The strongest candidates will be attracted to a business which has a clear strategy and a board that is united behind it. It should not be the shortterm goal of the CEO to develop the strategy unless the business is in need of a “turnaround”.
What kind of exit valuation is the board looking for and can this be supported with a coherent exit strategy? What comparable companies have been acquired or IPO’d and how were they valued? What are the key questions that a strong candidate should ask and on which the board and ultimately the search firm are aligned? Strong candidates will not pursue the opportunity if they do not believe in the business plan and it is vital that the search firm is sufficiently well briefed to avoid a low yield, due to lack of information, in the early stages of the search.
Candidate profile and search plan
The candidate profile should initially focus on the “hard” criteria (e.g. has profit/loss experience for a €10m+ company) and not the “soft” criteria (e.g. is a strong leader). This is because the “hard” criteria initially drives the search strategy. Be clear on what “hard” criteria is mandatory (ideally no more than 4 or 5 points) versus what is “nice to have”. Describe where the “ideal candidate” is currently working and what job he/she is doing. Give specific names, as examples, if possible. If other candidates have been met and were rejected or withdrew prior to engaging a search firm, then explain what you liked/disliked about them.
In a typical search around 100 people may be approached. 10 to 15 will meet the search consultant and the balance will reject the opportunity or be rejected as failing to meet the “hard” criteria. A shortlist of 3 to 5 should then come from this. A search plan must therefore comprise 100 “search sites” which is the number of companies on the search plan multiplied by the number of employees (past and present) of that company who would be potential candidates.
Assuming the company has a strong business plan the biggest single reason why a search is compromised is the inability of the search firm to create a sufficient number of search sites due to poor quality research. The board is well positioned to give input to the search plan. It may have market research reports it can share and it can help to develop a list of competitors or partners to add to the search plan. Getting the search plan right is the single most important aspect of a search.