|
Hazlett Associates through its principal, Tom Hazlett, has provided search consulting services on a national basis to a number of Fortune 500 companies as well as smaller, privately held firms across a wide range of industries, with an emphasis on consumer products and business to business direct marketing companies, agencies and financial services organizations. Assignments have included senior and upper mid-level positions.
——————————————————————————————————-
FINCH:
Tom, you’ve been in the high-level executive search consulting game for close to two decades now. 2008 and 2009 were tumultuous years for our economy. How has the recent recession affected job turnover in senior executive suites?
HAZLETT:
In this recession, as in past ones, normal executive job turnover has been seriously disrupted. During a contraction, many companies restructure and consolidate their organizations—either voluntarily or involuntarily–to survive; other companies go under or are acquired. This leads to considerable one-way turnover and the well-documented unemployment figures, across all levels of management. Remaining executives tend to hunker down and remain in place to ride out the storm. Employed senior executives are less receptive to potential career moves unless there is a great degree of familiarity with the situation, the board and/or the hiring manager. The severity and breadth of this downturn clearly have magnified the situation.
FINCH:
Will we see more or fewer executive searches in 2010?
HAZLETT:
We should see more searches in the coming year. The paralysis and fear of a year ago have morphed into an uneasy uncertainty about what the new “normal” will be going forward—but with the understanding that it must be addressed. The draconian cuts made by many corporations and service organizations have led to the realization that replenishing the ranks will be necessary to begin growing again. The past year has also uncovered weak performing executives needing replacement.
FINCH:
Because of the bonus controversies in the financial industry, think Merrill Lynch and AIG, are you seeing different allocations of salary versus bonus in compensation packages?
HAZLETT:
Performance based compensation still appears to be preferred by both hiring entities and strong executive candidates. Companies are less willing to offer large guaranteed salaries or huge signing bonuses. Performance bonus targets are being refined and more carefully calibrated. Clearly more rationality has taken hold (on both sides) in compensation negotiations.
FINCH:
Is compensation in the form of stock or equity becoming more or less prevalent in the current employment market?
HAZLETT:
Cash is king. The equity craze has abated, at least for the foreseeable future.
FINCH:
Wall Street, like Washington, can be insular and sometimes obtuse and may not have a real handle on how its actions and behavior are being perceived by Main Street. Do you think corporate America has failed to explain to and educate Joe Six-Pack as to why senior executives are so well compensated?
HAZLETT:
The short answer is corporations have not explained compensation issues because they have not been pressed to do so. The extraordinary income numbers coming out of Wall Street have become grist for the populist mill. These figures seem to be setting off alarms in the boardrooms of public corporations. Typically, senior executive compensation is buried in the pages of 10-K statements. When times are good, revelations about upper level pay are generally greeted with envy or mild consternation. When times are bad, and many are hurting financially, seeming inequities are magnified in the minds of many. Whether or not more transparency will occur, likely will depend on the attention span of the public, the politicians and the media.
FINCH:
Because some corporate reform activists see generous severance packages for senior executives as “failure pay,” are severance payment provisions in employment contracts getting harder to negotiate and obtain?
HAZLETT:
Board Directors, especially those on Compensation Committees, have become more aware of their legal fiduciary responsibilities in overseeing the compensation packages of senior executives. This has led to more scrutiny and conservatism in negotiating all aspects of employment contracts, including severance agreements. That said, the ability to attract a crucial executive away from his or her current job, may require the offer of a substantial “safety net” in the event of change of control or other trigger events.
FINCH:
As your parting advice, what are the three most important tips you would give to an executive recruitment candidate for the candidate to successfully navigate an executive search process?
HAZLETT:
- Be completely honest in every aspect of your endeavors, from resume facts, dates, compensation, degrees, etc. to answering interview questions. You must assume that everything will be checked—because it will.
- Do your homework—before and during the process. Not enough due diligence about the company’s situation, prospects and agenda, and honest self-appraisal about your role, the cultural fit, and personalities of prospective colleagues can be a recipe for serious problems.
- Be patient and rational during the process. This is easier to do if you are currently employed, but necessary in any case.
Your Executive Life Blog 