How One Recruiter’s Board Participation Is Paying Off

May 18, 2017 – For executive search firm leaders, serving in a board capacity for outside companies can be rewarding on several levels. There’s service to a company, of course. But a lot of valuable learning also goes on in such work, be it about emerging trends, the latest ideas or the hottest businesses and their talent. It also opens the door to new relationships and opportunities of all kinds.

Search assignments are just one possibility. For companies that are suited for it, there are other advisory roles to play for companies, whether they involve strategic counseling or any number of internal needs. Such relationships can also involve even closer collaboration between recruiter and client.

Jay Rosenzweig, founding partner of Toronto-based Rosenzweig & Company, recently met with the editorial board of Hunt Scanlon Media to discuss his experiences with boards of directors and advisory boards. He also discussed the challenges of timing that organizations face when bringing in new leaders. Formerly a partner with Korn Ferry, Mr. Rosenzweig founded his firm in 2004.

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Jay, you sit on a number of corporate and advisory boards. What can you tell us about this extracurricular business activity?

We work closely with a wide array of leading edge technology ventures. I sit on the board or advisory boards of perhaps two dozen emerging growth businesses. And through involvement with several venture capital firms as a limited partner and advisor, I am exposed to north of 60 other portfolio companies. So we are incredibly plugged into this space. As such, we are well positioned as thought leaders in the executive recruitment space with respect to frontier technologies. All of my clients, large and small, irrespective of sector, are extremely concerned about technological transformation, as they should be. And they are all looking to access leading edge frontier technologies and build learning with respect to new models, new interfaces and new ways of doing business, in addition to keeping a close eye on digital disruption threats on the longer term horizon. There is a pent-up demand for talent in these areas that is only going to explode further as the world transforms. I advise emerging technology companies across North America – in California of course, Silicon Valley, and New York, and in Toronto, which is poised to become one of the major start-up hubs over the next decade. I was also in Israel recently on a visit with top tech professionals and I have been approached with some very interesting opportunities there. There is a significant level of excitement in advising many of these companies and of course talent management is crucial. To see them grow and flourish is a real treat, and ultimately this work is highly integrative to our fundamental business as search professionals.  

How do these board opportunities come about? Are you contacted regularly or do you seek out them out?

One of the key market advantages we bring to our business is that as a firm we have one of the deepest innovation networks in executive search. We have connections throughout North America, and globally, in frontier technology and digital transformation, whether that means founders of high profile start-ups, digital, mobile and social media pioneers and innovators, prominent technology investors or other experts in innovation. At the same time, as an entrepreneurial firm, we have the freedom to engage with early stage companies in ways that I didn’t have in my previous life as a partner with one of the big global executive search firms. My relationships with these start-ups typically focuses at first naturally around talent and talent management, but quickly extends into other areas. Talent and ability to access people dominates everything that an early stage company does. Talent and strategy are often indistinguishable. And so we have often been able to help these companies secure additional investment or access senior business leaders and CEOs in marketing their products, and have been able to provide advice in terms of strategy and operations that was deemed to be valuable. 

“There is a significant level of excitement in advising many of these companies and of course talent management is crucial. To see them grow and flourish is a real treat, and ultimately this work is highly integrative to our fundamental business as search professionals.”

What are some of the more significant challenges you face as a broad-based advisor?

Certainly a key focus of our engagement with these ventures is ultimately on building out top class organizations from a talent perspective. And we do conduct search assignments as part of what we do. However, we also serve as a key advisor for these companies in terms of operations, strategy, technology commercialization, capital raising and building connections. In terms of one example that is quite interesting, we have been doing work with Hyperloop Transportation Technologies. As you may know, Hyperloop is a high-speed transportation system originally proposed as a concept by the founder of Tesla, entrepreneur Elon Musk. Hyperloop incorporates tubes in which pressurized capsules ride on an air cushion driven by linear induction motors and air compressors. Every assignment poses its own challenges, but I think working with companies that are moving from the start-up or launch phase to a fuller organizational build-out is challenging. There is always the question of timing – am I bringing on too much overhead too soon? Or too late? Will new hires change our company’s culture? How do we properly compensate new senior hires when we have yet to show we can produce sustainable revenues and profits? In these instances there are no cookie-cutter solutions – each company is different with different needs. That’s why we work so hard to understand the client’s culture and business environment. It’s hard work, but it is hugely rewarding to help a company successfully scale up at the right time and with the right people.

How are you paid? 

In terms of compensation, I am typically compensated broadly as an advisor and receive equity positions as an advisor, as well as investing from time to time. If the entity is large enough I may take both cash and equity, or it may be only equity depending on the size and cash position of the company. As a boutique firm, we have that flexibility, which is useful in this space. Hyperloop Transportation Technologies, for example, developed a crowd collaboration model, which led us to agreeing to work in that case for options.

What sorts of talent challenges do you run up against?

As I mentioned, early stage high-growth businesses provide unique challenges in terms of talent. One common mistake companies make is simply waiting too late to add needed executive talent. Having the right talent at the right moment in the evolution of these businesses can make all the difference. Timing is absolutely critical. Very often the first significant hire is the VP of sales or chief technology officer, but it really depends. The trick of course is finding the right timing – and the right person or persons. If you add talent too soon the costs might outrun your funding. But finding individuals who are the right fit, culturally and in terms of skill set, typically takes time – these will likely be the most important hires you ever make.

What else is critical?

The ability to anticipate when you’ll need to make a talent acquisition move is critical. Ultimately, though, there are sensitive issues around effectively supporting the founder or founders and what that means. One of the paradoxes regarding start-ups is that they typically benefit from having a hard-driving, entrepreneurial leader – a person with enough ego to launch a new venture, often against real odds. When they start to succeed, this only tends to reinforce their self-image. In reality, at some point the leader of a successful, growing company typically has to accept the fact that he or she can’t do everything – they need to learn to check their ego at the door and see that the ability to accept help is a strength, not a weakness. In most instances, you are not going to want a big corporate executive-type for a start-up or a small company – not because they aren’t excellent at what they do, but because they are used to operating in a totally different environment. Big company executives typically have access to vast resources, including capital, human resources and all kinds of technical and logistical support. With small companies, you are looking for someone with an entrepreneurial mindset. These individuals typically are looking for less base salary, for example, and more up-side potential. They embrace the idea that they are going into a higher-risk environment with an opportunity to more fully share in the company’s success.

Participating on boards is a departure from your primary career as a search professional. Is there a certain level of excitement in play when you are involved with companies in this capacity?

Well that’s an interesting question, and the answer is just as interesting. The truth is this work is critical – it may even be the most critical aspect of my work as a search professional going forward. As I mentioned before, every single client of mine is faced daily with the opportunities and the threats that this technological revolution is bringing to their business. Just a few days ago, I was approached by one of the largest corporations in the country that was seeking a key talent solution with respect to advanced technology. They are facing a number of significant challenges in this area as a business, and in the context of talent. It is a very sensitive search. They are not getting good results from the alternatives they are using. And they came to us in frustration because of our experience in this area, and because of the clear profile and depth we have in the emerging technology arena. The reality is that traditional markets in all sectors are changing profoundly. And the fact that they are currently undergoing massive digital transformation runs through the executive search business. That is true not just for the private equity & venture capital firms we work with, and their portfolio companies, but for traditional companies of all sizes in every industry. As to your question about excitement: Whether you want to talk about digital disruption, transformation or full-scale revolution, it is a hugely exciting time. I really can’t imagine a more fascinating time to be in the search business. The things we are witnessing now, what we are doing now, will thoroughly transform the world in the generations to come. That is certainly exciting. It is extraordinary. 

Contributed by Christopher W. Hunt, Publisher and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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