4 Reasons to Hire a CEO From a Different Domain

March 23, 2023 – When people set their minds to something, it’s hard to change them. It’s true in life — and in executive search when a board determines the type of CEO they want to hire. “I see it often in the staffing industry where a company intently focuses on hiring leadership talent only from within their domain,” said Lisa Maxwell, founder and managing partner of executive search firm Gerard Stewart, in a new report. “If their focus is light industrial (LI), they want a CEO out of LI. If their focus is healthcare, they are determined to keep their candidate lists clear of any talent outside of healthcare staffing.”

Often, Ms. Maxwell says, when she suggests to a search committee that they should consider looking outside their staffing domain for a CEO, the response is that they would prefer not to. “Am I asking too much?” said Ms. Maxwell. “Are staffing domains so specialized across the industry that a talented, experienced leader from a different niche might be confounded by the practices, culture, and rules? I don’t think so, and here is my case for why.”

Reason 1: It Works

Let’s start with the point that’s hardest to argue — the hard evidence of past successes. “In my work, I have helped several staffing industry CEOs leapfrog smoothly from one staffing domain to another,” said Ms. Maxwell. “Over the last year, I have guided three staffing industry CEOs through leadership transitions to new domains. In one case, a CEO from an IT staffing firm moved over to head a legal staffing firm. Another time, a CEO from light industrial switched niches to lead a healthcare staffing organization. The final of these recent placements was a CEO from outsourcing who moved to commercial staffing. To date, each of these three CEOs and the staffing businesses they lead is thriving. In addition, the leader has found motivation and inspiration in the learning that comes with embracing a new domain.”

Reason 2: The Industry Is Too Small for Limits

At just under $150 billion in total revenue, the staffing industry is relatively small, said Gerard Stewart. Walmart alone is a nearly $500 billion business. By narrowing candidate choices to CEOs within just one vertical segment of the staffing industry, businesses are creating a limited pool of prospects. Staffing leadership talent pools are limited enough without cutting them down by niche.

Reason 3: Outsiders Can Infuse Innovation

When you have been in the same role, niche and industry for decades, you can become blind to the challenges (and sometimes to the opportunities) that arise. A staffing leader who has taken a different path to the top and leveraged different processes, technologies and resources brings new ideas and perspectives. “At a time of unprecedented disruption across all industries, sometimes the CEO you need is not the CEO you planned or expected,” said Ms. Maxwell. “It’s a sanctioned disruption that businesses can leverage for competitive advantage.”

Reason 4: CEOs Have Learning Curves, Too

It is true that staffing niches have very specific processes, challenges, and approaches. Take light industrial staffing which has unique compliance issues and workers’ compensation considerations to manage. You cannot simply switch a light industrial staffing team for a professional services staffing team and expect business to continue as usual.

Related: Top Insights and Trends in Executive Search for 2023

“That said, I do think the CEO role is different,” said Ms. Maxwell. “By the time senior staffing executives have advanced to the CEO role, their daily work is focused on P&L management, growth strategy development, merger and acquisition execution and other critical business building and innovation driving activities. Those advanced leadership capabilities and skills cannot be learned in the first few weeks (even the first few years) on the job, but domain nuances can. Highly talented CEO candidates can and will do whatever it takes to quickly learn the business, from its customers and employees to the candidates, processes and traits that make it unique,” she added. “With every new role, there is a learning curve and that is true for CEOs as well. In my experience, staffing domain nuances can be a part of that curve.”

Exceptions to the Rule

While Ms. Maxwell is a proponent of keeping the leadership talent pool deep and wide for CEO roles in the staffing industry, she does have two caveats. “First, I would suggest being thoughtful when selecting a novice CEO for a new staffing domain,” she said. “While I have placed new CEOs who did not have experience in their ‘new domain,’ it takes a special and highly experienced executive to make this double jump to: 1) senior-most leadership and 2) a new vertical. In the cases where this has worked, the new CEOs were coming into roles where the P&Ls were significantly smaller than those they had previously managed. While it’s often preferred to have an established CEO, new CEOs must bring with them extensive financial and operational management experience.”

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Secondly, make sure that executive leaders who are switching domains have a powerful reason for doing so. “Be it a passion to dive into a new specialization or determination to manage a bigger P&L, I make it a rule to ensure that the leader looking for transition has strong, career-driven reasons to do so,” said Ms. Maxwell. “Ambition is always a critical litmus test for a leadership role. If ambition isn’t reflected in the candidate’s motives for transition, I would not recommend the hire.”

International Recruiters

Gerard Stewart focuses on recruitment for C-suite executives in the human capital space, including for private equity firms, HR technology, HR services and talent solutions companies.

The team at Gerard Stewart advises client companies on recruiting and retaining leaders and helps mitigate the risks involved with senior-level appointments. The firm has completed engagements across the global human capital landscape. Its client list includes firms in staffing, workforce management, human capital consulting, information technology services, vendor management software, recruitment process outsourcing, managed service providers, professional services and outsourcing. Gerard Stewart has additional offices in London and Menlo Park, CA.

Related: 10 Key Trends to Watch in Talent Acquisition

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media


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