When it comes to hiring a key member of your executive team, hiring a recruiter can seem expensive initially. However, do not underestimate the value of having a professional recruiter who will cast the net wide to give you exposure to various types of executive candidates, to be responsible for moving the process forward efficiently, and to run a competitive process for finding the best executive for your team.
Here are some key factors to consider when engaging a recruiter to help you find that top tier executive hire.
Understand Your Options And Do Your Homework
Retained recruiters are typically used for executive hires. They get paid a retainer (a fixed upfront fee) to have the recruiter do a dedicated search. Retained firms often charge higher fees, but provide longer guarantees on their placements, extend off-limit provisions (so they won't poach your other employees) and have a higher likelihood of staying the course through challenging searches (though "mileage can vary" on this, so finding the right recruiter partner who will actually stick it out is critical). Retained search firms also tend to have a much more structured and intensive search process. The best ones have long-standing relationships with hard-to-reach executives, invest significant time vetting and referencing candidates, and advise hiring managers on how to successfully close key hires.
Contingency recruiters are typically used when numerous hires need to be made relatively quickly at a more junior level. They get paid on a contingency (paid only if they find a candidate) basis, so their incentives are not fundamentally aligned with the company finding the best candidate in the market. This is a "fast-twitch" relationship, and their goal is to find the path of least resistance. They focus on volume, shop their candidates to multiple companies at once (creating conflicts of interest) and, if the search doesn't close quickly, they lack incentive to stick with the search through completion.
Effectively vet recruiter candidates
Find a recruiter who has done searches with quality companies for the same type of company and stage of growth as yours, and ask the recruiter what percentage of his or her business is related to the function that you are seeking. We have a Chief Talent Officer at our firm who continually vets who the top recruiters are for executive hires in particular functional areas for our portfolio companies.
Ask the recruiter what his or her personal and organizational differentiators are for this search. It's also helpful to know how many other searches the lead recruiter is working on parallel to yours if you sign tomorrow so you are certain they have the bandwidth to give your critical search the highest priority.
I also suggest understanding their off-limits policy. Which companies and/or candidates are currently off-limits that they cannot source for you? Ask for references on the recruiter to get a better sense of how the recruiter operates.
Run An Efficient Process
Actively manage the recruiting process
Be actively engaged from start to finish in the process. You know best what you need from that executive hire, so will need to be a big part of the process, from editing the initial position requirements (job spec) to helping tell your company's compelling story and articulating your unique culture. It's also important to provide feedback to the recruiter as quickly as possible after meeting candidates so they can continue to hone the candidates accordingly.
I often work closely with my entrepreneurs when hiring key executives, and try to send notes out to the hiring team as soon as I've finished a call or meeting with an executive candidate. This helps with prioritizing candidates, determining whether or not they should meet the broader team, and keeps the process moving along efficiently.
Leverage high value resources
Decide who makes up the core recruiting team and who participates at different stages of interviews. Keep the recruiting team as small as possible, but large enough to involve relevant advisors and investors/board members who have seen this movie many times before and can pattern match fairly quickly. (For other ways to leverage your board members see my previous post, "6 Ways To Get The Most and Best From Your Board")
As busy as you are, I strongly recommend having a weekly call with your recruiter, to keep everyone aligned and on track. My favorite recruiter has an online dashboard that recaps each of the candidates' backgrounds and their status in the recruiting process, which we review during out weekly calls. I've found this online tool to be more transparent, collaborative and effective than a pdf doc that many other recruiters typically send 15 min before our weekly calls (they become irrelevant almost immediately in a fast moving recruiting process).
If you like a candidate, follow up quickly with next steps and keep the momentum going. Establish a reasonable interview timeline up front so candidates understand the process. Candidates lose interest and searches break down as a result of poor communication and follow through. Keep yourself in the pole position by expressing your excitement and enthusiasm for the candidates as they continue thorough your interview process.
Conduct Your Own Reference Calls
Never outsource your reference calls. As tempting as it may be to pass all or most of the reference calls to the recruiter, take the time to make key reference calls yourself so that you can hear, first-hand, specific examples related to the executive candidate's strengths and areas for improvement. This will help you to a) decide whether or not this person could be a good fit for your particular company, and b) understand how to best manage that executive.
Always do multiple back channel calls as well, not just the calls with the references provided to you by the candidate. Read between the lines as needed during these calls. Separation agreements often contain non-disparagement clauses so listen carefully for red flags about an executive candidate's past performance. Sometimes you have to dig around to get someone who will speak candidly about a candidate's inability to perform in a past role.
Listen to past experiences but really pay attention to more recent data; the good people improve and master critical skills over time. Also, remember that sometimes the feedback you get on candidates says more about the person providing the feedback than the candidate, so multiple points of view are important.
Address Deal Breakers Early On
Flush out major concerns early in the process
Move a candidate to the back burner if they can't agree to something that is critical to you or seem misaligned with your company's values and culture. For example, geography tends to be a key issue. If you are seeking a key hire to help build your organization and you want someone in the office as much as possible, then having them commute from another city an hour flight away for a few days a week isn't likely to be a sustainable solution (unless there is a specific date that they agree to move closer to your office).
Keep the pipeline of top quality candidates filled until the day after the candidate walks in the door at your company. It can be very time consuming when the person you think is going to accept and follow through doesn't--you're back to square one without any strong options in the pipeline.
Key terms (aside from comp and equity) that often play a major role in a candidate's decision-making process include change of control and/or vesting provisions, flexible work hours to allow executives with families to pick up their children, and cost & coverage for relocation expenses.
Effectively manage potential concerns within your company
Some of the biggest challenges to this entire process can come from within the company itself. First of all, as the CEO, don't be afraid of change or disruption. If you get the right executive, it will be the best thing you can do for your company, and you will be surprised by how much weight is lifted off your shoulders and progress is made in that executive's functional area.
As such, don't let the team members who are afraid of change derail you in this process. Especially at early stage companies, it can be helpful to keep the executive recruiting process to a very small internal group--it could even just be you and your co-founder(s) initially (especially if it is a CRO or COO role that will impact a large number of employees).
As you narrow in on a top couple of candidates, you will need to involve in the interview process other senior leaders who will work directly with this new executive. When you break the news to them, explain that this hire is for the good of the company, that it will help the company to scale more quickly and effectively, and that all employees will benefit and learn from working with an executive who has "seen the movie before".
Plain and simply, what got you here won't get you where you want to go. Beware of B-level players. They may fear A-level players who hold them accountable, make them work harder or expose what B-level players don't know. Your strongest team members will realize and embrace the gift they are being given--an upgrade of expertise and experience on the executive team.
Find the right blend of experience and hunger
Beware of hiring executives that are too senior during the earlier stages of a startup. You need to find the right balance between an executive who will not only bring helpful experience, but also be hungry about helping to build the company, excited about getting their hands dirty and dealing with the inevitable challenges that come along with working for a quickly growing startup.
Getting to Yes
Spend time with and go the extra mile for stellar candidates
Don't underestimate how powerful it is to put time and effort into getting to know the top candidates. Grab coffee or dinner, go road biking, etc.; invest the time so that you pick up on things you might not in a more formal office meeting. I got huge bonus points from an executive candidate for one of our portfolio companies by hopping in the car last minute to drive an hour to meet and answer his questions when I was 8.5 months pregnant!
Negotiate comp with objective candor and fairness
Comp can be a sticky issue when it comes to hiring a key member of your executive team. Be willing to pay for critical talent but keep it within the bounds of reason. Yes, that executive will bring a lot of value to their role and will likely be the highest paid person in the startup (at least for now). However you also need to properly manage your burn rate and set a proper precedent for future executive hires in the company.
I typically try to find a base plus bonus solution that covers the executive's cost of living and doesn't cause massive stress in their living situation/family, etc., yet is market competitive so that outside options don't start to look more attractive. I also make sure that they understand that the key point of a startup is playing for the equity upside.
Take the time to clearly explain the value of a total compensation package. Candidates are smart and they will talk with their network for guidance on current market trends, but that doesn't always equate to your specific company stage or scenario.
Explain what their number of shares really means (current valuation, expected future revenue, valuation growth, and dilution mechanics if that is a concern) and help them understand the vast upside potential of your complete offer, assuming specific milestones are attained and in what anticipated timeframe. You can coordinate with your recruiter who can work in the background with candidates on these kinds of discussions as well.
Leave a good impression with all candidates
Overall, the recruiting experience is a very personal interaction between the outside world and your company. The best companies take the time to create memorable, authentic and personal experiences for candidates. Their goal is to make sure that each candidate has an incredible experience with the company, walks away feeling special, and says positive things about the company, regardless of the outcome.
Aside from this just being the right thing to do, it is a small world and a very long life, and you need all of the positive support from the ecosystem, directly and indirectly, that you can get.
(Note: Thank you to Mark Jacobson, a Partner at the search firm, True, as well as Elizabeth Patterson, the Chief Talent Officer at my firm, for their contributions to the content of this post.)