The Challenges of Recruiting Big Talent to Small Companies
January 22, 2016 – Enlisting talent for small and emerging companies is a balancing act. Delay can be costly on many levels. But jumping too soon has its hazards as well. Companies must be able to gauge when and where their hiring needs will arise, then act.
At smaller companies, hiring decisions are oftentimes amplified and carry big consequences, for better and worse. That’s why it’s crucial to find candidates who aren’t just qualified to do the job; they have to have the right outlook and temperament to work in a high-risk environment. Certain individuals, for instance, have made a career of jump-starting start-ups and the like. And though big-company executives are seldom suited to make the transition to an entrepreneurial type of situation, exceptions do come up.
In the following interview, Jay Rosenzweig, founding partner of Toronto-based Rosenzweig & Company, reflects on the challenges of identifying and recruiting talent to smaller client organizations. Prior to founding his firm in 2004, Mr. Rosenzweig was a partner with Korn Ferry. He is a graduate of McGill University and Harvard Law School.
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What are the common mistakes smaller or emerging companies face when it comes to beefing up their executive ranks?
One common mistake is simply waiting too long to add executive talent. At best, this can impede growth prospects; in a worst-case scenario, if a company is perceived to have reached a point of no return in terms of executing a turnaround, it can make it impossible to find a candidate. After all, you want to recruit someone who has excellent business judgment. That same judgment may signal to the individual that he or she may be looking at a lost cause. I always advise small companies and start-ups that it is best to find talent in anticipation of need, not in response to need. 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. So the ability to anticipate when you’ll need to make a talent acquisition move is critical.
Is it more challenging, Jay, to attract top level talent to small, or less established companies, versus a Fortune 500 company for example?
It is just different. 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 mind-set. 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.
In what instances will a C-level candidate be more interested in considering a post at a smaller company – what are the advantages of considering such an opportunity versus one at a larger company?
There are several considerations. The first, as I have indicated, is an appetite for risk. All senior jobs carry some degree of risk, but start-ups and emerging companies can be far riskier than large, established ones. In return for taking on that risk, however, there can be greater up-side opportunity, typically involving some form of equity or ownership. There is also the opportunity to operate in an environment that will be relatively free of bureaucracy and red tape, with fewer layers of management to wade through to get things done. A lot will depend on fit. The candidate needs to be confident that they can operate effectively in the particular small company or start-up environment. If they have that confidence – and if they feel a big company might stifle their entrepreneurial spirit or limit their upside potential – then by all means they should consider a job with a start-up. But this is typically best done early in one’s career. I always think of John Sculley’s move to Apple from Pepsi Co., replacing Steve Jobs. Sculley was a superb marketing executive and a strong big company CEO, but a cultural misfit at Apple. It was like watching the body reject an organ transplant – it just didn’t work for the company or for Sculley. Again, finding the right cultural fit is absolutely critical to success for both the candidate and the company. Finding people with the right skill-set is the easy part. Where I think my firm excels is finding individuals who will thrive in a new environment.
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Do you tend to look at a different type of candidate when recruiting for a small cap client?
There are candidates out there that I would describe as serial entrepreneurs – they have a track record of success working at start-ups or small companies for three to six years and then move on to the next opportunity. They thrive in that type of environment and they have a high probability – not a guarantee – of replicating past performance. I would describe that type of candidate as a safer bet. But there are some individuals who can succeed in both spheres. It is rare, but it does happen. Occasionally, you will find someone who was operating a unit or a new venture within a larger company very independently, in an entrepreneurial fashion. But even then, it is not quite the same – they worry less about financing and capital and they typically can fall back on corporate resources that just aren’t available to a true start-up. As I say, it happens, but it is relatively rare.
You have worked for a large search firm, Korn Ferry, and now run your own boutique. To what extend has your experience helped when you talk to candidates about their next moves?
There is no question that starting my own firm from scratch provided me with valuable insights when it comes to start-ups and emerging businesses. I understand from personal experience the challenges entrepreneurs face, from finding capital, to coming up with a new product or service and bringing it to market, to finding the right people. Working at a large firm like Korn Ferry certainly had some advantages – it gave me a front row seat in terms of observing how a big firm operates and I am grateful for that. But I was also able to see that there might be a different model, one that combines big firm expertise with a boutique level of personal service and customization. We pride ourselves on using only experienced professionals throughout the process and we believe our strength is the depth and breadth of our research – we go to extraordinary lengths to identify high quality candidates. On a personal level, I also advise several start-up companies, which has given me a unique perspective in terms of understanding their special requirements. So, yes, having worked in a big firm and having started my own company definitely has enhanced my ability to assess candidates and determine what might be a good fit for them and for the client.
Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media and Stephen Sawicki, Managing Editor, Hunt Scanlon Media
