August 10, 2022
By Leah Scanlan, Oak HC/FT
In my conversations with the CEOs of high-growth companies, I am hearing one overriding concern when it comes to talent. They want to make sure they have the right leaders in place to guide their firms over the next year or two, when markets may be tougher and keeping up the dynamic culture they have built may be more challenging.
I understand that concern. I spent the Great Financial Crisis recruiting executive teams at some of the country’s premier emerging technology companies. If I have learned one thing from that experience, it is this: periods like the present one can be great opportunities to hire people who can transform businesses. I’ve seen companies come out of tough times stronger than ever because of the people they brought in to have a seat at the table.
This new breed of leaders can communicate clearly. They have conviction and act decisively. They can determine where cutbacks must be made and where investments are required. It is always important to have such people, but in moments like this it is not an exaggeration to say they can be the difference between surviving or failing.
What kind of leaders should CEOs at promising technology firms be looking to surround themselves with? I call them “war time executives.” They have navigated through downs as well as ups. They understand balance sheets and know how to preserve capital, not just spend it. They know what it means to buckle down and execute when conditions are harder.
A few things distinguish these “war time’’ executives.
For starters, their backgrounds may be different. While yesterday’s hires may have come from sexy brand-name growth companies, “war time’’ leaders may have worked at firms like Boeing or American Express – blue-chip companies that have been around a long time and lived through recessions and crises. Or they may come out of bigger established technology companies – a Microsoft or an Oracle – businesses that have successfully ridden out a series of technology cycles. These leaders may be a bit older than the current crop, but what matters is not their age, it is what they have seen and done.
These executives will have qualities like grit and “stick-to-itiveness” that were not essential when growth was the top priority. They have experience rolling up their sleeves and working through messy situations. These qualities won’t pop up on resumes like degrees and awards, yet they will be every bit as important in the months to come.
Finally, the “war time’’ executives will come with skills acquired through experience. They will know about processes, systems and infrastructure. This scaffolding is not very sexy and many growth companies did without it in the go-go days when money was essentially free and companies could go out and hire 100 engineers every six months. Today that scaffolding is critical and so is having executives who know how to create it.
In a search for the next generation of leaders, two positions – chief operating officer and chief financial officer – should beat the top of any hiring priority list. COOs are just what the name implies, operators. They can instill a sense of accountability in an organization. They can ensure that companies maximize productivity in an environment in which firms will have to learn to do more with fewer resources. The ideal COO can serve as a complement to a visionary chief executive officer.
CFOs can make sure the cash on hand is sufficient to carry a company until markets open up again. They can also be strategic players with experience in mergers and the integration of acquisitions. In times like this, consolidation may be a smart way to grow. Competitors may be open to offers and purchase prices may be far more reasonable than they were only a few months ago. Having a CFO who can spot opportunity and execute on deals can be an enormous plus.
The word “opportunity’’ is worth focusing on for a moment. In a slower market, people’s first instinct is to play defense. They want to hunker down and do what it takes to hang on. That is only natural. But tougher markets can also be a time to play offense, to take advantage of opportunities – like making acquisitions or creating new business lines or products. Or hiring people who can make a difference. In the past, I have seen companies use times just like this to leapfrog the competition. They were able to do it because they found the right leaders.
Another point worth making: In a slower period, talent that may not have been available a year ago may now be on the market. Like scouts in the sports world, firms need to be on the lookout for promising players with the right skills, background and fit.
No one can say for sure how long today’s harsher conditions will last. History suggests it could be a while. Smart companies understand that and will recruit the leaders they need, not just to survive, but to thrive.