The Morgan Samuels Perspective

A New Front in the War for Talent?

Posted by Morgan Samuels on Thu, May 23, 2013

Todd Wyles Morgan SamuelsThe May issue of PE Manager includes a piece by our firm's own Todd Wyles on how private equity firms approach talent management across their portfolios. Increasingly, PE firms are adopting an Operating Partner in charge of Talent or Human Capital to help facilitate executive hiring at their portfolio companies. Todd interviewed several Heads of Talent, including leaders at Genstar Capital and Welsh, Carson, Anderson & Stowe to learn how they create value.

Todd is the Private Equity Practice Leader at Morgan Samuels. As a human capital consulting firm, we are always enthusiastic about putting a focus on talent issues. We think the emergence of the Head of Talent role at PE firms is a positive development in the private equity space for reasons outlined in Todd’s commentary.

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Topics: top executive search firm, morgan samuels, executive recruiters, lean six sigma, human capital consultants, executive search firms, retained search firms, retained executive search firm, top executive search firms, executive search, executive search consultants, executive employment agency, Private Equity, Private Equity International, Magazine, Head of Talent, CHRO, PE, Todd Wyles

Smarter Metrics, Smarter People

Posted by Morgan Samuels on Thu, Apr 4, 2013

It’s called Big Data.  Every transaction, every contact with a customer, every employee interaction is a data point that gets recorded, analyzed and processed.  It’s going to be a boon to companies that can get a handle on how to use it.  You can read a lot about how it will change business here, here and here.  But you’ll notice that most people discuss Big Data as an outwardly focused phenomenon: How can it improve profits?

What you don’t see enough of, we think, is how it can improve hiring.  In other words: How can it improve the teams that drive those profits in the first place?

In the human capital business, that’s a thing we think about a lot.  In a recent write up about the movement they call “Talent Analytics,” Forbes explained its importance thusly:

There are around 160 million workers in the US alone, and most companys’ largest expense is payroll.  In fact in most businesses payroll is 40% or more of total revenue, meaning that total US payroll expense is many billions of dollars.  How well do organizations truly understand what drives performance among their workforce?  The answer: not really very well.

Simply put, companies know how to measure success.  That’s what the bottom line is for.  What they don’t know is why people are successful.

Do we know why one sales person outperforms his peers?  Do we understand why certain leaders thrive and others flame out?  Can we accurately predict whether a candidate will really perform well in our organization?  The answer to most of these questions is no.  The vast majority of hiring, management, promotion, and rewards decisions are made on gut feel, personal experience, and corporate belief systems.

We all know that past performance is not a guarantee of future results.  But everyone wants to hire the guy with the past performance because he has demonstrated results.  Even if it works, the guy with the past performance is expensive.  No one likes expensive.  But we need results.  Round and round this loop we go.

How do we get off?  Talent Analytics.  The concept is familiar to anyone who follows baseball or saw the Brad Pitt film “Moneyball.”  (Baseball calls their analytics Sabermetrics.)  Much of the old, analog world hasn’t yet caught up to Big Data so there are huge market inefficiencies to exploit.

(The business world) operates under a belief system that employees with good grades who come from highly ranked colleges will make good performers.  So their recruitment, selection, and promotion process is based on these academic drivers.

Makes sense, right?  So they looked at the data.  You want to know three things they found did not matter when correlated with performance?

  1. Where the candidate went to school
  2. Their grades
  3. The quality of their references.

You need to find the traits and process of successful people, and hire people who have those traits and processes.  If you focus solely on a candidate’s past results, you’re using too small a sample size that is too largely affected by chance.

Focus on process, process and process.  (Billy Bean of “Moneyball” fame had the simple but brilliant observation that batting average was a terrible stat because it was dependent on the luck of where the ball landed.  Why not get cheaper players who put the ball in play but had so far been unlucky or hadn’t gotten opportunity?  i.e. find the players who had the best batting process, but not results?  Voilà, competitive advantage.)

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Here at Morgan Samuels, we love this kind of stuff.  As a Lean Six Sigma company, we’re big on fine-tuning our own process as we figure out what works for us.  But we’ve also found that we can make better executive placements across industries by matching skill sets, and sometimes ignoring the particulars of a candidate’s experience, as long as they have enough of it.  We can find a bigger slate of great candidates that way because no one else is doing it.

What can you accomplish by getting ahead of the data curve? Read this book: “Trading Bases.” It’s an out-of-the-box example of a former securities trader turned sports-bettor who used data-heavy analytics to turn $1 million into $1.41 million in one baseball season.  (He made only a 14 percent return the second year.)

How could he do that?  Simple.  He’s using Big Data, and the people he’s betting against are using their instincts.  Or as the trader, Joe Peta, put it:

Sabermetrics in baseball allows employers to pay for skill sets and not get confused by results.

When your competitors are stuck in the past, confused by attributes that don’t matter, that’s competitive advantage.

Topics: top executive search firm, morgan samuels, leadership, executive recruiters, lean six sigma, human capital consultants

Retained Executive Search vs. In-House Recruiting

Posted by Morgan Samuels on Wed, Jan 30, 2013

A recent article in Bloomberg Businessweek is creating quite a buzz around the human capital industry.  The piece, “Executive Headhunters Squeezed by In-House Recruiters,” uses a patchwork of anecdotes and piecemeal data to make the case that retained search firms are facing new difficulties.

With all due respect to Bloomberg, the realities they outline are neither new, nor are they really difficulties in providing value added retained executive search services.

First, let’s briefly discuss the problems with their data, which the Association of Executive Search Consultants already questioned.  Businessweek appears to have chosen arbitrary data points which happen to paint a picture that retained executive search firms are suffering.  Sure, a 33 percent decline in industry revenue in 2009 looks ominous; if you omit that the decline was from an all-time high; and if you omit that revenue is already re-approaching that all-time high.  (There was also a minor world-wide economic event in 2008 that Businessweek may recall.)

As the AESC states:

“Although in-house search is inevitably eating into the lower end of the market by taking work that previously might have gone to some executive search firms, nevertheless, the overall market for executive search services is holding firm.  Once global economic conditions stabilize, we expect to see even greater demand in response to the worldwide talent shortage—a shortage being driven by underlying demographic shifts in the developed economies and huge potential demand for executive talent from the emerging markets.”

Or, in summary, “The impression given in the article that the retained executive search profession is in decline is not substantiated by the facts.”

Businessweek seems mostly concerned with the impact of in-housing on the short-term bottom lines of both hiring companies and retained search firms.  To evaluate the merits of retained search services, and not just the costs, one would have to complete a true return on investment calculation, which includes critical factors such as the impact on bringing the best talent in the market to the organization in the shortest time period possible, while minimizing the time and energy of key existing client executives.  In addition, the extent by which true executive recruiting is done in-house is not put into context.  There has been and always will be organizations which maintain and build internal executive recruiting teams.  However, most of these limited numbers of organizations also continue to use some level of external support.

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If they had contacted us and asked the right questions - or had done the same with any of our brethren in the retained search industry - they would have heard a polite and convincing case for hiring an executive search firm and not diverting internal resources.

A key point of added value we bring to executive search over in-house recruiters is, simply, that we’re not in-house.  We’re impartial and data-driven.  We come to the hiring process with fresh eyes and perspective.

Secondly, this is what we do.  This is all we do and we’re focused on it.  We have in-depth research capabilities and access to a wealth of human capital across dozens of industries.  We have a broader view of the marketplace and a wide reach.  The Businessweek article says that Coca-Cola does 95 percent of their searches in-house.  We’re willing to bet the other 5 percent are their high-level and/or most specific searches.  They’re not going to try to find their own CEO for the same reason we don’t try to make our own Diet Coke - the result would leave a bad taste.

After all, when it comes to something vital, you want to hire an expert.

In a similar vein, the article also states that GE’s in-house executive search team was able to beat the retained search industry standard of 170 days to staff positions in 73 days.  That’s impressive.  That’s also about our average here at Morgan Samuels.

And conceptually, the article seems to argue against itself.  It’s difficult to make the case that the services provided by firms like Morgan Samuels are superfluous in an article that outlines how major corporations are hiring away our very-talented professionals in an effort to improve their performance and bottom line.  That is, after all, our specialty.  It’s the whole idea.  And imitation is the sincerest form of flattery.

Lastly, a firm such as Morgan Samuels that truly provides highly differentiated services within the retained search category is facing a robust market. There will always be a market for a firm that can be a strategic partner to clients, without being an insider, appropriately assesses leadership acumen and cultural fit, all the while scouring the marketplace for the best talent to meet our client’s key business objectives.  All of this is done with an average cycle time of 76 days, a 34% diversity placement ratio, and an average candidate review before offer of four.  Oh, and by the way, of the 4, 20% of our clients will try to hire two of the four.  So value like this is hard to duplicate and, frankly, from an economic standpoint, why would you?

Topics: top executive search firm, morgan samuels, human capital consultants, executive search firms

"Show Me the Money" Is Not Always the Answer

Posted by Morgan Samuels on Thu, Jul 5, 2012

Here’s a sticky situation for an executive recruiter: you’ve attracted an all-star who is a great fit for a role.  They’ve engaged with you, so you know you’ve piqued their interest, but they’re not quite convinced.  You need something besides compensation to bring them on board.  Luckily, there are a lot of other tools in your kit.

Compensation is always a big factor when an executive is exploring a move, but the right executives view it as only a piece of the pie when considering whether to make a move from their current role.  When faced with a situation where a client may not be able to give the perfect candidate a big jump in their current compensation, Mary Lees, senior consultant at executive search firm Morgan Samuels, asks herself a couple of key questions about a great candidate: “What are the driving factors making this person look at a new opportunity?  Are they unhappy in their current role?  Have they hit a plateau?  What is it about the new role that spiked their interest?”

The answers are all about vision.  That is, how people envision themselves and their future.

Think strategically

This isn’t about the recruiter’s strategy, but about the strategic influence the candidate might have in their new role.  Again, Lees throws out questions that can change a candidate’s whole perspective: “Can they develop the growth strategies for the new organization?  Say it’s marketing…Could they develop the go-to-market strategies for a new product?  Is this an opportunity to be a key driver of the company’s new initiatives?” If so, that’s an appealing picture.

Then there’s the question of influence and recognition.  Someone who is currently two or three steps away from the most senior levels of the organization, for example, would be very attracted by the chance to interface directly with the CEO or board.  Interfacing at high levels means being more influential within a company, and being influential leads to a lot more recognition—not just internally, but in the market.  And recognition is worth more than money in a lot of cases, especially if a candidate is bogged down.  No one envisions themselves as a cog.

Synergistically speaking

Here’s another question you should ask: how much synergy does someone have with their potential new boss and team versus their old?

Blog QuoteLees says, “Connection between parties is important.  I’ve seen people leave their roles for less money because they felt like they could do some amazing things with their potential new boss.”  So consider the company culture.  An entrepreneurial culture versus a static, flat one can be pretty exciting, and someone who’s languishing often just needs a fresh start in a culture they see as a better fit.

Location, location, location.

“It’s interesting for me to see how location can make a new role extremely attractive,” Lees says.  “Maybe it’s about family members, or this person grew up in the Midwest and wants to get back there, or they’ve always seen themselves ending up in a certain area.” There’s that vision thing again.  (Although a low cost of living doesn’t hurt.)

Low compensation can also be made up for by great benefits, including vacation, insurance, tuition reimbursement and retirement packages.  Or it might be balanced by more promotion opportunities and faster career advancement.  So look far beyond that one number, because for people with vision those non-financial incentives can go a very long way.

Topics: top executive search firm, morgan samuels, compensation

The Counterproductive Counteroffer

Posted by Morgan Samuels on Wed, Jun 20, 2012

Pick up any article about counteroffers and it reads like a romantic thriller full of intrigue, mistrust and betrayal.  The hero gets caught in a complicated web: drawn to a newer, better world he didn’t even know was there, he’s snared by someone he trusted and then WHAM! …It’s over.  The hero’s caught.  The deathtrap spiral has begun.

Exaggeration? Maybe, but only a little.  Martin Hewett, senior client partner for executive search firm Morgan Samuels, says doubt and mistrust are very real factors in situations where a candidate accepts a counteroffer.  And not just for the candidate.Blog Quote

“We try to attract the very best talent for our client.  We look for people who are doing a great job somewhere who weren’t particularly interested, before we spoke to them, about making a change.  So the chance of their current company being upset if they accept an offer from our client is pretty high.  We need to recognize that.”

So why would the spurned company want the candidate to stay after all that?  Let’s be honest: it’s not for the sake of the candidate.

“Think of this person’s boss,” Hewett says.  “Unless they have a succession plan they can’t find a replacement in two weeks.  The boss’ boss is going to ask questions as well, because why would someone leave if they were happy?  That makes the boss look bad, so they want to save the situation.”

Wheedling soon follows.  “You’re doing such a great job here!  You understand our business and culture! You’re high potential!  WE HAVE PLANS FOR YOU!”

Hewett points out the very next question the candidate should ask is, “Why are they only telling me this when I give my notice?” And then consider what will happen if the candidate falls for it and takes the counteroffer: uncertainty creeps in on both sides.  Bosses realize they didn’t know this person so well after all.  Candidates know they can’t trust the boss’ motivation for making a counteroffer out of desperation.  The seeds of doubt have been sown.

Statistics show that the vast majority of candidates who take a counteroffer end up not being with the company 12 to 18 months later.  Even more telling is that the majority of candidates who go through the whole recruiting process and are finalists (but not selected) for a new position end up leaving their jobs within two years anyway.  This, the senior partner at the executive search firm says, is not a bad thing.

“They were not looking for a new job.  We know that.  We wooed them.  And in the process of wooing them we make them realize their worth.  We made them realize how good they really were.  You cannot go back after that.  Even if they take the counteroffer and stay, they will still have that in the back of their mind: the uneasy feeling they could do better somewhere else.”

Uneasiness isn’t necessarily bad.  Comfort can lead to stagnation and severely limit a career.  So if you’re tempted by a counteroffer, think about this: There’s a bigger, better world out there and someone thinks you’re worth a lot more.  That’s a good thing.  So say "thanks, but no thanks" to the offer and move on.

Topics: top executive search firm, morgan samuels, human capital consultants

Good to Great, a Book Recommended for Businesses Striving for Greatness

Posted by Morgan Samuels on Wed, Nov 9, 2011

Business books help improve your overall business mindset, improve business functionality, and assess talent for your organization. As a part of a five-part series, our CEO, Bert C. Hensley, has recommended his top five selections for your Amazon wish list. According to Hensley, if you want a road map to take your company to greatness, place the following book on your Amazon wish list. Keep in mind that the knowledge gleaned from our book recommendations should always be practiced in conjunction with generally accepted business practices and your corporation's own agenda and culture.

Good to Great
by Jim Collins

"This book creates a road map that almost any company may follow to take their company to greatness," said Hensley in reference to this influential book. Many companies, businesses and executives wonder how to transform a good company into a great company.

According to Jim Collin's website, "This book addresses a single question: Can a good company become a great company, and if so, how?" Jim Collins set out on a five year research project to compare businesses that made the leap from good to great and what influential techniques they used to make the leap.

"Companies that make the change from good to great have no name for their transformation—and absolutely no program… They don't "motivate" people—their people are self-motivated." Because there is no set program to push a company to greatness, Collins suggests a road map to follow to improve companies and guide them from good to great.

"Good to Great shows that greatness is not primarily a function of circumstance; but largely a matter of conscious choice and discipline," states the book's description.

Based on a five year research project comparing teams that made a leap to those that did not, Good to Great discusses important and influential models like Level 5 Leadership, First Who and the Flywheel.

Buy Good to Great from Amazon today, and begin your path from good to great.

Morgan Samuels Company is a top executive search firm that locates top-tier, senior level talent in a proactive and comprehensive effort to place executives in higher level jobs and career advancements.

Topics: top executive search firm

Benefits of Training; A Conversation with Morgan Samuels' Learning and Development Specialist, Erin Kim

Posted by Morgan Samuels on Fri, Aug 12, 2011

Nearly everyone has received training at some point in their life, whether it was in school, with a new technology, for a new job or position or something completely different.  Training is important and occurs continually throughout an individual’s personal and professional lives.  In order to develop as a human being, we must be trained.  We spoke with Erin Kim, the Learning and Development Specialist at Morgan Samuels, and discussed the importance and benefits of training within a company for inpiduals and for the company as a whole.

“When you are trained appropriately, you feel you are able to do your job at the best possible level and that you are set up for success,” said Kim, “This helps to improve the morale of employees.  When you feel like you are being set up for success—when you feel like you know how to do your job—you may gain a sense of job satisfaction or job security which boosts morale.”  By boosting individual morale, you are in turn boosting the morale of groups of employees because when one person feels good about their job, an osmosis effect occurs, and others feel good, too.

“When one employee is very happy and successful in their job, that then has a chance of rubbing off on other employees and in turn helping other employees feel better about themselves.  It just helps the team morale, especially in a company like Morgan Samuels,” said Kim.  “We are not a 1,500-person company.  We are rather small, and we interact with everyone on a day to day basis.” Training causes job satisfaction and job security.  Kim explains that if employees don’t know how to properly execute their job, they might experience anxiety and fear that their job is in jeopardy; however, training helps to boost the morale of employees across the board.

“Effective, hands-on new hire training also helps companies be sensitive to the jobs of other current employees because they don’t need to supervise these new hires as closely,” said Kim.  When new hires are well-trained at the start of employment, current employees don’t have to take time out of their busy schedules to continually train them and do not have to worry about making up for lost time.  In addition, new hires experience a sense of accomplishment and are able to get into the swing of things quickly.

“When you have been trained appropriately and are doing well and know what is expected of you, you master your job more quickly and then there is more of a chance for you to progress and receive a promotion.  That, in turn, goes back to higher morale,” said Kim.  Kim believes that those who are trained appropriately feel they are more productive and they know what is expected of them.  These well-trained employees can allocate time appropriately each day and can better organize their day by knowing what needs to be accomplished, which also increases productivity.  Well-trained new hires provide less of a chance for error while using the best resources available without wasting time and money.

For more information on Morgan Samuels Company, a top executive search firm, and how we are continually improving and developing, visit our website at morgansamuels.com or contact us.

Topics: top executive search firm, morgan samuels