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A Difficult Action But Necessary to Optimize Your Company
What are we seeing in the markets?
The overall market has seen minimal increases in recent months and may be described by some as “flat”, while many still wait to see whether we have plateaued or if there is further recession ahead. Private equity continues to hold a considerable amount of dry powder (estimated at more than $1.3 trillion), and diligence and M&A activity remains slow. Firms and company owners are shifting to optimization and identifying ways to reduce costs and increase efficiencies…particular in smaller companies that are continuing to adjust to inflationary impacts.
“Investors are optimistic the market can continue its bullish early-year momentum in May, a month that has historically been one of the worst months of the year for the S&P 500.” – Forbes May 2023 Stock Market Forecast
The Wrong Leader
A significant factor impacting lower middle market companies (and our clients) is the labor market – and more specifically, hiring appropriate leadership. While there is still a labor shortage in many industries looking for qualified hands-on help at entry and mid-levels, there are plenty of qualified and exceptional leaders just waiting for the right opportunity at the executive and management level. Despite this, even among our client base, we are seeing companies keep poor leadership in place, or rush through the hiring process for vacancies in a desire to fill roles quickly. As a byproduct of this rush, they are sometimes hiring the wrong people, and are seeing detrimental effects of making the wrong decision.
Rushing into the hiring process for company executives or leaders can result in significant risks for the organization. Some examples:
Hiring the wrong person: When the hiring process is rushed, it's more likely that the wrong person will be hired. This could be due to a lack of thorough vetting, poor reference checking, or not involving key stakeholders in the process. Hiring the wrong person for a leadership role can result in poor performance, low morale, and decreased productivity.
Cultural misalignment: A leader's values and approach to work can have a significant impact on the company culture. A cultural misalignment between the new leader and the existing team can result in poor communication, low employee engagement, and increased turnover.
Loss of time and resources: An improper match can lead to wasted time and resources spent on training and onboarding, as well as recruiting and hiring a replacement when the initial hire doesn't work out.
Legal and compliance issues: Failure to conduct thorough background checks or to ensure that the candidate meets all legal requirements can result in lawsuits, fines, and damage to the company's reputation.
Decreased morale: When a leader is hired in a rush, it can create uncertainty and anxiety among the existing team. This can result in decreased morale and productivity, as employees may feel that their concerns and needs were not taken into account during the hiring process.
What Can You Be Doing?
Recruiting and hiring a true leader is a complex process that requires careful planning and execution. Some steps to help ensure a successful search:
1. Define the role: Begin by defining the position and its responsibilities, as well as the qualifications, skills, and experience required for the role. This will help you create an accurate job description that will attract the right candidates. Many companies rarely define what they are really in need of and strikingly – some hire without a clear job description! Identify and address the gaps when replacing a current leader or identify those expectations that need to change when a new hire is made.
2. Develop a search strategy: Develop a search strategy that includes identifying sources of potential candidates, such as professional networks, referrals, or executive search firms. This should also include creating a timeline and outlining the key stages of the hiring process, knowing that most roles will take a minimum of 90 days to fill. Plan a multi-faceted approach and have a backup plan to leverage an external firm if your own attempts come up with poor results.
3. Identify and evaluate candidates: Once you have a pool of qualified candidates, begin the evaluation process. This should include reviewing resumes, conducting phone or video screening, in-person interviews and time really getting to know the most promising candidates – dinners, operational site visits, and a review of the teams and operations they will manage. Involve key stakeholders in the evaluation process, including other executives, board members and external advisors in order to get a well-rounded series of opinions.
4. Conduct thorough background checks: Before making an offer, conduct thorough background checks, including reference checks, criminal history checks, and any other relevant checks. Trust, but verify.
5. Make an offer: After identifying the most qualified candidates, make an offer that includes balanced compensation, benefits, and clear expectations for the role. Total compensation includes the traditional elements (money, profit sharing, etc.) but may also involve flexibility in schedules, residence, industry involvement or other factors.
6. Onboarding: After the hire, ensure a smooth onboarding process that includes introducing the new executive to the organization, providing necessary training, and setting expectations for the first 90 days.
Throughout the process, it's important to ensure that the candidates are evaluated based on objective criteria, such as their qualifications and experience, as well as subjective criteria like cultural fit and alignment with the organization's values and goals. Involving key stakeholders in the process will help ensure buy-in and alignment with the overall decision. By taking a thorough and thoughtful approach to hiring an executive leader, organizations will increase the likelihood of a successful hire and a positive impact on the organization.
How Can We Help?
As companies look to replace poor leaders, fill unplanned vacancies, or establish new roles…X1 is here to leverage our experience and networks to help:
Providing interim IT or Operational Leadership to ensure you have a hand on the wheel to steer through times of disruption
Identifying opportunities to reduce cost, outsource select capabilities, or otherwise make budgetary room for recruiting and hiring the best leadership
Establishing or refining a strategic plan that drives the forward direction of the organization – and serves as the blueprint for your hiring process and finding the right combination of similar experience, cultural fit and proven leadership ability
Providing long-term management expertise (projects, programs) to allow leaders to focus on internal change and optimization, while keeping momentum on essential improvement projects
Assessing and evaluating teams and talent – as a key part of our assessment process, we actually start with an evaluation of the people. This is the most essential element for building and growing a successful organization.
Assisting in role definition, screening, recruiting, hiring and onboarding the right long-term leadership for your organization…partnering to ensure that the proper person is positioned for success and remains accountable for results
Supporting Articles
May 2023 Stock Market Forecast – Forbes
Contact
Justin Webb Founder & Managing Director Justin@x1consulting.com 540.412.8227 |  | Eric Norden Managing Director Eric@x1consulting.com 404.434.6915 |