Changing Jockeys; a Quick Executive Transition Primer for Private Equity
Very few people decide to replace an executive on a whim. More commonly, there are months of signs — subtle at first, glaring at the end — that the time to make a change is coming. If you’ve been in this situation before, you know exactly what I mean. You sense the need to make a change, but you spend your time putting Band-Aids on the problem and hoping it’s good enough. Why? Because replacing an executive is hard and sometimes unpleasant? It is. But, it’s far from the only organizational challenge with an uncomfortable solution. So why do so many of us drag our feet when the time comes to make an organizational change?
Because the actual obstacle for any board or private equity professional considering replacing an executive isn’t a long search or lack of qualified candidates. It’s risk. And taking on significant risk in what is likely an uncertain time is an unattractive option. Unattractive, yes. It’s also often the right option. The good news is that with preparation and a solid understanding of best practices, it doesn’t need to be as risky as you think. If you’re considering replacing an executive, you should:
Articulate your company’s needs
Before replacing an executive, start with the tangible outcomes you need achieved. Think beyond the interpersonal dynamics, and “I don’t like this executive’s style.” Get to the root of the problem(s) you’ll be asking your new executive to solve and develop an initial view on how they need to be addressed. Do you lack a clear strategy? Is your strategy a bad fit for current market conditions? Are you experiencing poor execution of a good strategy leading to below-market growth? Do you have a cultural problem? Or, do you have a cost structure or balance sheet problem? These are all serious issues that very well may be best solved by a new executive. From experience, it’s the rare executive who can solve all problems equally well.
Doing this heavy lifting is critical. Once you clearly articulate your company’s needs, you’ll be able to better define the unique attributes, skills, experiences, and relationships the ideal executive should bring to your organization. You’ll set yourself up to find the right fit, not just a different fit.
Define where and how to find candidates that address these needs
You’ve spent some time thinking about your problems, and now it’s time to start thinking about your solution — starting with identifying the best executive. As tends to be the case, noticing a problem is the easy part. Solving that problem, in this case finding your new executive, is harder. This is why there are seemingly infinite organizations that promise to find the best executive for your organization — for the right price, naturally.
My advice? Before you enlist the help of any outside agency, leverage your board and your own network. You very well may be able to source, vet, and hire a new executive without needing outside help. If — after looking outside your network — you still come up short, then it’s time to work with a recruiter. If you end up needing a recruiter, please dedicate the effort to finding the right option to lead the search for your executive. It will save you headaches down the road.
Understanding your organization and its unique needs will go a long way towards helping you find the right recruiting firm. For example, if your organization is in a particularly unique niche, it might be vitally important to identify a candidate with extensive market knowledge. In this case, your pool of candidates may be very small, and a more boutique or bespoke firm may be the best option. On the other hand, you may need to cast a wider net to meet strategic needs. In this case, you may benefit from the global footprint or name recognition that comes with a larger recruiting organization. Just don’t let size or name recognition be the only factors you consider when you’re evaluating recruiting firms. Market knowledge, a partner whose talent matches your needs, and the ability to communicate your brand story — and sell your organization — carry more weight than a big name.
Whether you conduct your executive search yourself or you enlist the help of a recruiting organization, you must design a hiring process that ensures the candidates will meet your needs. Then execute it well. This process should include the obvious (interviews and checking references) but should also feature a problem-solving session. This session allows you an opportunity to share your views on the problem and solution, while also confirming the candidate has the ability and interest necessary to identify solutions.
Successfully onboard the new executive — and follow up
On-boarding and transition make up the last, critical mile of hiring a new executive. In general, this step is poorly executed. For many organizations, the executive onboarding process is a slightly more professional version of handing the new person the keys and saying, “Good luck!” It’s a shame to spend the time, money, and effort to find and hire a new executive, only to fall short in the home stretch.
If executed well, however, the transition process creates significant value. A good onboarding process will be tailored to your organization but should always feature both clarity of goals (for the first thirty and ninety days) and a focus on team transition and acceptance, supported from the top. The ultimate goal of the onboarding process is to lay the groundwork for on-going communications, interactions, and conversations. You’ll show your new executive that you’re in their corner, not in their business. It’s not a secret that good communication is a contributing factor to success, so don’t underestimate the importance of the transition process.
The time leading up to, and immediately following, organizational change at the executive level can be tense and risky. Deciding whether or not this risk is necessary is one of the more daunting choices that a private equity professional faces. It’s a situation where expert advice from outside your organization can make all the difference in the world. At Bancroft Group, we have personal experience navigating executive transitions. And, if you decide you’d like to discuss your situation more, we can connect you to a member of our extensive Operating Executive Network to give you the real-world perspective you need to be confident you’re making the best choice for your organization. All you have to do is get in touch.
