The Morgan Samuels Perspective

Retained Search vs.Contingency: An Executive Recruiter's Perspective

Posted by Morgan Samuels on Fri, Sep 16, 2016

It can be difficult for a hiring company to decide whether the services offered by an executive search firm are necessary or whether a contingency firm might suffice. Morgan Samuels Associate Consultant Robby Kempton is one of our executive recruiters and sells career-defining opportunities to senior executives and C-level candidates every day.  Ms. Kempton has experience working on executive searches with both retained and contingency firms.  Understanding the differences between retained search firms and contingency firms is the first step to understanding their value and the best fit for your company’s needs.

unsplash_businessman_suit.jpgWith thousands of potential candidates competing for coveted senior-level opportunities, executive search firms can be valuable partners in helping companies identify and attract not only top talent, but those best suited for the particular role and company culture. “Retained executive search firms like Morgan Samuels truly collaborate with the hiring company to deeply understand the strategic needs of the business and how the role will contribute to the future of the company, as well as more nuanced elements like company culture.  Morgan Samuels recruiters scour the universe to seek out the most qualified talent that matches the specific needs for each role,” says Kempton.  "Unlike contingency firms that tend to rely on their existing database, retained executive search firms are more likely to reach out into the market to recruit 'passive candidates' -- executives who are not actively looking for a new opportunity, but may be a strong fit for the role. Contingency firms are likely to have a large pool of candidates in their database to shop around to several companies who have broader and more open criteria.”

Contingency and retained search firms also have different business models.  “As the name implies, retained search firms are paid a retainer to source the best possible talent.  They are typically the only firm engaged to fill the role and are paid for their services at the start.  Contingency firms, on the other hand, are only paid upon placement and may be competing with several other firms in the market.”

RobbyKempton.jpg

Robby Kempton, Associate Consultant

Retained search firms and contingency firms also differ in terms of the advantages they provide.  “The advantage of retained search is that by partnering with the firm, the client company has a greater chance of finding the best candidate in the market, who possesses the specific requirements for the role,” says Kempton.  “The level of the talent and the loyalty of the candidate significantly increase when they are paired with a search firm that aims to match stated requirements, like educational background and work experience, versus candidates in an existing database.”

The way that candidates are found also varies between the two types of firms.  According to Kempton, in most cases with contingency firms, the candidates approach the firm, especially if it is a reputable agency.  Retained search firms seek out the best specific talent in the market, targeting certain companies and industries and reaching out to candidates with the skills and backgrounds that meet the client’s needs.

The use of executive recruiters through both retained and contingency firms can benefit any company.  Whether searching for senior-level executive placements or mid-level executive placements, executive recruiters can provide value.

"For higher level placements, including C-level, it is beneficial to use a retained search firm, because there tends to be a very small selection of candidates who possess the specific skills, experience, qualities and culture fit the client is looking for,” says Kempton.  “On the other hand, contingency firms are more appropriate when the needs are not as specific and there is a large pool of qualified candidates in the market.”  Kempton believes that both types of executive search firms are beneficial and can serve as extensions of the client’s Human Resources department.  Both types of firms provide the most value when they are viewed as true partners to the HR department, working together to find the best possible talent based on the hiring company’s strategy, culture, challenges and key business objectives. 

For more information on retained search firms, how they work, and how executive recruiters can add value to your hiring process, contact Morgan Samuels.

Topics: executive recruiters, retained search firms, top executive search firms

What Makes a Great Private Equity CFO?

Posted by Todd Wyles on Mon, Nov 16, 2015

For private equity investors, ensuring they have the right CFO is widely thought to be the most critical decision they will make from a talent standpoint, second only to installing a top CEO.  

unsplash_businessman_suit2.jpgOver the past three years, nearly forty percent of all the PE-backed searches Morgan Samuels has conducted have been CFO searches.  Why is this search such a common one throughout the investment cycle?  Is there a common profile for the best CFOs?  And if there is, what are the specific attributes that are most often observed?

In an attempt to answer these questions, Morgan Samuels has captured and analyzed extensive quantitative and qualitative data from CFO searches we have conducted for PE-backed businesses ranging in size from $8M - $75M EBITDA, across multiple industries.  By culling the data collected from assessing hundreds of chief financial officers for these searches, we have identified three critical attributes of great CFOs for PE-backed companies:

  1. They all have the desire and ability to be a true partner to the CEO, both internally and externally.
  2. They have command of the levers and metrics that drive value in the business, and they play a major role in executing the strategy.
  3. They are hands on, decisive, and they have a very high sense of urgency.

Let’s look at each of these characteristics in more detail:

True Partner to the CEO

This may appear to be a relatively soft attribute and difficult to measure, but based on our experience a CFO must not only fit the culture of the portfolio company, but also the style and vision of the CEO.  And they must simultaneously focus on both the internal and external aspects of their position.

One of the reasons the CFO role is so critical to get right at a PE-backed company is that they must have the skills and ability to advance the vision and strategy of the CEO, across multiple functions. They need to be able to translate the financial impact / projected outcomes of the strategy across the organization.  This is the internal aspect of becoming a partner to the CEO. 

Additionally, they must be focused externally.  They need to manage banking relationships and ensure covenants are not broken.  They often own multiple professional service provider relationships.  Perhaps most importantly, they have to be comfortable serving two masters – both their CEO and also the Board which will typically include at least one senior member of the GP.  And when it comes time to exit, the CFO plays a major role in interfacing with potential buyers, which requires both strong presentation skills and the ability to influence buyers.

Metrics Driven

Cash is King is a trite anecdote.  But for many middle market private equity-owned companies, it is still a very relevant mindset.  Most control investments are levered such that the management team has to be extraordinarily thoughtful about how they manage cash to ensure growth (whether that be organic, or via acquisition) and liquidity.  The CFO is at the tip of the spear regarding cash management.

One CFO we recently placed at a $150M business services company recognized within about 30 days on the job that the company was going to run out of cash 60 days later!  The CEO and the Board were not as aware of this, and so the very first order of business for this CFO was to create a set of metrics/KPIs that provided visibility for cash management on a daily basis.  That is how critical managing cash can be for a midsized business, and CFOs who install systems to ensure this happens are the most successful.

Hands on and Decisive

One of the most striking differences we have observed in successful CFOs for middle market companies with private equity owners is that they truly appreciate (and accept) that resources are at a premium, and that time is of the essence. Very few CFOs in private equity enjoy the resources (both from a staff and budget perspective) that their counterparts in the marketplace have.  Similarly, they do not have nearly as much time to create value for the PE-backed business, with an exit often only a few years away.  Being willing to get their hands dirty—and do it quickly by making great decisions (often without as much information as they would like) are hallmarks of the most effective private equity CFOs.

Private Equity Practice Leader Todd WylesA private equity firm’s greatest asset lies in its people and their capabilities to deliver across a myriad of stakeholders’ expectations. Top talent that is a great fit for private equity is extraordinarily scarce across the board, and finding the right CFO is especially critical to success. We have conducted dozens of successful CFO searches for PE-backed companies over the past few years, and we have found that candidates who possess the criteria described above thrive within the unique demands of private equity.

Click here to find out more about Morgan Samuels’ Private Equity Practice.

 

Topics: executive recruiters, morgan samuels, lean six sigma, human capital consultants, executive search firms, retained search firms, retained executive search firm, top executive search firms, Private Equity, PE, executive search, executive search consultants, Todd Wyles, CFO, executive search private equity

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

Women Take the Lead: Changes in Aerospace and Defense

Posted by Morgan Samuels on Mon, Aug 27, 2012

Martin HewettMartin Hewett, a Senior Client Partner and Practice Leader for the Aerospace and Defense industry at Morgan Samuels, has written a response to an article that recently appeared in Forbes Magazine – “Rise of Women Transforms Defense Industry.”  Mr. Hewett’s article, “Women Take the Lead: Changes in Aerospace in Defense” explains that women are finally achieving the long-overdue recognition they deserve in the Aerospace and Defense industry.  Women are progressing rapidly in the industry and moving into top executive positions due solely to their skill, talent, and capabilities as individuals.

 

Read the complete article below:

As more and more women become heads of billion-dollar global defense companies, the message is clear: the glass ceiling has a crack.  As a Senior Client Partner at Morgan Samuels, I’ve spent years witnessing first-hand the progress of women in every industry as they move into top executive positions.  I’ve also been privileged to help some of them get there.  Our recent placement of DeEtte Gray as President of BAE’s Intelligence and Security sector is the perfect example of putting the right leader in the right place: Ms. Gray has invaluable knowledge and experience, and it’s extremely satisfying to see her in a high-visibility leadership role.

I was happy to see several recent articles highlight the growth of women in Aerospace and Defense, including Forbes Magazine’s Rise of Women Transforms Defense Industry.  Women have been in the industry for much longer than people realize, and they are finally getting the recognition they deserve.  It was disheartening, to say the least, to see a comment that chalks it all up to a government mandate.

Women in leadership positions now started their careers in science, technology, engineering and math (STEM) fields in the 70s and 80s.  They have decades of experience behind them, proving themselves in male-dominated fields.  What’s more, many of these women put in their years at the same company, despite a culture that didn’t exactly encourage their participation.  The homegrown nature of the new leaders shows they’ve gained credibility and experience within their organization.  Boards are now jumping at the chance to reward loyalty and outstanding work.

For executive recruiting firms, this means the days of focusing solely on diversity searches are long gone, and for a good reason: it’s not necessary.  At Morgan Samuels, every search means scouring the entire marketplace for the very best talent based on superior performance.  The final candidate slates are always diverse because diversity already exists in the market.  Firms don’t need to dig for women to build it, so it’s a serious mistake to look at diversity placements as mere mandates.

But even as these articles highlight the successes, it’s still painfully obvious that the culture within the engineering environment often dissuades too many women from pursuing careers in STEM fields.  Graduate enrollment in STEM fields has nearly tripled among women from the 70s to the present, and women perform at least as well as men across the board.  Yet gender disparity is still prevalent in the marketplace.  A study from MIT reveals that even now women just don’t feel comfortable in an engineering culture.  And the establishment really isn’t helping much. Women are still assigned “female” roles like note-taking during internships, for example, and women often say they aren’t taken seriously.

Having role models like those described in the Forbes article will do wonders to hasten the cultural shift, and I’ve been encouraged that Morgan Samuels’ results continue to reflect, rather than push, an increase of women in the marketplace.  Diversity is a priority for many valid reasons, but young women need to see that a clear path to the executive suite exists.  They need to see women ahead of them, like DeEtte Gray of BAE.  Today, thankfully, they finally can.

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

With Assessments, Context Is King

Posted by Morgan Samuels on Wed, May 16, 2012

Bert C. Hensley, Chairman & Chief Executive Officer at Morgan Samuels

There’s no doubt about it: requests for executive assessments are on the rise.  Clients and executive recruiters alike are more confident in the value of assessments and are willing to pay a sometimes hefty price to avoid the higher cost of hiring the “wrong” candidate.  A good assessment tool can provide clarity and perspective that are just not possible with the standard interview process, and can even result in faster promotions and retention of executives over time.  But assessment tools are still just that – tools.  And Bert Hensley, chairman and CEO of Morgan Samuels, feels people overestimate their worth.

In Hensley’s experience, assessment results taken at face value have led to some pretty bad decisions.  “They’re a snapshot in time of where someone may be, but they’re not really reflective of who that person is in every circumstance or situation,” Hensley says.  In other words, without context the picture is incomplete.  A good executive recruiter uses common sense and intuition to catch missing information from assessment results.

Here’s just one example of an evaluation gone wrong: A client wanted to use a nationally known assessment tool for a COO candidate.  The results came back showing the candidate had very low contentment and coachability scores.  “Without context,” Hensley said, “one might look at those results and immediately disqualify him because no one wants to work with a fellow employee who’s unhappy in life, and no one wants to bring someone into a role like COO when they’re not coachable.”

Hensley understood a frame of reference was needed, so he convinced the client to let him dig a little deeper.  It turned out the candidate was, in fact, unhappy in his current environment.  Moreover, he had very little respect for his CEO or board (for valid reasons), and it’s a rare person who wants to be coached by someone they don’t respect.  Given those circumstances Hensley was able to persuade the client to reconsider the candidate; they granted him a second round of interviews, he impressed the board to the nth degree and was successfully recruited.  Better yet, in less than six months he was promoted to CEO and has been extremely successful in his new role.  Needless to say, that happy ending wouldn’t have been possible if the assessment results went unexamined.

So for Hensley, assessments are useful (especially in considering candidates for promotion), but only to a point.  He calls out Capital One as a company with a very effective assessment tool, because “it was highly tailored and highly contextual for that company and what they needed.  They invested a lot of time and energy to get it to that point.  As a result, I think they got a better perspective and clarity on whether someone was ultimately going to be the right fit.”

What’s the upshot, then?  Assessments are only as good as the people who make and use them.  Avoid empty exercises by making sure assessment tools are well-developed, tailored for the company and highly contextual.  And always remember results can be misleading.  If you have doubts, be sure to dig deep, ask questions and use the tools we all have at no cost: intuition and common sense.

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

To Share or Not to Share: The Compensation Question

Posted by Morgan Samuels on Fri, May 11, 2012

That icon of etiquette, Emily Post, once said a very well-bred person never speaks of money except during business dealings.  Times change, etiquette evolves, but even now people are skittish about the Compensation Conversation.  It becomes the elephant in the room – the monster under the bed – but it doesn’t have to be.  In fact, when it comes to retained executive searches, it s a two-minute conversation that should be viewed as an opportunity to show not what you make but what you’re made of.

Ali Brainard and Alison Woodhead are experts in the field of retained executive search at Morgan Samuels and point out the compensation question is only one data point.  It’s analyzed with a whole host of other factors to determine the candidate’s fit.  “We want to get an understanding of the candidate’s compensation just to get an idea of their experience and expectations, and to assess opportunities,” Brainard said.  “If they’re way over or under the mark we don’t want to waste anyone’s time.”

“Be confident about your value and what you bring to the table.” - Alison Woodhead

That being said, there may be a huge range the client is willing to pay for the best talent, and someone below the mark could reap the benefits.  Woodhead has seen up to 75 percent increases in compensation, for example.  And Brainard points out that if a candidate is being paid way above or below the market, it can mean any number of things.  Someone getting three or four times market rates may be extraordinary, but someone way below the mark may be just as talented.  Maybe there are other variables, like cost of living, staying with one company too long, or working at a start-up where the compensation structure is different.  In that case, they just need the right opportunity to take the next step up.

Some people believe if they share their compensation right off the bat they lose bargaining power in the negotiation stage.  But a candidate for a senior executive position isn’t a dime a dozen.  He or she has a very unique set of qualifications, and clients will pay for top talent.  In fact, Brainard and Woodhead have found that the strongest candidates, people who have been successful in their career, don t think twice about throwing out that number.

“When you’re exploring an opportunity, your focus as a candidate needs to be on your fit with the opportunity and what you bring to the table,” says Woodhead.  “If you’re too focused on compensation, either hiding your compensation or positioning yourself for a good negotiation later on down the road, you’re going to come off as insecure.  You also waste time and energy too early in the process.  The recruiter or hiring manager doesn’t even know if you’re valuable yet, so why would they spend time thinking about what to pay you?”

What people don’t realize is that a recruiter can be a treasure trove of information and data.  They can tell a candidate if they really are undercompensated compared to their peers, and a candidate should feel comfortable asking that question.  It’s not only more than acceptable; it shows honesty, transparency, and trust in the recruiter.

So remember, when it comes to negotiation the most critical thing is to come across as capable and confident.  Regardless of what you’re making today, have a clear sense of your worth, and trust that the people on the other side of the table will see that value.  Companies are willing to pay for that.

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

Retained Search Firms versus Contingency Firms

Posted by Morgan Samuels on Thu, Aug 18, 2011

It can be difficult for a hiring company to decide whether the services offered by executive search firms are necessary.  However, with thousands of potential candidates competing for senior-level opportunities, executive search firms can be valuable partners in helping companies identify and attract top talent.  Robby Smith, an Associate Consultant at Morgan Samuels, is one of the Executive Recruiters for the company.  Ms. Smith has experience working on executive searches with both retained and contingency firms.  Understanding the differences between Retained Search firms and Contingency firms is the first step to understanding their value and the best fit for your company’s needs.

“Retained executive search firms partner with the hiring company to really understand the strategic needs of the business and how the role will contribute to the future of the company.  They seek out the most qualified talent that matches the specific needs for a particular role,” said Smith.  Retained executive search firms are more likely to reach out into the market to recruit “passive candidates,” executives who are not actively looking for a new opportunity, but may be a strong fit for the role.  Smith continued, “Contingency firms are more likely to rely on their database.  They are likely to have a large pool of candidates in their database to shop around to several companies who have a broader and more open criteria or need.”

Contingency and retained search firms also have different business models.  “Retained search firms are paid a retainer to source the best possible talent.  They are typically the only firm engaged to fill the role and are paid for their services at the start.  Contingency firms, on the other hand, are only paid after upon placement and may be competing with several other firms in the market.” Retained Search firms and contingency firms also differ in terms of the advantages they provide.

“The advantage of retained search is that by partnering with the firm, the company has a greater chance of finding the best candidate in the market, who possesses the specific requirements for the role,” said Smith.  “The level of the talent and the loyalty of the candidate significantly increase when they are paired with a search firm that tries to match stated requirements, like educational background and work experience, with candidates in an existing database.”

The way that candidates are found also varies between retained search firms and contingency firms.  According to Smith, in most cases with contingency firms, the candidates approach the firm, especially if it is a reputable agency.  Retained search firms really seek out the best specific talent in the market.  They reach out to candidates with specific skills and backgrounds per the client’s request.

The use of Executive Recruiters through both retained search firms and contingency firms can benefit any company.  Whether searching for senior-level executive placements or mid-level executive placements, Executive Recruiters can provide value.

‘For higher level placements, including C-level, it is beneficial to use a retained search firm, because there tends to be a very small selection of candidates who possess the specific skills and experience the client is looking for,” said Smith.  “Whereas contingency firms are more appropriate when the needs are not as specific and there is a large pool of qualified candidates in the market.” Smith believes that both types of executive search firms are beneficial and can serve as extensions of the client’s Human Resources department.  Both types of firms provide the most value when they are viewed as partners to the HR department, working together hip to find the best possible talent, based on a company’s needs and the available talent in the market.

For more information on retained search firms, how they work, and how executive recruiters can add value to your hiring process, contact Morgan Samuels, one of the top executive search firms in the industry.

Topics: executive recruiters, retained search firms, top executive search firms

A Professional Look at How LinkedIn Can Benefit You

Posted by Morgan Samuels on Thu, Aug 18, 2011

LinkedIn, a business-related social networking site that launched in 2003, is primarily used for professional networking.  The site reaches into more than 200 countries and territories worldwide, according to LinkedIn’s official website.  LinkedIn is used to connect professionals within the field, as well as develop relationships and connections for business partnerships, professional networking and job searches.  Parker Brook, a Research Consultant at Morgan Samuels Company describes how the firm uses LinkedIn to build relationships and identify executive talent.

“LinkedIn is one of the best available talent-finding tools in the marketplace today,” said Brook.  “They are continually updating their product with new features.  They leverage input from actual recruiters and customers to develop the LinkedIn product.” Brook believes that LinkedIn is an important tool for executive recruiters to find and connect with talent.  LinkedIn provides a variety of options for users in order to customize to their needs and preferences.

“There are different types of profiles that you can get on LinkedIn - there is a basic account, an upgraded account, and then there’s LinkedIn Recruiter, which is the best and obviously the most expensive,” said Brook.

“LinkedIn is a relatively new social networking tool, but it is really gaining traction and popularity,” said Brook, “It is getting up there; it is kind of the business version of Facebook.”  Brook believes that LinkedIn can be a valuable resource for anyone in business, as it provides a platform through which professionals can connect and build vital business relationships.

“You’re a dinosaur if you’re not plugged into LinkedIn,” said Brook.  Brook believes that professionals not using LinkedIn are missing out.  “If you’re an executive and you’re not on LinkedIn, not only are you missing out on career opportunities, you’re missing out on networking opportunities [, and ] you’re missing out on an opportunity to knowledge-share with other executives in your space.”

According to Brook, in order to be successful on LinkedIn, you need a full and complete profile that includes your strengths, experiences, education, abridged resume and awards.  Brook also explains that you should never turn down a connection, because connections can only help you.  It is equally important to update your status regularly in order to connect with as many people as possible and remain active.

“Stale information [or information that is not updated and accurate] is just as bad as no information.  It is misleading, and you won’t be able to connect with the people you want to connect with,” said Brook.

If you are considering using LinkedIn, take advice from Brook, a professional within the field of retained executive search and a Research Consultant at one of the top executive search firms:  “If you’re not on LinkedIn, get on LinkedIn.  If you are on LinkedIn, make sure you have a complete profile and make sure you update it and keep the information fresh.  It will keep you aware of career opportunities and business opportunities.  It can’t hurt. It’s a tool.  It’s the wave of the future.  You either get on it or you get left in the past.”

Topics: executive recruiters, morgan samuels, executive search firms, top executive search firms, linked in, linkedin, professional profile