Welcome to the Crispin Commentary Daily Mortgage News podcast. I’m your host, Robbie Chrisman.
Interview Begins at 02:15:
For today’s interview, I wanted to welcome to the show, SPMB’s Ross McLaughlin to talk about executive search firms and finding the best candidates for open positions. He joined SPMB in 2015 and was a key driver in building the firm’s Consumer Practice, which he co-leads today. He’s successfully led over 50 C- and VP-level searches for early, growth-stage, and recently IPO’d organizations. His expertise in consumer spans marketplaces, fintech, consumer electronics, consumer products, gaming, tech enabled services, e-commerce, manufacturing, digital health, and field operations. Ross spends his time leading operations and go-to-market searches.
Can you explain the role of an executive search firm?
Ross: I’d say it’s, it’s threefold:
(1) Search firms serve as a consultant to their clients. It starts with really understanding your client’s business and the problem that they’re trying to solve through an executive hire. I’d say the first step here is really just advising clients on how they should scope and frame the role — identifying key deliverables to create a scorecard, if you will. And then to formulate a search strategy with regards to, you know, what are the target companies and verticals that we’re going to go after that we think are going to yield this type of talent and experience. And really, before a search even begins is driving alignment around that is critical to make sure things are set up for success. If you don’t put a lot of that work in on the front end, that’s where things can really go awry, and you end up with a much longer search with a disconnect between the reality of the market, and how your client’s thinking about things.
(2) The second from there is really to run an end-to-end search process on behalf of the client includes everything from candidate development and recruiting to assessment to candidate management as they’re flowing through the process referencing once they approach a finalist stage or even before that, and then, of course, offer / negotiation and getting a finalist over the line.
I’d also say as the search goes on and things develop, a search firm should continue to be consultative to their clients and advise them on maybe tweaks in their interview process or how they’re assessing candidates — or even changing the scope or spec of the role if to becomes clear that maybe there’s a misalignment between the market, which could include factors like compensation, you know, actual skill sets of Executives in the landscape or any other component of search strategy. And also to take their clients feedback and then plug that into their research and outreach loop. So that if it’s not right at the bullseye to begin with, ideally you’re getting there in short order after the first couple of candidates goes through.
(3) And then the final one, I’d say, is just to really serving as a partner to the candidate community. Search firms’ core responsibilities in the day-to-day of the search is always doing the best work possible and serving their clients in the best way that they can. But relationships with candidates are so critical to a firm’s access and ability to deliver ‘the-best-of-the-best’ to their clients, and so serving as an advisor to the candidate community is really important so that they’ll pick up the phone when we call. And that includes everything from talking with them about career development and serving as an advisor in that capacity, advising them on compensation trends, or even just general market intel on certain companies that they might be talking to that really creates a deeper relationship and moves you away from just someone who helps you find a job to more of a long-term part of your network. So, that’s really critical to getting to candidates, assuming they’re very well ensconced and happy in their current role.
Can you explain why companies choose to use a search firm versus doing it in-house. Is confidentiality a factor? What’s your take on why they would choose a company like SPMB?
Ross: Confidentiality can certainly be a factor — and maybe it’s a situation where, unfortunately, a client is having to replace an existing executive due to performance or something of that nature. Or, the client is launching a new business and they don’t want the market to know about it quite yet; that’s certainly a reason why would be retained.
I’d say, more generally speaking, it’s because in-house recruiting teams just have too much going on from an open rec standpoint. They might be juggling anywhere from 12 to 20 at a time, and one person just doesn’t have the bandwidth to drive a true executive recruiting process. This is typically when clients retain our firm.
We generally have four people working on a search — this includes: a partner, like myself; a candidate developer helping with recruiting and outreach; a research analyst, who’s breaking down all the target markets that our clients are interested in; and then a project coordinator who helps with all things scheduling. And so, it’s a high-intensity effort where you get four dedicated individuals on one role, as opposed to having 10% of someone’s bandwidth on your in-house team. This approach also allows us to be very hands-on and in the weeds with our clients. We don’t take on a large number of searches, it’s only five or six at a time — and so, they really get our full attention and access to the right types of candidates in a much shorter time frame than they would working with an in-house resource.
The second thing I’d say is when there’s a situation in which a company is trying to enter a new market that they are not familiar with or don’t have access to. For example, we built out most of the technology team for Disney Streaming when they were launching. Of course Disney, a large Global Fortune 500 company, has a super strong executive recruiting team in house, but they didn’t have access to product, technology, and data leaders that they wanted to hire to really build out that side of their business. And so we were able to provide them access to a market they were entering. So I think it’s those two reasons: (1) they need more horsepower and/or perhaps they’ve tried it on their own and it hasn’t worked out due to bandwidth; or (2) it’s a market they aren’t familiar with and they need both an advisor and a team to help them access that. And as you mentioned, confidentiality can fit into either one of those situations I just described.
I don’t know if you deliver one candidate recommendation or multiple candidate recommendations, but how do you weigh organizational fit of a candidate versus overall competency?
Ross: Yeah, it’s always a large and diverse slate of candidates. I think our average average cycle time as a firm is about 110 days from start to close, and we usually present anywhere from 8 to 12 candidates on each search on average, some of them go much longer. And of course there’s situations when a client hires one of the first two to three people they meet, so it really just depends.
I think with new clients there’s always a period of just getting to know them and understanding fit and what’s going to work with their culture — and what type of people they like to hire. Generally speaking, when we’re presenting a candidate to the client, they’re going to be highly competent. They’re going to come from some of the best of the best companies from the sector that our clients are interested in. So generally speaking, the competency fit from a skillset standpoint is going to be there — so it then becomes a question of assessing fit in terms of, is this person going to work well with the rest of my team, etc. For example, I’m working with a real estate Marketplace in Canada right now and there were a couple of candidates that were here in the US that just had a more US-centric way of thinking about things and we pretty quickly realized – okay, the right kind of organizational fit here is probably going to be someone who’s worked in a global company and is really going to seek to understand different points of view around the table, versus just applying what they’ve done in other companies to this new role. And so it’s nuanced and it changes from client to client. But after we go through one or two candidate meetings, I think we’re able to pick up on the organizational fit and can layer that into our point of view.
What makes one candidate stand out versus another in your mind?
In the current market dynamic this is really important. We serve a lot of companies in the technology space and there’s a major trend around doing more with less right now that includes both budget and resources — but also with people and teams. And so, I advise clients to really focus on an interview process. Right now, the market is really tying their experience to data and areas that move the ball forward in, whether it be, revenue growth or increasing profitability or efficiency. Talking about those pieces of their experience and background versus how they built a hundred person team and now have however many direct reports. Management skills are critical to leadership roles, but I would just advise folks to spend less time on that and more on what actually happened in the business and in the current market.
What’s the best way for someone to negotiate starting compensation?
Ross: This may feel contradictory to a lot of folks, but I would always be open and transparent about your comp expectations, whether it be with the recruiter or the hiring manager. Sometimes people think that’s putting themselves in a box and they might be limiting their potential compensation, but I actually think it gives you a much stronger point of negotiation. For example, if you’re really happy in the role you’re in today and you want to share your expectations, you could say, hey I am not going to make a move for less than this and so you’re setting the groundwork for the comp discussion.
I think where people can run into trouble is when they don’t share any information and the recruiter or the company is flying blind — and they’re not going to be able to really get a sense of what’s going to get you excited. And so I think that having trust and partnership with whoever your main point of contact is really critical to ultimately get an offer that you’re going to be excited about, and that’s going to work out for the company, too. I’d also advise people to think more about total compensation than just salary and bonus. This is certainly company dependent, but in the current climate, I think companies giving you more equity versus cash compensation, is a much easier trade-off for them to make as the market is really shifting towards prioritizing profitability.
I want to close by asking you a very qualitative question: What have you learned about people during your time conducting searches?
Ross: I think that the biggest thing, and this might sound basic, is just that whether it’s a CEO, or a board member, or individual contributor on a team, all people are just people. No matter which layer of an organization they sit in at a company, and so everyone comes with their strengths and with their quirks — everyone’s fallible. I think we can build up, particularly from the media, these images of superheroes at the CEO and board level, but once you spend enough time with enough of these executives, you realize that while they are amazing and highly talented, they’re all humans at their core and that comes with everything that you get in the human experience. And so I think it’s a good reminder to everyone when meeting with the CEO, a board member, or anyone at a very senior level organization to just remember that they’re going through everything you’re going through, whether it’s having a great week or going through a rough time in their life. So, just try to keep that in the back of your head and don’t let that title influence how you engage with them and treat them.
It’s an excellent point to end on; everybody puts their pants on one leg at a time. I want to thank you for making the time today, Ross. I thought this was great and hopefully I’ll see you out there soon.
Ross: Thanks so much for having me.