“There are really three parts of this question of the right people. The first is the right people on the bus. Second is the wrong people off the bus. But third is the right people in the right seats.” — Jim Collins on Leadership from his book, Good to Great.
One of the big challenges CEO/founders face is hiring their Leadership Team and then upgrading the team as the company grows.
This post is written to counsel the CEO/founder and those helping them with the job description, including the Head of People, Executive Search firm, and the Board of Directors / Advisors. It is targeted at smaller companies with up to 250 employees.
Getting aligned on what you want from each Leadership role is critical before beginning the search. Otherwise the search will take inordinately long or fail repeatedly at the final stages.
Ask yourself the question: What level/type of leader do I want in the functional leadership seat? A ‘Head of’, a ‘VP of’, or a ‘C-Level’? Use the following questions to get aligned on whether your ‘wants’ and the market expectations for the role are aligned.
- Skills required. Deep functional expertise only or also general business acumen?
- C-Level’s want to be hired for their general business acumen and be the true-strategic partner to the CEO. Especially CROs and CFOs.
- Autonomy to be given. How much freedom will they have with regard to decision-making and ownership?
- Are you seeking someone who will execute the plan proficiently or someone who will proactively strategize, explore and recommend a new course of action?
- Are you ready to trust someone to be your business partner? This is a big decision. If you think you are ready but when push comes to shove you can’t fully delegate, it will lead to chaos post-hire or a failed hiring process.
- C-Levels expect to be empowered to make decisions with many fewer constraints.
- Development of the function today. Is the department small or non-existent? Or is this a fairly qualified and experienced team that needs a new leader?
- If the function is small, you probably need to hire a leader that understands the limitations and is willing to build slowly or simply optimize what exists. C-Level hires are seeking to make a large impact and thus are drawn to managing larger, more complex and more developed teams.
- Challenge for the new leader. Do you want the new hire to simply ‘optimize and run’ the function? Or does the new leader need to significantly ‘upgrade the talent level and reinvent the function?’
- You need to seek out more experienced leaders if the mandate is to do a lot of hiring (expand the breadth of the team) and/or to up level the talent level on the team.
- Willingness to pay. What is the compensation budget for the role? How does that compare to the market rate for the title you want?
- In an efficient market you get what you pay for. In other words, don’t seek out a C-Level person but only offer the compensation appropriate for a Head of or a VP.
- Do the research upfront. Don’t be penny wise and pound foolish. The right person who is paid well and fairly can make a huge difference to company performance.
- Don’t overvalue your equity, particularly in the current market, where prior valuations don’t mean a lot, and preference stacks as well as future financing needs can dilute equity value a lot.
- Willingness to invest in the function. Is the goal to minimize investment or to grow to be world-class?
- C-Level leaders are looking to build a world-class function. That typically means investing in the function. So, if you are not willing to do that over a reasonable time frame (i.e 12-15 months max), then scale back the hiring level.
- External interaction level. How much will this person speak publicly with prospective investors, the board, and clients?
Other Things to Keep in Mind
- Everyone on the Leadership Team does not need to be the same level.
- You likely need senior, experienced leadership in product, engineering and revenue functions earlier than you do in G&A functions.
- Pay for seniority and experience in roles that you cannot outsource without losing your competitive business advantage.
- Create a ladder to growth, if you mean it.
- It’s acceptable to hire at a lower level and promise a growth path / promotion opportunity in the near term future (say,12 to 18 months to the next role). Only do this if you are truly ready to promote a high performer..
- Reference checks are really important.
- Talk to people who have worked with your prospective hires. Ask if they would hire the person again if they had a senior role open. Put a high weight on the input of references, particularly those you know and trust.
- Consider fractional hires, at least for a while, as you figure out the needs more clearly.
- You can get more experience without having to give away the senior title on a permanent basis, offering nearly as much equity.
- Fractional leaders are typically willing to do less sexy roles because they view it as a client engagement rather than as a calling with deep mission alignment.
I’ve seen many C-Level roles (in finance predominantly) advertised as the ‘strategic partner’ to the CEO. Upon diving deeper, I often find they are seeking someone who will be excellent at the execution of the responsibilities. There is nothing wrong with that. But most true C-Level executives will not take such a role.
So do your work upfront to avoid a mismatch between your expectations and what the talent marketplace demands. If you do this well, you will have a faster hiring process and get lots of recommendations, even from those who don’t fit or want the role, because they see and respect the self-awareness of the hiring team and the CEO.
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