First of three parts
Attracting talented leadership to the senior ranks is essential to any company’s ability to execute a long term strategy and outperform its competitors.
The mechanisms available to companies needing to identify top tier talent have dramatically increased over the last decade as executives have willingly put their career histories on the web for the general public to view. As the founder of a retained executive search firm, I’ve seen firsthand how my clients’ motivation for hiring my firm has changed over this same time period.
Before the Internet evolution, we were retained because clients desperately wanted to tap into our highly specialized network. Now, we’re more often retained for our ability to:
- Effectively position or elevate our clients’ profile with the best candidates in the market who are faced with multiple opportunities.
- Create screening mechanisms that qualify and extract the best single candidate from a large pool, and,
- Most importantly, create and finalize an offer that gets the chosen candidate into the company.
No matter the effectiveness of a search process, it’s this final phase – closing the finalist candidate – that ultimately defines the success or failure of a search.
There are many reasons why offers breakdown at the eleventh hour. To increase the probability of hiring the candidate that the search process has identified as critical to your growth plans, there are critical considerations you must weigh at each phase of the recruiting process.
Key pre-recruiting efforts
I’ve outlined those key considerations in three parts starting with a few important pre-recruiting efforts:
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- The Chicken and the Egg. Every successful search begins with the development of a comprehensive position profile accompanied by a strategy to successfully recruit just such an individual. That strategy is only effective, however, if it includes a compensation philosophy for the role at hand. For instance, a company’s internal metrics may not be sufficient to attract the top tier talent desired. The hiring manager, however, may not be willing to settle for anything less. If the mandate to your search partner is to recruit the best available candidate, then you must commit to compensation flexibility regardless of your internal metrics. If internal ranges must be preserved, then you must accept the market returns and focus on the candidate pool recruitable for that compensation range.
- Internal comparisons are simply a starting point. If you’ve committed to compensation flexibility in order to attract the best possible candidate, then you must remember that your internal comparisons to already existing employees may ultimately be meaningless to the candidate. To work, the offer needs to be compelling versus the candidate’s current compensation package, not your company’s internal metrics or peer group. Remember, in today’s highly competitive market, an executive needs a compelling reason to leave their current situation
- Compensation packages must make sense to both candidate and company, particularly in today’s market. Often the best packages for all concerned involve elements of pay for performance. In other words, consider compensation plans that include escalated bonus payouts for achievements that go above and beyond. The best candidates will seek out such a plan due to their confidence in their abilities to deliver.
The best companies will be comfortable with such a plan because it prioritizes and rewards achievements above all else. Similarly, rewarding achievements with equity grants (i.e. options and restricted stock units) also helps to align candidate and company goals. Making the candidate an “owner” helps to alter the mindset of the candidate ensuring their focus on decisions and actions that are good for the company. This is extremely important to investors when recruiting a C-suite to manage their investment, but should be considered by all levels of managers when developing a package to attract top talent.
Companies must have a very clear strategy when entering a new market, and the job market is no exception. Hiring decisions are often a balancing act between the best candidate available and internal compensation metrics. Therefore, it is critical that a company determines its compensation philosophy before recruiting efforts even begin.
Tomorrow in Part II, I’ll discuss non-financial strategies that a company can utilize to help close the finalist candidate.
This is excerpted from an ON Search Partners white paper titled Making An Offer That Sticks: 7 Strategies for Closing The Deal with Top Talent.