October 21, 2016 – Over the last two years, the energy industry has suffered some of its most significant losses. The rapid price decline in crude oil has been staggering and, with it, jobs have been adversely affected. One search firm with a front row seat to both the energy sector and its impact on talent is Houston-based Alder Koten. Although the firm is well diversified in the industrial and consumer products sectors, it has been highly active in energy since its founding in 2013.
In the following interview, Jose Ruiz, the firm’s CEO and managing partner, talks openly about the energy sector and its challenges. He addresses its various components — and despite the downturn in oil & gas, he outlines how Alder Koten has been able to post double-digit growth despite the industry’s overall slide. Mr. Ruiz also addresses the talent issues facing Mexico where Alder Koten has strong corporate ties. And he shares his thoughts on C-level recruitment, including in the automotive industry which, in Mexico, is seen as an exporter of talent. Finally, Mr. Ruiz comes full circle with a look at board recruitment, a hallmark of Alder Koten, and what comprises an effective board candidate today.
Prior to launching Alder Koten, Mr. Ruiz spend nearly five years with Heidrick & Struggles as a principal in the firm’s global industrial practice based in Houston and Monterrey, Mexico, where he served as a member of the firm’s CEO, CIO and supply chain and operations functional practices.
Jose, your business is focused primarily on the energy, industrial and consumer products sectors. How have you threaded the needle through the downturn in energy?
The energy industry is quite broad and, part and parcel within energy, there is the oil & gas sector. In the upstream oil and gas segment (exploration and extraction of gas) it has been an extremely difficult period which, of course, was a well-publicized event. Energy services and equipment companies also got hammered, but the midstream segment (trading & logistics of crude & gas) and the downstream segment (refineries) were not affected nearly as bad. Our firm is fortunate enough to be diversified in a number of industries and regions, so this did help to soften the blow to a large extent. Despite the downturn in oil & gas, we were fortunate to have experienced double-digit growth in our oil & gas practice during the last two years which was aided, in large part, to our cross-border work. Much of this has to do with what is going on in Mexico – the country is in the middle of implementing an energy reform and that has kept us very busy south of the border. It has also had an impact in oil & gas, renewable energy, and power generation. As for talent in the energy sector in Mexico, it is scarce. Activity develops talent and there is a very big gap between the number of jobs available in the past, the jobs available now, and the jobs that will be available in the near future. In effect, there is no talent pipeline. A vast amount of talent in Mexico’s energy sector has been imported. It would have been impossible, in many ways, to fill many roles if we were not in a down cycle.
Your firm maintains a strong presence in Mexico as you have just indicated. So give us a sense of which industries are growing the quickest in Mexico? Also have you been able to attract C-level talent to Mexico from other regions or is it more home grown?
The automotive industry is, by far, the sector with the most growth in Mexico. When it comes to talent it is currently the polar opposite of the energy sector in Mexico. C-level talent is currently being imported into Mexico but it is being exported into the automotive sector. For example, we are helping to place C-level talent but that talent is going from Mexico to other regions, such as the U.S., Canada, and Europe. The demand is putting stress on the home grown pipeline but it’s also generating tremendous opportunities for young multicultural management and executive talent.
Jose, four months ago Alder Koten acquired OCE Consulting, a management consulting firm focused on helping clients achieve successful deployment of their business strategies through culture shaping and the application of change management techniques. Do you think adding these services is the wave of the future for search firms and what are clients saying about it?
We don’t see this as being an ‘ancillary business’ any longer and it’s also certainly not an attempt at diversification. Organizations and their talent needs are complex and they get more complex with every day that passes. The key to success in recruiting is truly understanding the strategic, operational, and cultural challenges that our clients face. It takes time to fully grasp the intangible elements that drive an organization’s success. Consulting services and a consulting focus helps us achieve a higher understanding of what our client’s need and what works and what does not work for them. And it makes us more effective as search consultants. Once we are there, so to speak, it’s not about being a ‘one stop shop.’ It’s about a client telling us that they would not consider partnering with anybody else on a search because they know we ‘get them’ and they value what it takes to get to that point.
You served with Heidrick & Struggles for five years. What did that experience give to you when you launched Alder Koten? Hypothetically, if Heidrick & Struggles, or any Big Five search firm, offered to acquire Alder Koten in the near term would you consider it? If not, why?
Heidrick & Struggles is a great organization with an outstanding group of partners. I learned a lot from the people I met there and I’m still very close with many of them. Our competitive edge over large firms is centered on the personal focus, flexibility, and agility that a smaller corporate footprint provides. We’re not bogged down by overwhelming off-limits or regional restrictions. I’d never say never, but my feeling is that our competitive edge would be lost merging into the large ecosystems of one of the top five firms.
Your firm actively recruits board members. If you had to describe the ideal board candidate today what would you say that person would look like? What have been the biggest shifts in terms of what your clients are looking for today in candidates for directorships?
There is no single definition of an ideal board candidate if you view them in isolation. It’s all about context and the board they are going to join. Boards need to accomplish a lot in a very short period of time. There is a lot more pressure on board effectiveness than there was in the past. The effectiveness of a board is highly dependent on what each member can bring to the table in terms of knowledge and experience and how they collaborate with the rest of the directors and the executive team. It can be very disruptive if a new director does not flow seamlessly into the dynamics of the board. The biggest shift is a stronger focus on director professionalism. It’s no longer enough to have a stellar executive career.
Contributed by Christopher W. Hunt, Publisher and Scott A. Scanlon, Editor-in-Chief — Hunt Scanlon Media