Investor Spotlight: How to Maximize ROI with an Executive Search

Investors and board members have a unique perspective that can help guide an executive search to success. As an investor, you are more removed from the day-to-day pressures a CEO faces. This emotional distance puts you in the best place to uphold the mission, vision and prosperity of the organization while remaining a fiduciary to shareholders.

You might at times intuitively sense when a CEO is about to make a mistake. The right board mentorship and participation can help a startup founder avoid serious blunders. One of the worst mistakes a CEO can make is selecting a bad executive hire. Failed executive searches cost up to five times the annual salary. The wrong executive hire at a high-growth business costs significantly more than at a slower growth company. It can literally put your survival at stake when an executive leadership role is involved.

On the other hand, the positive impact of a successful executive search is a 1,000% ROI. When it comes to your important executive search, the costs add up to one conclusion: get it right the very first time, every time you secure a hire in a key leadership role.

To ensure a successful search and maximize ROI, here are three important steps to take:

1. REFOCUS ON STRATEGIC PRIORITIES

The CEO of the company is facing enormous pressure. Either the company is in the midst of tremendous growth and the need for a functional leader will help keep the train from derailing; or, the team is overworked and performance numbers are suffering. In both these scenarios, a CEO might decide to act fast and settle for a candidate that is “good enough” — at the expense of long-term strategic priorities. The right board mentorship and participation can help a startup founder avoid a bad hire, double down and refocus on strategic priorities.

2. DEFINE THE SUCCESS FACTORS

After you’ve rallied your executive leadership around the mission and strategic priorities of the company, make sure you are also crystal clear on what the success factors are for the leader you need to place. What do they need to accomplish and what will success look like for them? How will they help drive the strategic priorities?

3. RUN A CORE FIT SELECTION™ PROCESS

The biggest factor determining the success or failure of a leader at any company is a core values match between his or her personal DNA the cultural DNA of the organization. Core competencies (the basis for strong technical chops) allow a leader to be effective in a role, while core values alignment (the basis for strong culture fit) is what pushes leaders to achieve their own purpose and the mission of the company. As an investor or board member, you have a broader perspective of what the values of the organization are and what core values a candidate must have in order to align with the mission of the company.

The utilization of venture capital is best applied towards the acquisition of the right human capital. For more insights on executive leadership and headhunting strategy, visit DaveCarvajal.com/blog