Why the CEO (and not H.R.) should be the point of contact for Executive hiring…

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3 years ago one of my trusted clients was in the market for a global head of sales. They produce high value software for banks and it was quite a technical product. An understanding of the product was critical, as was a strong track record of building a world class global sales organization and a good reputation in the banking market. In short it was a tough assignment.

I interviewed over 35 candidates myself and presented the best 5 for my client to assess. Eventually we got it down to one strong candidate who was really keen on the role and the company.

However close to when were about reach offer stage with this candidate I was referred to someone who I advised would be an excellent fit for the position. Within minutes of meeting my newly referred candidate I could tell she was special. She had literally lived the same job for 14 years and been as successful as you could have imagined. Plus she had spent the last 3 years working in digital media start-ups that had given her an even more competitive edge. Although she wasn’t looking and wanted to see at least the year through she agreed that meeting my client could do no harm and so we arranged an initial interview.

I phoned Tina in H.R. to let her know of the situation. She agreed it would make sense to at least see what our new lady candidate had to offer. They met for a discrete coffee early on a Monday morning on Fleet Street. Within 5 minutes of the end of interview, Tina called me on my mobile positive about how the interview had gone – she agreed our lady candidate could be a good alternative to the other candidate we had further down the line.

However the next day my candidate called me up. She’d been thinking about it hard and had decided that although the opportunity was really tempting, she owed it to her current employers to see if through to the end of the year as promised. The interview experience had taught her that her heart was definitely in banking and she was sure that at some point she would definitely go back into her original career but not for now. I informed H.R. who understood and we moved forward with our other excellent (although perhaps not as excellent) candidate. He joined 3 months later.

6 months later, I read in the WSJ that our lady candidate had joined another company in the banking software markets. Although a much smaller player (the 5th largest) in this space, she had accepted the responsibility to run sales and marketing globally.

Fast forward to today and her company is now the second biggest player in this space and a serious challenge to my client’s market leader status. Key to this has been the way the company has won sales from my client using their far superior digital offering which allows banks to sign up for separate modules easily over the internet. Our lady candidate has been the major reason for this, within months of joining she had designed and implemented a fully integrated sales process with the clients new digital offering and has spent the last 2 years hiring and training an industry renowned sales team. She is commonly approached by all the leading software and PR companies within the sector for sales leadership and even CEO level roles but is fully committed to her new company. Upon joining she was given a long term stock plan which is now highly lucrative and she is certainly a leading candidate for a future CEO succession within her current firm.

Last month the CEO at my client called me up and mentioned that he wanted to meet with me. I had met with him on several occasions previously but very much in the boardroom type business context. I think the maximum our meetings had ever lasted were around 30 minutes – after which he would ask me to follow up with Tina who was responsible for managing the recruitment process.

The purpose of our meeting was to discuss our lady candidate and the impact she had on the industry. It turned out that my client was losing market share even faster than publically reported and he wanted to see if there was any way we could possibly entice her across – perhaps even into a bigger role as global COO. I explained that I would definitely mention it to her, but that it was unlikely. Acceptingly, he also mentioned to me that he had spoken to a few other people in the industry who knew her well, and that they had mentioned the same thing.

What was interesting about our conversation however was how annoyed he was about the whole thing. In particular he wanted to know why Tina or I hadn’t brought this lady to his attention when they had originally met. I explained that this was because she had withdrawn from the interview process which happened commonly in first round interviews.

However his response surprised me: “but if I had known how good she was I would have definitely stayed in touch and tried hiring her when the time was right. At that level, you need to know all the best candidates in the market”.

Throughout my recruitment career I’ve always worked well with H.R. departments. I see them as a valuable source of knowledge regarding the organisation and good H.R. professionals have always made the hiring process smoother. I also realise their need to protect hiring manager time, screen increasing numbers of applications and to centralize the hiring function for a company so that everything is properly recorded and available in one place. However, through my recent experience I began to ask myself – for senior executive hiring was it better to initially engage candidates with the CEO or with H.R.?

I conducted a study of 50 CEO’s Iopa Solutions had successfully completed assignments for in the past 3 years to see if they preferred to be the initial point of contact for hiring. The results were overwhelming – 100% said they preferred initial contact to be done by another person within their organisation. The major reason for this was “lack of time” (90%), with the next highest being “because H.R. is responsible for that function” (8%). Likewise, I asked 50 Heads of H.R. (at different organisations to those studied) whether they preferred their CEO’s to be initial contact and the results were the similar – 90% said no, with 8% saying they were indifferent and 2% saying yes. So it seemed from a hiring company’s perspective at least, hiring should still be a H.R. led function.

However, when I conducted a survey of 100 Executives asking the same question (consisting of COO, CTO, CFO, CMO, EVP Sales and Regional Heads) the results were surprising. 95% of executives preferred to deal with the CEO as the initial point of contact when considering a job opportunity.

The graph below illustrates their reasoning for this:

Graph

So these results infer that to improve an organisations chance of attracting and hiring the best executives, we should get the CEO involved right at the start of the hiring process. 32% executives felt that meeting the CEO was the best indication of strategy and culture with 42% explaining that personal chemistry with the CEO was actually the most important reason for them to move in the first place. However these results are somewhat expected – CEO’s probably want to save their time on holding first round interviews, and executives want to get as much value from their meetings as possible. Regardless of this, what this does show is that in today’s ever growing competition for talent getting the CEO to interview executives in the first round does work.

What these results show is that although it may take extra work on the CEO’s behalf and may not be the industry norm, getting CEO’s to hold the first interview will improve the quality and quantity of people you attract. In turn the organisation performs better. Like any policy that causes companies to change the way they work, this transformation is often hard to suggest and even harder to implement. What’s more, there is likely to be resistance from H.R. departments who have historically led the process and may believe that relinquishing the chance to interview executive candidates initially may result in a less influential part in the recruitment process. However, as the competition for candidates continues to increase globally, companies will eventually need to improve and redesign all aspects of the recruitment process and if first round CEO interviews is what it takes, then so it shall be.

This situation reminded me of Billy Bean (played by Brad Pitt) in the blockbuster film Moneyball. Bean, General Manager of the baseball team Oakland A’s had become frustrated at the mediocre performance of his team capped by the end of year loss to the Yankees. Aiming to rebuild his team Bean wondered whether the way the A’s recruited players was outdated.

Up until then, players were initially assessed by the club scouts and then presented to the GM once they were close to signing. The scouts were seen as the hiring experts – with many years in the game and who monitored players and made decisions made on professional “opinions”. In many cases players were signed up before they had even had a chance to meet with Bean. Flipping the process around, Bean realised that by meeting with potential new recruits himself – particularly star players (like he once was) – he was able to improve his chances of getting better players. He also redesigned his assessment process in other ways, substituting “opinions” with evidence based criteria based on player statistics, resulting in the A’s having their best season for years and winning 20 consecutive games in a row breaking the American League record.

Sir AlexSports team managers having the lead influence in buying players (or “CEO” led recruitment in sports) is commonplace. The legendary Sir Alex Ferguson, recently retired manager of the great Manchester United Football Club (in case you are wondering, yes I am a HUGE United fan) has self-confessed that his approaching players directly had been the major reason he had been able to build such a successful team. Roy Keane, his most successful club captain had even agreed to join another team before Ferguson had called him directly and convinced him to join Manchester. Even at youth level, he was famous for visiting promising talent at their Parents homes late at night – with contracts ready in hand so that he could use his reputation and charisma to close out the deal. David Beckham was a famous example of this. The one player (Paul Gascoigne) who Ferguson has always regretted not signing, he still attributes to him being on holiday at the time and being unable to meet him in person.

When the rise of LinkedIn started around 2007, my message to clients was pretty clear – hiring is going to become less about screening suitable candidates and more about selling to qualified candidates. The global recession of the last few years may have slowed this down a bit but at some point companies are going to face massive problems in attracting talent.

At an executive level this is highlighted even more. Companies are tying top performers down to even longer performance based deals which is all resulting in less executive movement. Anything that can be done to facilitate the hiring process will become a significant advantage and engaging the CEO at the first stage of the process is a strong part of this. The more organisations embrace this, the better the quality of hiring will be. Maybe one day we might get the CEO of Microsoft knocking on the door of the next big entrepreneur at Stanford…..

Jas Singh, Iopa Solutions

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