November 1, 2021 – Historically, priorities for hiring senior leadership were strongly focused on an individual’s technical (hard) skills, as well as focusing on candidates with direct industry and functional experience. This formula proved to be successful for many executive hires, but certainly not all. “Under these requirements, we saw too many losses, and sponsors and search firms were challenged over time to become more analytical to understand what truly works (and doesn’t work) when hiring individuals to successfully lead companies,” said John Marshall, co-founder and CEO of JM Search. “My personal belief is that while a tried and true playbook may have worked well in the past, today’s market landscape has grown in complexity and competition, and out-of-the-box thinking is now critical to drive results in a company,” he said. “Today, we are seeing a significant increase in non-competes, counter offers, and overall demand for outstanding candidates and this has made the marketplace more competitive than ever.”
“We have all seen that COVID already has had a lasting impact on the workforce,” Mr. Marshall said. “From my view, I’ve seen a paradigm shift where companies are seeing an increased value in assessing candidates that may lack some of the industry experience, but can demonstrate that they have the ability to successfully drive and lead businesses. I have seen numerous examples where a C-suite leader looks good on paper – checking all the boxes for what is believed to be the “right” background for an open role.” They have run businesses the same size or larger, they know the industry, and appear to have been successful in their previous endeavors, said Mr. Marshal.
But many of these very executives faltered during the last year. Why? “In speaking with numerous equity sponsors and board members, I uncovered several critical skills that these leaders lacked during the global pandemic, a time of turmoil and market disruption,” he said. “The exposure of leaders who were unable to navigate businesses through the recent periods of stress and uncertainty has set the stage for a new set of requirements that PE firms are focusing on when hiring leaders of their partner companies.”
Join Blue Rock Search on November 15th for an interactive webinar supported by Hunt Scanlon Media. The session will focus on ‘Evolving the Conversation Around DE&I’ examining how DE&I is expanding to touch equality, equity, and belonging and why this signals a change in both organizational culture and workforce expectations.Moderated by Ruben Moreno of Blue Rock Search, this is a great opportunity to hear first-hand from some of the key players on the frontlines of transformation. They will share valuable insights into what is happening and how they see the changing attitudes to language about DE&I, and what that means for executive search and beyond.
Blue Rock Search will be joined by panelists:
- Brian Miller, Chief Talent, Diversity and Inclusion Officer at Adobe
- Sharawn Connors Tipton, Chief Diversity and Inclusion Officer at Micron Technology
There will be an opportunity for audience members to ask their questions to panel members. Join the conversation.
The Growing Importance of EQ
Mr. Marshall said that during this recent period of market disruption and uncertainly, JM Search saw that in many cases, past experiences and successes do not always translate into prosperous future outcomes. “It is critical to recognize changes in market dynamics, and truly understand why an executive may have been successful (or not) based on market conditions,” he said.
“Today, hiring managers should not only be assessing hard skillsets, but also the softer skills of their potential future leaders. It is the soft skills – like communication, teamwork, problem-solving, and critical thinking – that will help an organization assess how well the candidate will be able to steer their company through not only the good times, but potentially the bad.”
The two soft skills of leadership that have been mentioned more than ever in the past year have been communication and inspiration, according to Mr. Marshall. “It is assumed that all leaders are required to be bright, decisive, strategic. But now more than ever boards, CEOs, and sponsors are looking for ways to assess how a leader will communicate and inspire with their teams,” he said.
“During the interview and referencing process there has been an increased emphasis on how leaders showed up for their teams during the pandemic and how their teams respond throughout remote working, decreased travel, and infrequent face-to-face meetings. Hiring personnel also are working to uncover how quickly their leadership adapted to a new environment and how they are anticipating handling potential changes in the future,” he said.
Testing and heightened interviewing techniques are playing a critical role in helping organizations with this new type of assessment. At JM Search, the firm has invested in increased training for its search consultants, including new questions and points of discussion for candidates, as well as questions geared toward official and back-channel references that are structured to uncover what soft skills a candidate has demonstrated during their career.
“In today’s market, it is essential that organizations obtain views from a variety of sources to truly understand how a leader has not only demonstrated success in the past, but also is well positioned to successfully navigate different types of market landscapes in the future,” Mr. Marshall said. “Furthermore, there are some key immediate term decisions that many organizations are currently grappling with, such as long-term policies around potential remote or hybrid working, and the future of office and real estate footprints. Views on these critical topics that are still in up for discussion should be an essential part of the dialogue taking place with executive level candidates.”
Building a Strong Supporting Team
In today’s extremely competitive market for talent, effective leaders must clearly demonstrate their ability to build and retain the right team. Employees have become very comfortable working remotely and many believe this is the wave of the future.
“I have observed first-hand that it may work for some employees and functional positions, but it certainly does not work for all,” said Mr. Marshall. “The pandemic has opened a whole new thought process around work and what constitutes as the right work / life balance. The best leaders are listening to understand the needs and flexibility preference of their employees, while maintaining an eye on what is needed to best serve their customers and achieve established business goals and targets.”
John Marshall founded JM Search in 1980 and has been helping companies build exceptional management teams for over 40 years. Under Mr. Marshall’s leadership, JM Search has grown to become one of the 20 largest search firms in North America and a premier firm dedicated to serving private equity and venture capital investors and their portfolio companies.
Mr. Marshall has been fortunate to have had the opportunity to be involved in the hiring of senior leaders for the firm’s clients for more than four decades and has been able to observe the characteristics of leadership that are most effective in delivering a well-run organization that is sustainable for current equity sponsors and eventual acquirers.
Workforce dynamics may be evolving, however. Equity sponsors still have an obligation to their LPs to achieve their forecasted goals – and this comes through hard, focused work, Mr. Marshall pointed out. “It is more critical than ever that company leaders maintain the drive and sense of urgency that has always been synonymous with success in the private equity world,” he said. “Once again, communication and inspiration from all functional leaders should be a trademark for executives. Leaders today are required to be more hands on and they need strong supporting players that can help them execute under compressed / aggressive timelines. Furthermore, the current tight job market is highlighting the growing importance of both retention and attraction of candidates, both of which are very front of mind for organizations today.”
Another trend JM Search is seeing is increased demand from hiring leaders to attract candidates who can demonstrate cross-functional expertise. The best CEOs, presidents, and general managers have often been exposed to several different functional areas within an organization, according to Mr. Marshall.
“Leaders that have worked across the organization have an increased understanding of what to look for during times of trouble and how to react to it in a more expedient manner,” he said. “Exposure to different functional areas also demonstrates an individual’s ability to adapt to different roles, which may allow the person to step in if necessary or effectively guide other leaders to improve their stature in the organization. CFOs are a prime example of a function that is looked upon by the equity sponsor as the eyes and ears into a partner company.”
Mr. Marshall noted that today’s CFO must have a strong working knowledge of all the major functional areas based on the importance of their relationship with the equity sponsor. “A private equity CFO is such a significant role that we built an entire practice around this singular function so that we could identify every equity backed CFO in the market, and have a true understanding of their track record, and the attributes needed for success,” he said.
There has been much written and discussed around how the recent pandemic will change trends and focus in the hiring of their leadership. As much as the pandemic has had an effect on the types of skills and areas of focus that are important when hiring leaders, the increased attention now placed on diversity, equity, and inclusion (DE&I) during the hiring process is the most apparent change Mr. Marshall said he has seen broadly across the market.
“I do not believe these are trends that we will see change or go away anytime soon, and they shouldn’t,” he said. “These critical changes in how organizations assess and attract talent have opened the floodgates for widespread change in leadership teams that was not widely considered enough in the past. Emotional intelligence (EQ) and DE&I considerations are at the forefront of any critical hiring discussion in today’s marketplace. If recruiting firms and hiring managers are not paying strict attention and are not being proactive in these areas, they will run into significant push back from not only their investors but their employees, and even their customers / clients,” he noted.
“Every individual that I speak with expresses a strong desire to get back to normal. Whether it is related to family functions, restaurants, travel, sporting events, or the elimination of wearing masks, people have a desire to return to their way of living pre-pandemic in some regard,” he said.
When it comes to assessing, choosing, and hiring talent, however, there will be a new normal. This will include an emphasis on DE&I hiring at all levels and a new skill set as to how to best attract and develop this talent base. A remote workforce in some capacity will remain in effect as leaders determine how to best structure future workforces to meet both the needs and demands of internal employees and external customers.
“Communication and inspiration this will remain pinnacle requirements for individuals in leadership roles. Hard skills will remain important, but soft skills will increasingly be the factors that differentiate a qualified leader from a truly successful leader,” said Mr. Marshall.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media