Samuel Dergel

Dear Samuel: I’m actively looking for my next executive role.

June 25, 2019 by Samuel Dergel Leave a Comment

Dear Samuel,

I am an executive that is actively exploring new career opportunities. Do you find that retained search firms are the primary source for new roles or networking? Other than leaders that you have worked with in the past, who do you network with and how?

Sally in Seattle

Dear Sally,

A good number of the executives we speak with that are new in a role tell us that they got the role because they are were hired by someone that they’ve worked with before. The reason this happens is because a high level of trust already exists between the person hiring and the person being hired.

Retained search firms are hired by companies in two instances:

Multiple people are involved in the hiring decision process, and having an outside objective, experienced and trustworthy search partner ensures that a complete search will be done and that a strong pool of qualified candidates will be considered in the hiring decision process.
Where a potential candidate is already trustworthy to one of the people in the process, an executive search firm can ensure that this person is properly compared to others. In many cases, the person who is already known and trusted by one of the hiring decision makers is the person that wins. This can include an internal candidate for consideration or an external candidate that is known to or used to work with one of the hiring decision makers.
When there is one key hiring decision maker involved, if they do not have someone they already trust that is interested and available, they will go to search.

The best people to network with as you look for your new role are those that you have worked with in the past. They already trust you.

The biggest challenge many executives have is that they only build their network when they are looking for their next role.

Successful executives are always networking, even when in their role.

Your question pretty much tells me that you are like most executives. You have not invested what you needed to so you can be as successful as you can be.

Is it too late to build your network when you are actively looking? No.

However, even if you are very successful in the building your network in your search process, the likelihood is, as it is for most executives, that you will ignore your network once you start working again and let your network go stale.

Networking is a verb. It requires action. If you don’t tend to your network, you won’t have a network that works for you.

An active network to whom you continually add value to you will keep you in mind for opportunities.

In your situation, I would focus on adding value to your current network of people you have worked with in the past, and grow your network of people so that you can begin to add value to them today so that they will be able to add value to them in the future. Could this turn into an opportunity in the short-term? Maybe. But if you are not playing the long game, you come off as desperate, which is the kiss of death for an executive in transition.

Also, spending time reaching out to recruiters may not be the most effective way to find your next role. Sure, recruiters out there may have the role that fits you, but experience shows that if you are visible and branded, good recruiters will find you if you are what they need to meet their clients’ needs.

Good luck with your search!

Samuel

Dear Readers,

Dear Samuel is a feature of our Leadership Blog that deals with questions executives have about their leadership roles and career situations. If you have any questions that you would like Samuel Dergel to address, please send your questions to [email protected].

Please note that all questions asked will be treated in the strictest of confidence and all identifying material in questions asked will be edited to respect the privacy of all participants and companies.

Samuel

Dear Samuel: I want to cash out my vested shares, but…

June 19, 2019 by Samuel Dergel Leave a Comment

Dear Samuel,

Here’s a career challenge for you…

Situation

Approaching 5 years of CFO service in a PE situation that chose to recapitalization vs sell. PE is minority, founders in early 50’s control.

As CFO, I hold in-the-money vested equity interests worth approx. 8 times annual salary at current expected valuation. Payout requires change of control, however. And there are significant barriers to exit – it’s essentially “must be present to win”.

Location is undesirable, and with last child graduating in 1 year, it’s time to think about an exit strategy. Obviously, want to retain or cash out of equity, but location is a problem on the family front, and a strong motivation to relocate.

Question

What recommendations do you have to negotiate from this golden handcuff toward a more desirable financial and geographic outcome?

Options I have been pondering…

Ideally, payout and exit as a “good leaver”, with non-compete. This is contrary to founders and PE partners, who have intimated unwillingness to consider.
Relocate to a commuter/remote situation.
Pitch PE firm to relocate within the portfolio family (I’m regarded very well among all portfolio company CFO’s), and retain equity interests until a change of control.

Bob in Boise

Dear Bob,

The one thing others can learn from this is to make sure when going into a new career opportunity with a PE player, make sure (if possible) that a recapitalization counts as a change in control would for vesting purposes.

Option 1: As CFO, you might be in a position to speak to potential purchasers that would come up with a price that the founders and PE couldn’t say no to. That would benefit them (and you), and might get you to leave with your head held high and your bank account flush with cash. The likelihood of this happening is low, but you should at least sniff out potential interest without upsetting the owners. Not easy.

Option 2: You can ask them to consider a remote / commuter situation. My thought is that this is the most likely situation that will allow you to continue to grow your equity and keep your family happy. It may be the easiest solution for the owners to accept, especially if they like you.

Option 3: This could be a good solution. While it might make your PE firm happy, the original and majority owners may not be thrilled with this situation and might put up a stink.

Without more information than you’ve provided in your letter, I would recommend the following approach:

Speak to your PE owners, telling them that you want the company to continue to be successful, but your life situation has changed since you’ve started and you would like to make a change. Be honest and say that you were hoping for a sale rather than a recap, as this would allow you to exit gracefully and earn what you’ve invested over the years. You can ask them to change the deal to include recap to trigger your change of control provisions. They may balk, but your should at least ask and let them know this is your first choice. You can provide them with Option 2 (remote / commute) as the first alternative option once they hesitate and Option 3 (relocating within the PE family) as a second option.

In essence, the owners should know what you want, how you feel, but not believe that you are holding a gun to their head. Asking for what you want and providing alternative solutions can lead to a solution that everyone can accept.

Good luck and let me know how this turns out.

Samuel

Dear Readers,

The HR Leadership Disconnect

February 7, 2019 by Samuel Dergel Leave a Comment

“Our people are our most important asset”

— So says almost every CEO.

Yet most companies do not live up to this statement.

How do I know that most companies do not live up to this statement? I hear this from top HR Leaders every week. (Complaint No. 1)

Do you want to know what I else HR Leaders grumble about?

They complain when executives without HR experience become CHRO or Chief People Officer. Nothing makes the ambitious HR Leader that is in line for the top job more frustrated than when they get passed over by someone that comes from the business and ‘knows nothing about HR’. (Complaint No. 2)

Complaint No. 1 is valid. Forward looking HR Leaders that want Complaint No.1 to disappear need to embrace No. 2.

Let’s take a look at this real-life situation from the new this week.

Deirdre O’Brien, a 30-year Apple veteran, will now lead Apple’s Retail and People teams.

Apple’s Head of Retail retired, and the role was given to the Head of HR in addition to her current role. Now Dierdre O’Brien is Head of Retail + People at Apple. Dierdre is not an HR lifer – she has cycled through business leadership roles and is continuing on the path beyond HR. When she becomes CEO one day, wouldn’t you want her as your CEO?

One of today’s most iconic CEOs is Mary Barra of General Motors. She too spent time in HR in a senior leadership capacity. This has helped her not only understand the various facets of the business that she has cycled through during her career, she is now leading the dynamic people based changes and disrupting the transportation business in the process.

These are just some of the situations where business leaders are cycling through HR on their way to the top.

The pessimist can look at situations where the Head of People role goes to an ‘outsider’ from the business and says ‘this is not good for the company’.

An optimist (count me in here) looks at this and says that the best way to get a future CEO to truly understand that people are a company’s most important asset is for them to have an opportunity to do so.

My challenge to HR Leaders: Embrace the opportunity to have your business leaders get hands on HR experience. If you really care about the people and know that if is through people that your business will succeed, take the opportunity to support these business leaders become better People leaders.

PODCAST: The Hiring Triangle – CEO, CFO and the Board

May 10, 2018 by Samuel Dergel Leave a Comment

Samuel Dergel was recently interviewed by Jack Sweeney for his podcast series called CFO Thought Leader. This was the fourth time I was interviewed by Sweeney, and I enjoyed our conversation once again. I believe you will find the conversation interesting and relevant.

Here are some of the questions addressed in this podcast. (You can listen via the Youtube window on this page, you can download the file or find the iTunes link below)

How involved is the Board when hiring a CFO?
How can a CFO hire go wrong?
How can a CFO going through a hiring process work through the CEO/Board dynamics?
What advice do you offer CFO candidates before their first interview?
If a CFO hire is going to happen, what is the time frame to make it happen?
How do you help CFOs with executive coaching?
What advice would you give a CEO trying to evaluate a CFO candidate?
What part do part-time CFOs play in the market today?
When is the right time for a company to hire their first real CFO?
Who engages an executive search firm for a CFO hire?
What advice do you have for senior finance executives that want to build relationships outside their business?

If any of these topics are of interest to you, you will find this podcast to be worth listening to. (29 minutes)

Which comments resonate most with you? Let me know what you think below, or email us.

Download | Subscribe to CFO Thought Leader Podcast series on iTunes | Link to the CFO Thought Leader web page with more details about this podcast

A CFO Success Story: Naresh Bansal, CFO of Actiance

August 3, 2016 by Samuel Dergel Leave a Comment

The following is from an interview with Naresh Bansal. Naresh became CFO of Actiance in May 2016. Previously, Naresh served as Vice President, Finance of ZScaler, as announced in CFO Moves. This interview was edited for clarity.

Samuel: What attracted you to Actiance?

Naresh: For the last 4 – 5 years, I was at a company called Zscaler that has done extremely well. I helped the company grow from a company of less than 200 people to a company of well over 800 people. But what really piqued my interest was there is such phenomenal opportunity for similar growth at Actiance. And after talking to the executive team and board members, and realizing how committed they were. It really helped solidify my interest in the company, and I decided that I do want to be part of this success story. The product which they had developed is so completely ahead of the technology curve, in the potential that it offers. It has a great executive team as well as great backers.

Quick Takes from Naresh Bansal on…
The new CFO

The role of the CFO has evolved so much, we cannot do just finance; we have to make sure that we understand and are partnering with all the other parts of the organization – like marketing, sales, engineering, pretty much every part of the organization. You need to understand that they are part of the business, and to be a partner of that.

Dealing with rapid growth

You need to make sure there are defined processes around that growth. Especially when you’re growing at such a fast pace – it becomes even more important that we have all the processes in place. You need to make sure that you’re thinking ahead of the curve.

Developing your team

Give them more responsibility. People want to be challenged. If you have people who are hungry to get more, they won’t be satisfied unless they are constantly being challenged. If people are given additional responsibility and accountability, they will rise to it.

Learning from others

Be very open – if your counterpart has a better idea, be open to adopting their idea. Be collaborative. It’s not about people imposing their will on the next.

Networking is key

You have to be constantly staying in touch with your network. It could be anyone. It could be the auditor that you work with, your external vendor that you work with. We all need to make a very conscience effort – this has to become second nature.

Samuel: Each career move that you’ve made has been good for you. What does this opportunity have for you, in your ability to deliver and accomplish, that some of the other maybe didn’t?

Naresh: I feel that the opportunity at Actiance is unique. When I look at the market opportunity, they have the top ten of the ten top banks as their customers. And it’s the ability of the company to monetize those customers. That was a very compelling reason.

For me, having been the head of finance for my last company, this was a phenomenal opportunity to step into the more official CFO role of the company and help them grown substantially, to drive the strategy, drive the approach.

This company is at the intersection of big data, social media and compliance. And all of these three markets are all growing at a phenomenal pace. This is reacting to great opportunities, in a much more regulated environment.

Samuel: What are some of the new challenges that face you in this new adventure at Actiance?

Naresh: There are 2 kinds of software companies. There are companies that have been born in the cloud. There are some companies that have been around for a while and are transitioning to the cloud. Actiance has both of those aspects. Actiance has been in a transition where they have been moving from a perpetual software licensing model to a cloud model. And this is really what I brought to the table – that past experience of having been in those fast growing SaaS companies. Bringing that mindset in terms of how you look at metrics, which metrics to look at, how operationally should we be looking at, whether we should be looking at the pricing strategy, looking at the compensation strategy for the sales teams, looking at it across the board, looking at how the planning needs to be done, etc. In SaaS companies, it’s a very different approach to all of these things.

The second aspect is the rapid-growth the company was experiencing. How do you make sure there are defined processes around that growth? Especially when you’re growing at such a fast pace – it becomes even more important that we have all the right processes in place. And if we don’t have all those processes in place, then we’re putting them in place. We’re putting all the systems, the controls, the whole environment. When you’re a small company, you do what you do. But as you’re growing, you have to make sure that you’re thinking ahead of the curve, and that you have all of the right systems, the right processes. And looking at where the team has the experience and the tools to help build us to the next level.

Samuel: Do you feel have enough of the right team members necessary to accomplish what you need?

Naresh: It’s like anything else – as the company grows, there are different talents of people that we need to look at. As of today, when I entered the organization, there is the absolutely the right amount of people that we need. The people here are phenomenally dedicated. We do have the right team. But as the company grows, we need to make sure we have the correct leaders in all the areas.

Samuel: What are some of the top CFO challenges that face growth companies – like yours – today?

Naresh: Every company is different. Every industry is different. And every stage of growth is different. If you’re dealing with a very fast rate – how do you balance all of the requirements and all of the resources? Finance is one of the areas that you should be able to help with that. But what other things can you look at? How can I help the sales team deliver their growth objectives? How can I make sure as the CFO, I’m the enabler of that growth and not the impediment? It needs to be a good balance where you are growing at a very good rate, but at the same time making sure you keep your burn to a minimum. And where you are adding value to your investment along the way. To me, that’s the main challenge – how do you grow at a fast rate? And making sure that you’re very disciplined about your capital allocation.

Samuel: As a leader. How do you develop other leaders?

Naresh: There is the hiring of people who are very smart – even if they haven’t done everything, but that they smart and have a lot of potential. The other aspect to being a leader is to give your team a lot of guidance and mentoring and tutoring along the way, to be in a position that you’re able to guide other people, and to groom these folks to become the future leaders.

And the third element is giving them more responsibility. People want to be challenged. If you have the right people who are hungry to get more, they won’t be satisfied unless they are constantly being challenged. To me, if people are given additional responsibility and accountability, people will grow. The problem then is – how can I grow? If I have a strong team, that going to help me grow? Will it help my role, help me to do more things, help me to partner with other parts of the business in a more effective manner. To me it’s all about hiring the right people. Helping and grooming them by providing them coaching, and by giving them more responsibility along the way.

Samuel: Other than the CEO, who do you feel is the most important business partner for the head of finance in any organization?

Naresh: Well, the CEO is the most important. But when I look across the table, everyone who is on the executive team is a critical component of that. Also marketing and sales are among the most important people. If you’re looking only at the numbers, everything smells great, everything looks great. So you need to ask yourself – how can I partner with the sales team to make them into a high performance organization, making sure they have the right quotas, making sure they have the right compensation structures in place. On the flip side, it’s sort of making sure we’re setting the targets in the right way. And by providing the correct incentives for the marketing leadership so they can effectively deliver. Supporting these guys with a large enough budget allocation so they can have the right tools in order to deliver these numbers. So it’s a very important partnership with sales and marketing.

Similarly, for cloud operations and engineering, it’s about making sure we’re growing in all the appropriate areas – that we have enough engineering talent, that we’re bringing in more and more, and that we’re doing it cost effectively. Whether it’s putting all the data centers we have in different parts of the world, making sure we have the right contacts in place, so we can help the company scale as we grow. And since we are growing, we need to be looking at expanding in different geographies, and building multiple data centers.

Samuel: What’s your style to get the other senior-level executives to work together with you?

Naresh: We are very fortunate in that it is very collaborative – we all feel and believe we are going in the same direction. How do we make this company a big success? Everyone is looking for the ideas. And similarly, I’m very open to ideas – if my counterpart has a better idea, I’m very open to adopting their idea. Or if I have an idea, they are very open to adopting my ideas. It’s very collaborative. It’s not about people imposing their will on the next. Because, in the end of the day, it’s about how to create value for everybody.

Samuel: What advice would you give to finance professionals who want to grow into the CFO chair?

Naresh: The role of the CFO has evolved so much, we cannot do just finance; we have to make sure that we understand and are partnering with all the other parts of the organization – like marketing, sales, engineering, to pretty much every part of the organization. You need to be able to understand that they are part of the business, and to be a partner with the rest of the executive team. And not even just the executive team – but all the different parts of the organization, to understand their needs and their requirements. How to work with them in a better way, to collaborate and help grow the company. That’s one aspect.

The external factor is networking. Networking is key. If you know your friends are the board members or the people that you work with, it’s not like you meet them once and they’re going to call you the next day for an opening. Because you only want them to call you when they have an awesome opportunity. Not just any opportunity that they have available. You have to be constantly staying in touch with your network, whether it’s the board member that you’ve worked with in the past, or some of the executives that admire your work and that you played a role in their success. It could be anyone. It could be the auditor that you work with, your external vendor that you work with. Everybody will want to work with somebody that has good success. And can bring success to your organization.

Samuel: You’re preaching to the converted. All finance professionals will agree with that in principal, but they’ll always say – I’m too busy. How is someone like yourself able to give attention to that while being very busy?

Naresh: This is one of those things where I wish I could do a lot more. It’s true, the job that you have at hand is far more important. But at the same time, networking is great. Some of the things that I have done personally is that I’m part of the local CFO group here which is call FEI, and they have the monthly dinner. And I at least try to go, if not every month then at least every other month. It’s a great avenue where they bring in a great speaker and have a dinner meeting, so at least you’re not taking anything away from your day. And then you have the fabulous chance to meet the rest of the leaders of the CFOs, share your ideas, and just be able to network. And even in my day to day job, things come up where I might have some questions, but at least I know I have a network of people who I can call and ask for guidance, and ask – have you ever had the same challenge? And how have you dealt with that challenge of such a scenario. Without sharing anything confidential. People generally want to help each other out. I’ve had people call me, asking for advice, and I actually feel like I’m privileged enough to be able to help out somebody.

Samuel: Anything else you want to share with our readers?

Naresh: I think we all need to make a very conscience effort to network – this has to become second nature. Especially as a CFO. Because, especially in my world, you’re not just managing your company, but your also constantly hiring as well. Networking is the key. And to try to learn and absorb. Every year – what have I added on to my skill sets. What more have I learned? And not just be content and think I’m the one who knows everything.

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Samuel Dergel is a Principal with Dergel Executive Search. He is an executive search consultant, executive coach, blogger, speaker, trainer and author.

This blog originally appeared in Samuel’s CFO Blog

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