DERGEL Executive Search

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

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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:

  1. 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.
  2. 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…

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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…

  1. 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.
  2. Relocate to a commuter/remote situation.
  3. 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,

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.

The HR Leadership Disconnect

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“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.

A CFO Success Story: Jim Burns, CFO of Accela

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Jim Burns - CFO of Accela
Jim Burns – CFO of Accela

The following is from an interview with Jim Burns. Jim became CFO of Accela in June 2016. Previously, Jim served as CFO of Silver Spring Networks, as announced in CFO Moves. This interview was edited for clarity.

  • Quick Takes from Jim Burns on…
                                                                    Some key challenges to a rapidly growing software company

    Really making sure that you integrate well and deliver on your promise. Progress shifting from more license based models to cloud based and recurring SaaS based models.                                                                                                                                 Older tech companies having a difficult time growing
    There’s been such a shift to cloud, and to analytics, and to SaaS. New companies, those that are starting the kind of legacy free, are the ones where all the growth is coming from.                                                                                                                     Advice to future CFOs
    Get as broad a level of business and operational experience as you can. You get a totally different perspective looking through the lens of somebody in the business versus somebody in finance. I’m seeing more and more CFOs these days that didn’t come up through the public accounting ranks.The new CEO/CFO relationshipIt seems CEO increasingly wants to be able to spend their time externally making a name for the company with customers and wants a CFO that can make sure that everything, not just the numbers, come together, and that the business is operationally being optimized continuously too.

    Building your career

    Take chances to do jobs you’ve never done before. Your job isn’t just to run it, but to make it substantially better when you left the role versus when you started it.  I shy away from jobs where everything is working perfectly when you go in, because there really is no other way but down.

Samuel: Congratulations on your move to Accela. How do you feel? What are you excited about?

Jim: Well, this is a company that I had to do a fair bit of digging into, to get familiar with it, before joining. And the more I learned about it the more excited I got.
They’re really in a great place, and there’s not a lot of competitors. If you think about the enterprise software space, there are so many people trying to get in, and this company has been a market leader and it’s successful. Once you get into state/local governments business, it’s about as sticky as it gets. They just don’t churn very much. It really builds a nice client base, SaaS platform from civic engagement, they’ve been broadening their portfolios through both, organic development and quite a number of acquisitions, and I think it’s just a very exciting space to be. If you look through some of the comparatives they have in the public marketplace, they traded eight nine times sales multiples, because investors just appreciate how strong and sticky this business is. So that’s very attractive. Also the management team is great and the board is great, and everyone is very engaged and focused, and that’s a big deal for me too.

Samuel: At what point in time during the interview process did you decide that this is the place for me, this is where I want to go?

Jim: My initial interview with the CEO was very good and then I got even more excited talking to Mark Jung, who’s the chairman of the company. Mark has been around quite a number of opportunities and he’s been CEO of multiple places and on multiple boards. He really validated everything I hoped the opportunity would be, and then some. So it was fairly early on that I got excited that this might be a great thing.

Samuel: You’re in, and you’re trying to figure your way around this new organization. What do you see are the challenges ahead of you?

Jim: I think the markets are growing great, the company has been through a lot of change recently with quite a number of acquisitions. And that’s heavy lifting and the company is working through it. They made nine acquisitions over just a few years. So really making sure that we integrate that well and deliver on the promise, that we get them making great progress shifting from more license based models to cloud based and recurring SaaS based models. And that’s a wonderful thing to do when you’re private versus public. So just continuing the post that mix shift and in trying to get the EBIT margins where they can be for a company of this size.

Samuel: You’ve come from HP, the technology company that it was and still is a very large and successful business. And you’ve made a transition in both your previous opportunity and this opportunity to a much more entrepreneurial, high growth situation. Tell me about that. How was the experience, what have you learned?

Jim: That is a very interesting question. The HP that I left was very different than the HP that I joined back in the late 80s. Hewlett and Packard had set the company up and the very engineering culture to go after growth opportunities. They then realized that the real brilliant engineers did not want to work amongst thousands of other engineers, so they set the company up as a bunch of small to mid-size businesses that had all the resources they needed to either succeed or fail. Most businesses I worked with were anywhere between four to six hundred people-sized businesses. The HP I left had consolidated so much. The division I was in had a hundred and thirty thousand people. So when I went to Silver Spring it was kind of like going back to my original HP route. It was seven hundred people, 300 million dollars in revenue. And Accela is very much in the same boat. Honestly, I enjoyed the earlier days in HP better than the late days in HP, even though I had a much more senior level of responsibility. It’s the difference between flying, with a dashboard in the cockpit versus being able to see through like a crop duster and see through the windshield and know everything that’s going on. It’s just because of the scale of it. Most of the old tech companies are having a difficult time growing right now because there’s been such a shift to cloud, and to analytics, and to SaaS. And new companies, like Accela, the ones that are starting the kind of legacy free, are the ones where all the growth is coming from. And a being part of that growth story is very exciting.

Samuel: Now that you’re in the growth game, with nimble companies that are very different than the HP that you left. What preconceived notions fell by the wayside once you’ve made it into Silver Spring?

Jim: Honestly, there was a lot that I was able to bring from a process maturity standpoint from HP that Silver Spring needed to grow to. Companies go through different transitions. They go through a starter phase and then they go to a scaling phase and then they go to a more mature optimization phases. And then, unfortunately some of them start to go in decline after that. When I joined Silver Spring, it has just gone IPO six months before, so it kind of had a successful chapter one but it was really struggling with the growing pains of the company. And a lot of the entrepreneurial types that are drawn to startups really shun structure. They don’t want structure. And yet the lack of process and structure was really bootstrapping the company. So I think I came in at a good time when the company needed to put some more process and more discipline and some more rigor in terms of how the portfolio was planned and reviewed. How the businesses were run. Kind of getting the businesses do more of a sinus rhythm so that you could run more collaboratively cross functionally, etc. I consider myself a good chapter 2 guy, and I think Accela is in the same boat now. They’ve made a great name for themselves and now it’s just all about continuing to scale larger and do acquisitions and integrate them effectively and operate in multiple geographies and countries. It’s just a different way of working, but it’s what I like doing, it’s what attracted me to Silver Spring and what attracted me to Accela now.

Samuel: Now that you’re CFO and you’re on your way to another success, what advice do you have for those that are aiming to move into that senior role over the next coming year?

Jim: I think that getting as broad level of business and operational experience as you can. I spent nine years outside the finance function. In HP I was general manager of a couple of businesses. I ran multiple different operational supply chains and services and support and sales operations. You just get a totally different perspective looking through the lens of somebody in the business versus somebody in finance. I’m seeing more and more CFOs these days that didn’t necessarily cut their teeth and come up through the public accounting ranks. They’ve had a broader blend of operations. I think the CEO increasingly wants to be able to spend their time externally making a name for the company with customers and wants a CFO that can really make sure that everything, not just the numbers come together, but that the business is operationally being optimized continuously too.

Samuel:  What do you feel has made you successful?

Jim: I think the combination of getting the mentors through my career that not only helped and coached me, but took chances on me to do jobs that I had never done before. Because I had kind of shown a track record before. I always believe your job isn’t just to run it, your job is to make it substantially better when you left the role versus when you started it. I took a lot of jobs where people told me to stay away, people who take those jobs get fired, kind of high complexity jobs, and those ended up being some of my more rewarding roles. Because when you go into something you really can make a name for yourself, it’s demonstratively better when you leave the role versus when you join the role. As long as the right elements are there for the role, there’s any number of roles. I sort of shy away from things where everything is working perfectly when you go into it because there really is no other way but down. This job at Accela has got all the things I want – relative to having a good fast growing market and good leadership position. But also a number of things internally that can use my experience and help to allow them to reach their goals a little quicker.

+++++++

A CFO Success Story is a feature of Samuel’s CFO Blog, where Samuel Dergel follows up on his book, Guide to CFO Success, speaking with CFOs featured in CFO Moves and CFO Moves Canada, Samuel’s popular and comprehensive weekly report on CFO Movement across the USA and Canada.

Dear CEO & Board: You can’t afford to hire the wrong CFO.

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Hiring the wrong CFO can be detrimental to your business.

Costs of hiring the wrong CFO include:

Risk to your company reputation.

    1. A weak CFO will not help your company with what it needs.
    2. Not being able to get the most out of your CFO as soon as possible.
    3. Opportunity cost – the wrong CFO misses the opportunities to add value to the company.

Yet, many companies fear doing a proper search because

    1. Cost of a CFO Search.
    2. Effort and time required to do a CFO Search properly.
    3. Cost.

As CEO or Board Member, you may think that you know people (that know people) that know CFOs. And you ask yourself “How hard can it be?”

Let’s face it. The cost of hiring the wrong CFO is way more than the fees you will pay for a proper CFO Search.

Well. Have you ever hired the wrong CFO? Wonder why they were wrong for you? The CFO was not right for your company because you didn’t do a proper CFO Search.

Now, there are options to how to do a proper CFO Search. You can work with me, work with any good executive search firm, or even manage the process internally.

However, you must have the following elements in your CFO Search.

Assessment: You need to assess what your company really needs from the CFO, both today, and in the future. You need to assess whether your leadership is really ready for a good CFO that will add value and be a leader in the business. You need to assess what skills, knowledge and abilities your new CFO will have to have to be successful in your environment. If your last CFO failed, ask yourself if you did a proper assessment first before hiring him or her.

Search: “Who you know” will not cut it. You need to do a proper search for CFO caliber people that can meet the needs you’ve assessed. If you don’t do a proper search, you will not end up with the best possible CFO for your business.

Onboarding: For a new CFO to be successful, it is important to invest in ensuring that the CFO has what they need to be successful. Onboarding allows your new CFO to acquire the necessary knowledge, skills, and behaviors to become most effective for your organization.

If you’re ready for your next CFO, do yourself and your company a favor. Hire the right CFO this time.

Contact us and let’s get started!