“Without leadership, a person's impact is only a fraction of what it could be.” -- John C. Maxwell
Leaders are those responsible for giving direction, providing hope, and maximizing potential. At the end of the day, leaders determine if a group works harmoniously towards its goals or in disarray towards failure. For that reason, when it comes to recruiting and hiring a new executive, it’s paramount to choose a candidate with the experience necessary to steer your company towards wealth and prosperity.
Making a bad hire is not only damaging to company morale, but the financial costs can be extraordinary as well. According to the Center for American Progress, hiring at the executive level can cost up to 213% of the position’s yearly salary. On top of that, a recent PwC study found that companies that undergo forced succession for top-level positions cost shareholders an average of $122 billion in market value. With these expenses in mind, the importance of recruiting the right candidate the first time around is quite clear.
Because making the wrong choice can be devastating and hiring great executives drives company growth, invites innovation, and improves corporate culture, we’ve put together this guide, so you can avoid the pitfalls of hiring and secure the best leader for your enterprise.
Traits to Look for in an Executive
In the past few decades, the rate of disruption in our economy has increased exponentially. With new technologies constantly uprooting long-standing business practices, the most successful executives are those who seamlessly lead their companies through uncharted waters. These leaders aren’t afraid to embrace new technologies and adapt on the fly.
Overall, the characteristic that best encapsulates these strengths is resilience. Look for leaders who’ve been battle-tested on the front lines of mergers, acquisitions, turnarounds, and growth periods. Years of experience in the trenches allows these candidates to roll with the punches and drive their teams forward
Resilient leaders know the opportunities that lie in every challenge, and they instill confidence in their shareholders and team that those opportunities will be seized. The best executives are open, creative, vulnerable, and transparent as well. These traits build trust and buy-in from company members, uplifting them whenever spells of cynicism, distress, and disorganization crop up.
Although executives with these traits are ideal, hiring someone with such solid features can be a bit of a challenge due to the competition in our current market.
Hiring Executives in our Current Economy
With the unemployment rate currently hovering around 3.8% for our economy as a whole, and even lower at 2% for management professionals, unemployed executives quickly fly off the shelf soon after hitting the job market. For that reason, it’s paramount to move forward with new candidates quickly and efficiently before a competitor seizes the opportunity first.
On average, a business only has four to six weeks to close a new executive hire before their recruit’s interest fades. For that reason, removing bottlenecks and avoiding hesitation is the key to securing top talent. Once you’re ready to move quickly, it’s time to identify your needs and find someone who meets them.
Streamlining the Hiring Process to Beat the Competition
Before you formally begin hiring, it’s important to be aware of the 5 key milestones in the executive search process. With this roadmap in mind, you’ll be able to move through the executive search process with ease.
The first step in the process is evaluating the skills that you need your new executive to possess. From small startups to international nonprofits, most businesses have widely different needs. When beginning your executive recruitment process, you’ll want to understand the best practices for your sector. For example, middle-market for-profit and not-for-profit executive search processes require distinct approaches to hiring.
After better understanding the landscape that you’ll be competing in, take some time to assess the skills that your team is currently lacking. Although many founders prefer to hire executives who are similar to themselves, in reality, maximizing your team’s differences is the key to creating synergy. When all executives and employees possess complementary skills, a culture of autonomy is promoted, which leads to better overall company performance.
Once you know what you need, it’s time to start reading resumes and conducting interviews. With new techniques for hiring executives transforming the ways that we recruit executives in recent years, it’s important that the process receives a personal touch. Although technology can certainly help narrow down your pool of candidates, humans are still superior to machines in assessing organizational and cultural fit, two keys for a new hire’s long-term tenure.
After you’ve found a few candidates with the skills you need, you’re ready to begin the interviewing and negotiating process.
Negotiating Compensation Like a Pro
Because the unemployment rate in the U.S. is so low, the tables are turning when it comes to who's doing the interviewing. Rather than companies assessing candidates, candidates now have the option to choose which organization they’ll serve. Potential hires view the interview process as a window into your businesses’ brand and corporate culture. For that reason, organizations need to put their best foot forward and maintain transparency throughout the process.
In this new hiring climate companies must show the utmost respect for their candidates and the hiring process itself. This means not skipping any steps, being prepared for each interview, and focusing on relationship building through in-person meetings. In every meeting, be sure to demonstrate respect for your candidate’s time and contributions.
Start negotiating compensation early
When it comes to negotiating executive compensation packages, always start early and maintain transparency throughout the process. During your first in-person meeting, ask about the salary range your recruit is expecting; you don’t want to go through a drawn-out interview process only to discover you’re unable to properly compensate your ideal candidate in the end.
It’s also important to be aware of salary history bans that might exist in your city or state when discussing your recruits’ salary. Although these laws were created with good intentions, they can sometimes make negotiations more difficult and potentially lead to pay discrimination in the workplace. A good rule of thumb is asking what your candidate expects to be compensated, rather than what they’ve been given in the past.
Invest more in employee benefits
Amidst the current competition, it’s necessary for organizations to step up to the plate in regards to the benefits packages they provide. As market forces drive salaries up, many organizations are providing pages upon pages of benefits to their new hires; everything from stock options, to executive relocation packages and daycare services are included. In the end, you’ll be happy you made the extra investment because proper compensation is the key to an employee’s long-term tenure with your company.
Sealing the Deal
If you properly implement a sound recruitment and hiring process, you’ll be in a position to get ahead of your competitors and bring great leadership to your business in no time.