The Cushman Report

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The Cushman Report

Breaking News, Trends and Information about

the Communications Marketplace

September 2000

September’s newsletter is about the Story of an Offer -- Chapter Two. If you missed Chapter One, it is posted at http://www.jc-a.com/CareerAdvice/CR_00_8.htm in the August edition. This is a "behind-the-scenes" look at how a Vice President is hired and the lessons learned. I’ll add my perspective throughout the tale.

Coming up, once we complete this story, is the analysis of why the IR function is growing in importance as a strategic element in a company’s market positioning. The impact of the dot coms in reshaping the IR marketplace is profound.

For a more in-depth list of our job opportunities, please visit http://jc-a.com/Jobs/Jobs.htm.

A word about our web site and database upgrades -- we’ve installed a new server and are busy working on integrating the web site with the database. That should give you access to your record and control of the information provided to JC&A. Our target for launch of the new site is the beginning of October. You’ll be hearing more once it is operational. (Very soon, I hope.)

Judy

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THE STORY OF JUNE, THE STORY OF AN OFFER -- CHAPTER TWO OF THREE

The Company and Its Senior Officers

About the Job

The Candidate Profile and the Job Description

Financial Considerations

Competing for Talent

Strategic Search Decisions

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The Beginning -- A Recap

Our client is at the offer stage. It has taken six months to reach this point, which was the fastest possible timeframe the CEO could accommodate. There is only one candidate that has reached this stage. If the offer is turned down, we will begin a new search that will take another six months. Negotiations are very delicate. The initial offer is not lucrative enough, in the candidate’s opinion. The finalist, however, does want the job. Where will we end up? Let’s go back to the beginning and read about the protagonists and the company.

THE STORY OF JUNE, THE STORY OF AN OFFER -- CHAPTER TWO OF THREE

The Company and Its Senior Officers

The company was an early leader and pioneer in its software, business-to-business niche. Over the years it had built a healthy balance sheet based on sound fundamentals. The culture had been clearly defined and the current leadership is extremely proud of those values. The CEO is surrounded by a handpicked, loyal and supportive group of senior officers to assist the organization as it moves forward.

However, when the search began, the company was in the throes of a major reorganization to compete for broader market share. It involved developing a strategy and implementation plan to adjust to new market conditions. Financial growth had slowed dramatically and there had been "key" losses of senior staff, which concerned the investment community. Conversations with employees at various levels told me the company had not communicated a clear strategy or mission -- and that morale was suffering.

The CEO, brilliant, impatient and driving, had already formulated a plan and was moving ahead to refocus and redirect the company. The problem was, no one inside the organization knew what that was (much less the outside world). It was early in the change process and the CEO had simply not been effective in sharing the vision -- and needed counsel. The very strength of the CEO -- the fierce pride in the company (and impatience with people who were not "on the same page") -- was a double-edged sword. That positive spirit made it difficult to accept criticism and to accept the perception of the company in a dot com-dominated marketplace.

This was the heyday of the first startup cycle. Instant wealth was just around the corner and risk was dismissed as insignificant. This company was not in the right space at the time, despite its fundamental strengths. At some point in the search, the competition in the marketplace -- fueled by dot coms and the money they were putting on the table to woo excellent candidates -- would have an impact on our search.

After the initial meeting, the CEO bowed out and delegated day-to-day management of the search and internal liaison to a Human Resources Manager. This executive was a mid-level professional, loyal, knowledgeable about the company and committed to its values. However, he was several layers away from the CEO and not finely tuned to her needs and hiring preferences. He had not supervised a search before and was unfamiliar with the process.

Search organizations today are stretched thin with the increasing competition to find talent. There are more assignments and fewer candidates. Success comes at a slower, higher price. Keeping a search company focused and insisting that the hiring organization be adequately serviced is critical to achieving the goal.

A mid-level manager can be sure the process is orderly, active and served by staff at the search group who are paying attention. But, ultimately the manager may be unable to judge the quality of the candidates presented and the potential "fit". There is a great risk of the project derailing because of insufficient oversight by an officer sensitive to the values, style and intangibles of the hiring executive. CEOs have very specific ideas about the desired outcome and the more layers between the hiring officer and his/her "point" person, the more those intentions can be misinterpreted or misunderstood. The finalists presented can be "off the mark," lacking critical qualities the CEO thought s/he had specified.

The timing was extremely tight for this search because the CEO had just two time periods for interviews -- and those dates were months in the future. There was a very real possibility that we would arrive at the end of the process -- with only those limited times for candidate interviews -- with the wrong mix of finalists.

One observer of this process commented that it was very telling that the CEO could only find two hours in her schedule over the next several months for the search. How committed was she? Considering the changing market conditions and the need to be responsive to highly sought-after candidates, would this lack of flexibility undermine the search? There certainly was the possibility that timing issues would result in loosing excellent prospects. In an employee-centric marketplace would the CEO’s behavior become an issue?

I have seen an enormous yet simple problem crop up as institutions attempt to hire mid-to-senior level managers. On the one hand, I hear an acknowledgment that the market is the tightest it has ever been. Yet, when I ask what actions, processes or policies have been adjusted to accommodate the new paradigm, the answer is very little. The disconnect between knowledge and behavioral change is profound.

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About the Job

This position was a hybrid and reflected the company’s attempt to combine the corporate communications and Investor Relations function under one senior executive directly reporting to the CEO. The purpose was to communicate consistent messages to various constituencies as the company undertook a comprehensive redirection of its market strategy. The post required a broad, "value-added" thinker that could counsel the CEO and the senior team. The VP would help crystallize and then explain this strategy both internally and externally to the media, analyst and financial community.

Historically, corporate communications and Investor Relations are rarely combined. The IR profession focuses on tangibles, near term goals, analyst relations, meeting disclosure requirements and quarter to quarter earnings results. It is a critical function requiring specific analytical skills, training, and a finely honed sense of how to present the company strategy.

Corporate communications -- at the leadership level -- concentrates on broader issues such as image, perception and branding. Effective professionals combine special talents -- creativity and a bottom-line focus that help organizations articulate their special qualities, enhance reputation, its selling proposition, values, etc. The emphasis is longer-term and less tangible than IR.

Only recently have those functions been combined and it is primarily in the dot com, start-up world. Young, small companies begin their lives needing market support and media relations activities. The goal is a successful IPO, requiring Investor Relations leadership. That function can quite naturally fall under the Communications Director who has some exposure and interest in telling the "financial story" to both the press and the analyst communities. However, those career tracks are very new and the jobs are of a scale and scope that would not prepare an incumbent for the VP spot with our client.

Finding an individual to manage both areas would mean a compromise in one direction or the another. Either, we would find a corporate communications professional with some IR experience or an IR professional with some corporate communications responsibilities. The skills are rarely equally balanced in one person. The search process would allow the organization to choose, but it was my opinion that the new VP should be a strong corporate communications professional with the ability to manage the IR function. Ultimately, the hiring team agreed with that balance after meeting candidates with differing levels of expertise in both areas.

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The Candidate Profile and the Job Description

As with many searches, the hiring team didn’t know enough about the function to tightly define job parameters or candidate prerequisites. Generally there is wide latitude in selecting candidates and this is where art and science meet. The process and the market play important roles in determining the outcome. In this particular situation, the CEO was crystal clear about personal qualities -- very smart, fast track, and values aligned with corporate culture. We thought a minimum of 15 years would be sufficient corporate experience.

The finalist met all of the top-line personal qualities the CEO discussed -- incredibly bright, et al. -- but was relatively weak in specific areas. This all points to the importance of the "click" between the senior officer and his/her direct report.

The job description that I wrote and the client approved focused on challenges and opportunities. It described cultural values and it gave a broad overview with an outline of specific assignments. The VP, coming into a newly created position, should be capable of defining and fleshing out tasks, strategies and processes.

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Financial Considerations

Financial parameters were also approximate. As with jobs that report directly to the CEO, when the fit is right and the CEO wants to "make it work," funds shake loose and salary ranges move up.

In an environment where outstanding candidates have many choices, there is no reason for any financial compromise on the part of the finalist. New opportunities are always just around the corner. No matter how superb the company, the compensation must be competitive -- based on the individual’s perception, not the company’s.

This is not to suggest the company write a blank check or ignore signals that the candidate is taking the job for "get rich quick" reasons. If the finalist is too focused on short-term financial gains, s/he may be the wrong person for a company that values relationships and longer term thinking. (Short-term thinking is far more typical of West Coast professionals than senior managers in the Northeast.)

The offer to the finalist was at a level below the current market and range for a VP -- it was about one-year behind. The finalist had provided compensation information indicating a top-of-range earnings package. Despite all the documentation and analysis indicating to the contrary, the company still felt theirs was a good offer.

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Competing for Talent

Organizations that consider themselves excellent companies expect to hire "A" players. Search firms are retained to produce top-notch candidates. In this tight marketplace, companies are finding they simply cannot "pry loose" excellent employees at excellent companies because current employers are desperate to retain their top performers. This turn of events (where the current employer makes a grandstand play to retain a "key" person) can occur after the offer is made and accepted. When a counter offer is extended, it frequently is an extraordinarily attractive package.

The incumbent is taken by surprise, flattered and stunned by the significance of the counter offer. S/he has not realized how valued an employee s/he is. In today’s environment, it should not come as a surprise that a market-savvy employer can compute the hundreds of thousands of dollars it will cost to replace the incumbent. (This does not take into account the disruption to the senior team and to the momentum of their communications/Investor Relations program.) Finding a replacement can take from three to six months. It is simply good business and a cost effective solution to cut potential losses by retaining the executive.

Pre-IPOs once sang an irresistible song. That is no longer true. When a key employee re-considers what s/he is giving up for a risky venture the answer is, frequently, "It’s not worth my while to take a chance." When the new opportunity clearly represents a change in career direction or a new lifestyle option, then the hiring organization has a reasonable expectation of success.

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Strategic Search Decisions

Other issues impacting the search included the high cost of living in the area necessitating an extremely pricey relocation package. That was not a desirable option, nevertheless a possibility. The CEO was inclined to hire a high potential "star" (perhaps meeting minimum specifications) for whom this position would be a major career enhancement. Another direction was to consider a more seasoned mid-career corporate professional ready for a change due to issues with his/her current employer.

As the research progressed and the human resources team reviewed the slate, their goal became to fill the position as quickly as possible with a local finalist. Their sights were set correctly to make speed and convenience important considerations. Six candidates were evaluated personally by the Human Resources team and three selected for final interviews.

Of the three, one dropped out and one required further evaluation (a question of fit) when she accepted another offer and withdrew. Here is an instance where the pressure of the marketplace, to move quickly or loose a candidate, had an impact. The company just couldn’t react quickly enough. The third was a "star" from a top-tier agency in California -- with a VP title -- ready to make a significant career shift.

As we approached the two time slots allocated for CEO/finalist interviews, we were confident about one of the six. The HR team decided not to consider interviewing additional professionals and felt, if needed, that the process could be restarted after the CEO met the finalist. It was my suggestion that additional time be invested in meeting "back up" candidates prior to a decision being made about our single finalist. I was concerned about the risk, but it was ultimately the client’s decision.

So, five months after this search began, it all came down to one local top-notch professional who was successfully employed and under no pressure to leave.

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And now, we are poised to move to the final stage of the process -- the offer. In Chapter Three we’ll read about the candidate -- June, her background and mindset, the behind the scenes conversations and the decisions made at these delicate moments. I was keeping my fingers crossed.

Would we complete the search in six months or were we headed for round two?

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