobs go unfilled each month (while millions more remain unemployed), and when employees underperform, companies worry more about engaging them than about hiring the right people in the first place.
Somehow, these poor hiring outcomes — which are the result of poor performance within HR and which in turn drive poor performance throughout the organization — are deemed acceptable! (“Congratulations everybody! Thanks for playing!”)
It’s up to you to break this cycle. If your organization is going to compete — no, if it’s going to survive — you must demand performance. And that means hiring the very best, particularly at the executive level. Doing anything less will cost you.
That’ll Cost You: The High Cost of Poor Hiring
In the six months after Marissa Mayer took over as CEO of Yahoo!, the company’s market value increased $17 billion. Around the same time, JCPenney, guided by new CEO Ron Johnson, saw sales decline by $4.3 billion. The way we see it, regardless of what comes next for either Mayer or Johnson, there’s never been a clearer example of getting an executive hire right versus getting it wrong.
When we say hiring the wrong executive will cost you, we mean it really will cost you! On the low side, you’re looking at the executive’s compensation — say, a few hundred thousand dollars. On the high side, that number is, well, higher. Dr. Brad Smart, author of Top Grading (How to Hire, Coach, and Keep A Players), has been quoted as saying, “It is painful and costly to hire the wrong person. Based on our studies the average cost of a mis-hire can be six times base salary for a sales rep, 15 times base salary for a manager, and as much as 27 times base salary for an executive.” In other words, suppose you hire an executive who earns $250,000 per year, and things don’t work out. According to Smart, that could be a $6,750,000 mistake!
We say it could be even worse than that. Consider this story about NBA star Stephen Curry. In 2009, the Golden State Warriors used their first draft pick to select Curry, a scrappy point guard out of Davidson College. Over the next few years, Curry would energize an organization that hadn’t won a championship since 1975. In 2013, Curry, who had long been a member of Nike’s stable of athletes, was due to re-sign with that company. Things quickly went off the rails, however. According to Ethan Sherwood Strauss of ESPN:
The pitch meeting, according to Steph’s father Dell, who was present, kicked off with one Nike official accidentally addressing Stephen as “Steph-on,” the moniker, of course, of Steve Urkel’s alter ego in Family Matters. “I heard some people pronounce his name wrong before,” says Dell Curry. “I wasn’t surprised. I was surprised that I didn’t get a correction.” It got worse from there. A PowerPoint slide featured Kevin Durant’s name, presumably left on by accident, presumably residue from repurposed materials. “I stopped paying attention after that,” Dell says. Though Dell resolved to “keep a poker face,” throughout the entirety of the pitch, the decision to leave Nike was in the works.
Maybe that Nike official just had a bad day. But more likely, he was incompetent. If that was in fact the case, it seems fair to assume that Nike’s HR department failed to vet him properly during the hiring process. In other words, he was the wrong hire — and this proved costly indeed. That’s because Curry, instead of signing with Nike, opted for Under Armour — a move that analysts say could result in as much as a $14 billion increase in that company’s value. That’s billion, with a B. So to sum up: Nike (probably) made a lousy hire. That lousy hire botched the deal with Curry (who, incidentally, led his team to an NBA championship two years later). Curry went elsewhere — and now Nike’s out on a potential $14 billion boost to its bottom line.
If hiring the wrong person is bad, not hiring the right person can be disastrous. Here’s an example. In the summer of 2009, Brian Acton, a former engineering executive at Yahoo!, sought a new position at Facebook. Now, you would think that Facebook, a technology company that’s barely a decade old but is already a global brand with a market cap of $363 billion, would employ recruiters with super-human powers — able to spot high-performing individuals from miles away, that kind of thing. But in this case, Facebook blew it. It rejected Acton. Shortly thereafter, Acton partnered with another former Yahoo! engineer, Jan Koum, to develop WhatsApp, a messaging application that enables users to exchange messages on their mobile devices without having to pay for SMS. Five years later, Acton and Koum sold WhatsApp for a whopping $22 billion. Guess who bought it? That’s right. Facebook.
