making an offer that sticks: 7 strategies for closing the deal with top talent

MAKING AN OFFER

THAT STICKS

THE EXECUTIVE WHITE PAPER SERIES | 2012

PRESENTED BY|

7 Strategies for Closing the Deal with Top Talent

MAKING AN OFFER THAT STICKS


ABOUT THE AUTHOR | TIM CONTI

Tim Conti is a Partner and Co-founder of ONSearch Partners. Concentrating his practice on CXO,Vice President, and Board-level searches, Tim has builtmanagement teams across a broad swath of industries,focusing on the intersection of the energy, technologyand industrial sectors.

In addition to leading senior level searches, Timhas partnered with his clients to conduct executive levelassessments identifying areas of strength and weaknessthen crafting strategies to plug the most glaring gaps.Having spent a career focused on executive levelassessments, Tim and ON Search Partners have beenable to craft a customized behavioral screen to identifytrue leadership.


ABOUT ON SEARCH PARTNERS|

The Executive White Paper Series is a cooperative effort by leading experts to provide meaningful leadershipinsights to today’s executives. To view more topics in the series, please visit www.onpartners.com.

As a leading retained executive search firm, ONSearch Partners locates and lands the best CEO, Board andVice President talent for both public and privatecompanies. Known for a highly-personalized consultativeapproach, our partners are distinguished by theirprofessionalism and a tenacious entrepreneurial spirit.Our goal is to provide clients the insight and contextnecessary to make smart leadership decisions. We arededicated to your success. Explore our website for moreinformation on our partners and services.

Silicon Valley | 650.257.7870Dallas | 888.989.6140

Cleveland | 855.995.ONSPWashington | 440.543.2992

Email | [email protected] | www.onpartners.com

Twitter | @ONSearchPartner

Employing a communicative and collaborativestyle, Tim has successfully maneuvered his clientsthrough every step of the team-building process, fromcandidate identification and assessment to hiringdecisions and offer negotiations. Intrigued by theevolution of leadership and its impact on businessdevelopment, Tim leverages his background as anintellectual property litigator and a certified publicacccountant.

To reach Tim about crafting an offer that sticksin order to recruit the top talent in your industry, emailhim at [email protected].


MAKING AN OFFER THAT STICKS . . .

Attracting talented leadership to the seniorranks is essential to any company’s ability toexecute a long term strategy and outperform itscompetitors. The mechanisms available tocompanies needing to identify top tier talent havedramatically increased over the last decade asexecutives have willingly put their career historieson the web for the general public to view.

As the founder of a retained executivesearch firm, I’ve seen firsthand my clients’motivation for hiring my firm change over thissame time period. Before the internet evolution,we were retained because clients desperatelywanted to tap into our highly specializednetwork.

Now, we’re more often retained for ourability to:

PAGE 2MAKING AN OFFER THAT STICKS

Seven Strategies for Closing the Deal with Top Talent

No matter the effectiveness of a searchprocess, it’s this final phase – closing the finalistcandidate – that ultimately defines the success orfailure of a search.

There are many reasons why offersbreakdown at the eleventh hour, includinginsufficient compensation parameters and clumsypresentations to the candidate.

To increase the probability of hiring thecandidate that the search process has identified ascritical to your growth plans, keep in mind thefollowing seven important strategic consider-ations from start to finish.

· effectively position or elevate our clients’profile with the best candidates in themarket who are inundated with multipleopportunities;

· create screening mechanisms that qualifyand extract the best single candidate from alarge pool; and,

· most importantly, create and finalize an offerthat gets the chosen candidate into thecompany.


#1: Consider the Chicken or the Egg


Every successful search begins with thedevelopment of a comprehensive position profileaccompanied by a strategy to successfully recruitjust such an individual. That strategy is onlyeffective, however, if it includes a compensationphilosophy for the role at hand. For instance, acompany’s internal metrics may not be sufficientto attract the top tier talent desired. The hiringmanager, on the other hand, may not be willing tosettle for anything less.

Compensation conservation and best inclass talent are often competing principles. So, ifthe mandate to your search partner is to recruitthe best available candidate, then you mustcommit to compensation flexibility regardless ofyour internal metrics. If internal ranges must bepreserved, then you have to accept the marketreturns and focus on the candidate poolrecruitable for that compensation range.Determining expectations and then drivingconsensus on these priorites will ultimately shapeand define the success of your search strategy.



#2: Build a Compelling Offer for the Marketplace

If you have committed to compensationflexibility in order to attract the best possiblecandidate, then you must remember that yourinternal comparisons to already existingemployees may ultimately be meaningless to thecandidate. To work, the offer needs to becompelling versus the candidate’s currentcompensation package, not your company’sinternal metrics or peer group. Remember, intoday’s highly competitive market, an executiveneeds a compelling reason to leave his or hercurrent situation.

Of course, compensation packages mustmake sense to both candidate and company,particularly in the current economy. Often thebest packages for all concerned involve elementsof pay for performance. In other words, considercompensation plans that include escalated bonuspayouts for achievements that go above andbeyond. The best candidates will seek out such aplan due to their confidence in their abilities todeliver. The best companies will be comfortablewith such a plan because it prioritizes and rewardsachievements above all else. Similarly, rewardingachievements with equity grants (i.e. options andRSUs) also helps to align candidate and companygoals.

Making the candidate an “owner” helps toalter the mindset of the individual ensuring focuson decisions and actions that are good for thecompany. This is extremely important toinvestors when recruiting a C-suite to managetheir investment, but should be considered by alllevels of managers when developing a package toattract top talent.



#3: Recruiting Talented Leadership is a Sales Effort

Consider that often the best talent isdefined as someone “heads down” working withfocus and drive at a competing firm. In fact, over65% of our placed candidates were not originallylooking for a change. This percentage goes up thehigher the executive, the more competitive theindustry.

Decades of search experience has taught usthat “heads down” candidates tend to considerother opportunties for one of only four reasons:

a) better company (by culture or marketposition);

b) better industry sector (one that isgrowing);

c) better compensation; or

d) a better (i.e. expanded) scope ofresponsibilities.

So, when establishing a search process,you must demand that your search partner builda strong enough connection to the candidate toidentify the source of the candidate’s interest.Then, the recruiter should work to “sell” thatunique aspect of your position that will make thecandidate take notice.

Over 65% of our placedcandidates were not originallylooking for a change.

As a result, companies do not have theluxury of simply assessing candidates in a one-sided process. Instead, they must work toposition their opportunity as being unique fromothers in the marketplace both professionally andfinancially – selling themselves along the way.



#4: Don’t Blow the Goodwill You’ve Built Up at the Close

Throughout the course of the searchyou’ve spent considerable time assessing thecandidate’s professional skill set and getting toknow the candidate personally. Your efforts andtime spent have created a personal relationshipwith the candidate — a bond of sorts. Yet moreoften than not, when the time comes to negotiateoffer terms, the company representativesdisappear and all communication with thecandidate is cut off.

This is a tremendous mistake I’ve seenmade over and over again. It essentiallyextinguishes the goodwill you’ve built up with thecandidate. Remember, no matter how attractivethe job may be, the candidate will only join ifthey’ve connected personally with the company.So stay connected to the candidate even as yoursearch partner works to negotiate terms. This“open door” approach will cement the candidate’sbelief that he/she is joining a company that valuesthem as an individual and has a culture ofcommunicating openly.

#5: Let the Recruiter Be Your Buffer

While you should stay engaged with thecandidate throughout the offer negotiation and beavailable to them at anytime, it’s best to allow yoursearch partner to lead discussions with thecandidate about the compensation details.Discussions on compensation terms, such as basesalary parameters, bonus targets, and equityofferings, can often times be emotional. In thosecases, it’s best to let your search partner be yourbuffer.

If a candidate’s demand is unreasonable, letthe recruiter tell the candidate. If your offer isbelow market, let the recruiter provide you withfeedback. The recruiter’s role is to be consultativeto both ends, helping to ensure an agreement thatboth sides feel positive about.



#6: Consider Going the Extra Mile to Close the Deal

With the highly competitive nature oftoday’s talent market, it may be helpful toconsider that adding on unplanned compensationcan tip the “scale” in your favor. Keep in mindthat the cost of going the extra mile is almostalways less impactful on a company’s bottom linethan the cost of an empty seat in a key role for anextended period of time. This is especially truewhen you consider thedrastic impact a single topperformer can have on theaccomplishment of yourorganizational goals.

Your search partnershould be able to help youidentify exactly whatconstitutes the extra mile.In certain circumstances, itcan be elements completelyunrelated to cash compensation that help youovercome a candidate’s objections or obstacles.

Examples of noncash levers we’ve pulledin past situations include offering to pay for acandidate’s family to fly once a year back to theirnative state for special occasions; or allowing thecandidate to work in a remote location for onemonth a year; or providing assistance with thecosts of private school for the candidate’s childrenwhen the public option doesn’t meet expectations.On the other hand, cash as they say is king, sosometimes the best example of “going the extra

mile” is to simply sweeten the cash pot offered tothe candidate.

While internal metrics should not serve ashandcuffs when trying to hire an importantexecutive, there are mechanisms that provide thecandidate with the necessary cash increase whileat the same time preserving (or not dramatically

destabilizing) internalmetrics.

For example, wehave on multiple occasionsutilized signing bonuseswhich pay out in equalinstallments over a 2 – 3year period in order toincrease the fixed cashportion of a candidate’soffer while keeping his

salary in the ballpark of his peers. Choosing topull one of these levers can often times be thedifference between an accepted or a rejected offer.

CONCLUSION |



#7: Know When to Move On

Your search partner is your best resourcefor developing a reasonable compensationpackage designed to attract the top candidate inthe field for your leadership position. Utilizing arecruiter from the beginning to develop acompensation strategy will lead more quickly toyour desired candidate and reduce the expenses

Despite best efforts, there are situations inwhich a workable offer becomes out of reach. Adecision to end offer negotiations should be donein coordination with your search partner.

It should also be communicatedrespectfully to the candidate so as to preserve thatrelationship should you ever wish to revisit it.Openly communicating your decision also helpsto avoid ill feelings that could do harm to yourcompany’s reputation within the marketplace.

If it is time to move on, review yourbackup candidates with the help of your searchpartner before starting your recruiting effortsfrom scratch. The disappointment of a failed offernegotiation with Candidate A often causescompanies to ignore equally qualified and vettedCandidates B and C, only to restart recruitingefforts and end up later with an average hire dueto process fatigue.

Remember if your search partner hasexecuted a comprehensive recruiting effort, thenyour backup Candidates B and C should qualifyas strong positional fits compared to the balanceof the recruiting universe which should havealready been screened and disqualified (or at leastlowered in priority).

associated with an empty seat in a key leadershipposition.

By making an offer that works on multiplelevels, you can propel your company’s perform-ance significantly in a single act.

making an offer that sticks: 7 strategies for closing the deal with top talent

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