Drunk on Entrepreneurial Kool-Aid … A few sobering thoughts on hiring ‘A' players in hot markets

June 7, 2016 at 9:33 AM

Pick a sector, any sector and someone is likely trying to disrupt it. And with the exception of those being disrupted this is good news as companies are popping up everywhere with all manner of interesting ideas, business models, funding and grand aspirations.

We are fortunate to be called upon by many of these companies to help them find key talent to propel their growth. And generally, with all due modesty, we execute extremely well against those objectives. We are very plugged to the sectors in which we work and understand the art and science of fitting executive talent to individual companies. But occasionally there are those companies for which we cannot seem to get it right. Companies for which we seem unable to deliver to their expectations or close the deal. Some of these companies come to believe that the issue is us.  Perhaps not surprisingly, we have a slightly different perspective…

Consider if you will the Internet of Things (IoT), one of many emerging sectors brimming with promise and thirsting for all manner of talent. Moreover, it is not just emerging companies that are looking to build IoT capabilities. It is also mid-sized and multinational concerns seeking to ensure their relevance in a changing world. IoT is one of those sectors where companies from the owner operated to VC-backed start-ups to governments, the General Electrics, IBMs and Deloittes of the world all covet the same people. And there are more than just a few such sectors out there.

Entrepreneurs jostle to be near the front of that talent queue. They want those ‘A’ players with the appropriate domain and successful scaling experience who hunger to do it again. In fact, they often want it all; hands-on driven executives with wisdom and youth, vigor, passion and the requisite ‘risk taking’ temperament. This last quality generally means candidates who look beyond short-term compensation considerations to the pot of stock options gold that will reward their success.

We understand the start-up entrepreneurial psyche. These incredible individuals battle for every inch, every customer and resource while fighting competitors and the requisite army of naysayers. They must have an almost messianic belief in themselves and their vision and persevere well beyond the point that most others would quit. Any modicum of success adds validation to their sense of destiny. They drink their own Kool-Aid as sustenance and to get high.

We know that our role as recruiters includes not only finding the very best talent but advocating on our clients’ behalf. And trust me we do advocate. However, in hot sectors such as IoT, and others like it, certain realities cannot be ignored or dismissed. First, hot markets mean choices for candidates, and lots of them. Furthermore, when many companies compete for the same talent there is invariably upwards pressure on compensation and individual firms can be expected to pull whatever levers they possess to attract and retain their talent. Larger companies will open their bulging wallets and dish out cash, RSUs, generous pension plans, cars and other perquisites. Taken in total the numbers become substantive and prove effective in deterring would-be poachers. Mid-sized firms also deploy whatever tools they have to attract and retain their high performers. And with few exceptions they all have a few. Meanwhile, many venture-backed firms remain hide-bound to their tried and true quid pro quo …. a quest driven roller coaster adventure like no other with lottery type payouts to those who get to the end. In return, everyone must buy into the cause, the Olympian effort that success demands, and a frugality driven back-end loaded compensation model.

The reality in some of today’s hot labor markets is that for many ‘A’ players the quid pro quo does not cut it. With rich multi-dimensional compensation packages available in so many larger organizations, no amount of advocating is going to convince the high performer to accept a below market compensation sprinkled with 1-2% stock option pixie dust. They can do almost as well, if not better, staying where they are, with significantly less risk. And so, many respectfully decline.

Rejection does not sit well with many entrepreneurs who reflexively lash out at such insolent candidates as misinformed, misguided, lacking in entrepreneurial spirit or even judgment. Better to have found this out now than later. And heaven forbid if this happens on multiple occasions for then the focus shifts, not inward mind you, but rather to those headhunters who brought those candidates forward. Perhaps it is them who don’t get it or can’t sell it…

About the Author

Robert Hebert is the founder and Managing Partner of StoneWood Group Inc., a leading executive search firm in Canada. Since 1981, he has helped firms across a wide range of sectors address their senior recruiting, assessment and leadership development requirements. 

Contact Robert by email at rhebert@stonewoodgroup.com or call (1) 416-365-9494 Ext. 777