In the era of virtual workspaces and unprecedented personal mobility, finding and landing senior talent seems more difficult than ever. At the same time, retaining and motivating the leaders you already have might be even more vital.
Join us for a lively discussion with Chris Craig, VP of Executive Search with McDermott + Bull, a worldwide leader in executive search and interim leadership placements. Chris takes us through today’s talent acquisition landscape, how companies are exploring and leveraging interim executives to meet their immediate goals, and what other perks and incentives are helping businesses keep their leadership teams on board and on track.
Transcript
Chase Hoover:
Hello, and welcome back to What’s Next, hosted by Acuity Advisors, the show where we help middle-market business owners understand and monetize the value of what they’ve built. I’m one of your hosts, Chase Hoover. I’m stepping aside because today we have another great guest on the podcast, Chris Craig of McDermott + Bull, an executive search firm headquartered here in Orange County. Chris sits down with our Chris, Chris Kramer, that is, to talk about something on everyone’s mind, which is the war for talent and specifically for senior executive talent, how to find candidates, articulate the role, and ultimately, land and retain them, so without further ado, here is a conversation between Chris Kramer and Chris Craig. Hope you enjoy.
Chris Kramer:
Good morning. Pleased to be joined by Chris Craig, my friend and colleague with McDermott + Bull. Good morning, Chris. How are you today?
Chris Craig:
I am doing outstanding, Chris. It’s a pleasure to be here. Thanks for having me.
Chris Kramer:
Oh, it’s our pleasure, Chris. Thank you. Hey, why don’t we start just by giving us a little bit of background on yourself and the firm and what you guys do at McDermott + Bull?
Chris Craig:
I have spent the last 30 years in the business community here in Orange County, in Los Angeles in particular, and decided to join McDermott + Bull as Chris Bull has been my friend and best friend and colleague for 25 years. I’ve watched his meteoric rise of McDermott + Bull and decided to join forces with him to promote his practice.
Chris Kramer:
Awesome. Yeah, ’cause you guys have grown quite a bit over the last number of years. I’ve known Chris as well, not that well for the period that you have, but I’ve noticed what eight or ten offices now or worldwide, right?
Chris Craig:
We do have an office in Amsterdam. We have a very successful office in Canada and another half a dozen offices across the country. We started in Orange County, of course, but as the clientele has grown and the need for talent across the country now around the world has started, we’ve captured that and created some space there.
Chris Kramer:
You’re recruiting worldwide and placing worldwide or is that to attract the talent for U.S. positions or kind of both?
Chris Craig:
Our focus is in the United States. The Amsterdam office takes care of our Western Europe presence and our Canadian office takes care of our Canada presence, but the office is here. We have our New York office – will place somebody in Los Angeles or Orange County and across the country, so it is a bit spread out across the United States.
Chris Kramer:
Are you focused on certain levels of talent? Then tell me a little bit about the difference between, I think your area is more permanent placements versus some project or interim work that you guys do as well?
Chris Craig:
Yeah, so we’re a retained search firm, which is focused on really C-level positions and positions that report to the C-level. We started out in permanent placement and then about seven years ago started an interim side of our business, McDermott + Bull Interim Leaders. That has grown into an incredibly robust practice as the need for part-time, interim placements for C-level executives has really exploded, especially in the last three years. We have an entire team dedicated towards parachuting in functional leaders at the C-level, the been-there, done-that talent who can make a really incredible impact on a company whose need is immediate.
Chris Kramer:
Is that more driven by the talent that they don’t necessarily want a permanent position or the companies that need either somebody quickly or they have a project or a shorter-term view of what the need is?
Chris Craig:
The most common scenarios for the interim leader role would be if a CFO suddenly quits or passes on or there’s an immediate need for a functional role that came up upon you suddenly. Our Interim Leader Group has a deep bench of functional leaders that have chosen this lifestyle, that three-to-six-to-nine-month positions that they know are short-term. There are a certain percentage of those that do convert as they enjoy the position, the company likes them. They will convert to a permanent role, but the intention is to be a short-term, stop-gap measure until a permanent leader is chosen.
Chris Kramer:
Got it, so sometimes that would be that there’s an immediate need, it’s really a permanent position, but there’s an immediate need to fill something, and you don’t want to hire a permanent person too quickly because the fit might not be there, etc. Or other times it might be just a short-term need, like prepping a company for sale or there’s some huge initiative, maybe it’s an ERP implementation or maybe it’s some new product launch or something like that. I mean, is that?
Chris Craig:
That’s exactly right. They will have the been there, done that expertise coming to a role that is where it’s needed as opposed to training somebody up to that role.
Chris Kramer:
Got it. Okay. You mentioned the term “retained search” earlier and have always wanted to ask someone like you, what does that mean and how is that different than what some people or how are you different than what some people might refer to as a “headhunter” or some other name for what it is that you guys ultimately do?
Chris Craig:
There is a great question. It’s a huge distinction between the headhunter and the contingent roles versus a retained search firm like ours. A retained search firm is just what it sounds like. We take a retainer in order to get a search started. The contingent and headhunter roles that are the most ubiquitous are the ones that will get a contingent fee if we place you.
The biggest difference between these two approaches to filling senior leadership is the fact that when we go to find somebody for a specific role, in general, the best people are already hired. They’re already working somewhere, and through our processes, we will find the best talent at a company where they’re already working, and then reach out, connect with them, and then offer them a role that is at our client’s company. The contingent model generally takes people that are looking for a job and collects resumes and then passes them on to the client. Because we’re on the retain side, we have a higher level of pools of talent that we go after in order to fill your role.
Chris Kramer:
Got it. Yeah, so said another way, if I’m a recruiter/headhunter, not a retained search firm, I’m pretty much selecting people from what’s available versus finding the right fit and that’s going to be somebody that you actually have to either know in your database or seek out some other way, right?
Chris Craig:
That’s correct, yes.
Chris Kramer:
Okay. No, that makes perfect sense. It would also seem to me that the higher up you go in the organization, right, the more important it is to spend the time and energy to find the right person as opposed to we’re just filling XYZ position where maybe you need 20 people that do the same thing. You’re not going to be able to ever retain search for each one of those in the same way as you might, if let’s say, it’s a CEO or CFO.
Chris Craig:
Correct. The level of talent in the positions we fill are all unique. They’re all extremely important, extremely high-level, and all come with a series of very specific requirements. That’s where we make our money is where, is being able to find people with that skill set and be able to vet those people in a way that provides our client with the best talent available.
Chris Kramer:
Are there any particular industries or niches that you guys are either better at, that you specialize in, or that you’re seeing more of in this market?
Chris Craig:
Yeah, the McDermott + Bull as a whole has several different teams that focus on different industries. We have an aerospace and defense team. We have a banking credit union team. We’ve got several different ones in mind. We’re almost 100 people at our firm, some 22 years old. The Bull practice of which I’m a part of has been focused on high-level executives in Orange County to begin with. As the practice has evolved, the Bull practice has gone upstream to CEO/CFO-level placements. About five, seven years ago, Chris made an intentional decision to align himself with some private equity firms. That has paid off well as the private equity industry has become incredibly prevalent in buyouts, acquisitions, etc. When we aligned with those private equity companies, their operating companies, in general, need additional or new leadership after that buyout is executed.
Chris Kramer:
Yeah, it makes perfect sense, right? Somebody’s going to sell their company, generally speaking, they want to have an exit, right? I mean, if they were going to maintain the position for five or seven or ten years, usually wouldn’t sell out to a private equity fund. In fact, they might do an ESOP, as you know, we’re big in the ESOP space, among other things. That’s one reason why business owners will actually sell to an ESOP whereby they want to keep working for five, six, seven years, right?
But usually, private equity, it’s about 18 months, two years, and I think everybody knows that, so you’re right, once the deal is done, the private equity fund wants to start figuring out who’s going to be the heir apparent. By the way, and you could speak to this better than I, my experience is you need 18 to 24 months to just get a senior-level person, not trained, but acclimated and onboarded to the company’s procedures, the industry, the customers, right? That doesn’t generally happen in a very short period of time at least not seamlessly.
Chris Craig:
That’s very true. That runway, when private equity comes in, their mission is to grow the company. In general, the talent that is at the company has gotten them from A to B. Private equity wants to get them B to C and the functional leaders that are there are not always equipped for that next step. That’s where we come in and a lot of times the private equity will come in and their first job is to change out that CFO to a more experienced one or one that’s going to get them to the next level.
Chris Kramer:
Sure, yeah, and it might ultimately involve a systems implementation, but we know it’s going to involve follow-on acquisitions. You’re right, the business owner that’s grown it from zero to 10, 20, 30, 40 million, or five or ten percent a year, isn’t the same guy that’s going to oversee six or eight acquisitions and double or triple the size in four or five years like the PE firms looking for.
Chris Craig:
That’s exactly right.
Chris Kramer:
Yeah. Tell me a little bit about the state of the market, vis a vis. All of what we hear about talent shortage, can’t find any people, unemployment is super low in certain areas and higher in others. I mean, are you able to make quality placements? Are people willing to move around? How long is it taking? How is it different than maybe pre-COVID? Tell us about the landscape right now.
Chris Craig:
Yeah, the landscape is really interestingly not much different for our approach than it was three years ago. This is why the people, in general, will lead the devil they know for the devil they don’t as long as the incentives are there. The shortage on talent is a real thing, but if there is a good story and a good compensation, people will move.
This is where a big part of our job right now is training clients in an instructional way that compensation is gone to a point that they need to take a serious look. This is another issue that’s happening with our clients now. Compensation, it’s at such a level that they need to really take a look at their senior leadership in their own company and decide who they really want to keep at what level. Everybody is getting approached. Everybody’s getting calls from companies like ours to take a job somewhere else and their key people in their key positions need to be addressed, assessed, and the owners need to know that they better pay them what the market is at right now or they’re going to lose them.
Chris Kramer:
Yeah. Let me ask you this, then, because we’ll get to, I think, compensation here in a minute, but while we’re on the topic, is that enough in terms of retention? Because we talked a little bit about placement, right? We’re going to find talent, right? We haven’t yet talked about retaining them and then incentivizing them, which I want to get to. If we move the discussion to retention, everybody needs and wants to be paid “fairly” or I guess the word would be competitively, right? Is that enough, though, right? Are you finding that people are moving or making a change because of compensation or is it a more interesting position or more flexibility, more work/life balance? I mean, how important is the comp piece of it?
Chris Craig:
Well, it is certainly an important piece, but to your point about the stickiness in the current climate we’re in with remote work, with hybrid work, the loyalty, the soft pieces of what it takes to retain an employee, especially at the high level, those are all extremely prevalent, extremely important. It’s making it easier right now for people to leave the position they’re at for the position they’re going to. That’s why comp is such a key function because people are doing a similar role, and if they’re doing it out of their house behind a screen, the idea of leaving from point A to point B for an extra 30, $40,000 can be enticing. That is something that every company’s facing and the idea of trying to keep their best talent in a way that does create that stickiness, that goes to the story that the company has, to the kind of people that they hire, what they’re doing, their values, their purpose, a lot of those soft skills that are really important.
Chris Kramer:
Yeah, so are you getting any feedback from your clients around their ability to maintain that with new people or onboard them? Basically what you’ve said is, “Look, I’m a remote worker. Even if I’m a CFO or even a CEO, I’m virtual, I’m remote. I don’t have the connection to the team on a daily basis, the water cooler chatter,” so really, what that means is the culture is suffering to some extent or at least hard to maintain. By the way, probably not that different if you have multiple locations and each office has its own personality. But, here I am, sitting at home, I get a call from Chris Craig at McDermott + Bull. I’m enticed. I make the change to a different company, but it’s also remote and it’s also how do you get that person onboarded? How does the new culture permeate so that he doesn’t get another call in 18 months and go and take that other enticing position?
Chris Craig:
Yeah, that’s the million-dollar question of which literally every company in America is facing right now. I wish I had a magic bullet for you on that. The success of that dynamic that you’re referring to really comes down to senior leadership and how they treat each other and what culture they’re created at the company. I mean, there’s nothing that is going to replace the face-to-face interactions around the water cooler. We’re trying to get everybody back. At McDermott + Bull, we are facing the same challenges that every company faces and we’ve opened up the office to bring everybody back with lunches. We have online virtual water cooler events twice a week. We do everything we possibly can. We fly the whole company in for Cinco de Mayo. We do everything that can be done and we’re facing the same challenges.
Chris Kramer:
Sure, yeah. I’m actually seeing it. We’re in the office, have been really mostly all through COVID, for good fortune has kind of struck us, but I’m feeling that and seeing that with a lot of our clients where I might have to have a two or three hour meeting with somebody and they’ll even say, “Oh, we can do it remotely.” It’s kind of like, well, that’s fine, but how do I foster that relationship? How do I really impart my personality and that of my team into this situation? It’s really hard to do on a flat screen, so I think you’re going to see a return to the come into the office at least a few days a week.
A couple of our clients have said, “Hey, every Wednesday, everyone’s in the office,” and that way, whatever day of the week, right, at least that way you have a touchpoint, and you can say, “Hey, if I need to get to know Chris a little better, at least I have once a week, can take him to lunch. We can have a little staff meeting. We can have some banter over a cup of coffee.” But, I think this whole notion of, “Well, we’re more efficient because we’re all working at home,” I think it’s got its limits and I think we’re nearing the end of the utility of that, personally.
Okay, so I guess where I’d like to take the conversation is around compensation. My question for you is what are you seeing? Is it any different than, let’s say, over the last three, four years? What are you seeing as far as the structure of a package? Are you seeing some amount of equity participation in certain deals, in most deals? Is it kind of salary bonus or other perks or benefits? I mean, is there any general commentary you can give us on that?
Chris Craig:
Well, the incentives are what will draw senior-level leadership away from where they’re at to where they’re going. The base salary has gone up significantly, undoubtedly. Stock options, the equity ownership, the LTIPs, those are extraordinarily important as a way to attract that senior talent. What are we seeing? We’re seeing an increase across the board as far as what their offerings are, so it is critically important that the candidate understand what they’re getting, that the company understand what they’re offering, and as the levels go up, from the VP, to the President, to the CEO, those factors are critical in order to attract talent, and of course, to keep it.
Chris Kramer:
Right. Yeah, we’re still doing a fair amount of that work whereby a company will offer some incentive, let’s call it phantom equity or even direct stock options, and those require some amount of evaluation opinion because as you know, there are compensation implications. If you’re granting certain benefits, let’s say incentives, let’s call it above or in the money, if you will, where it can be deemed to be compensation, so we’re seeing a lot of it as well.
Just a couple of more questions for you, Chris. I guess my big question for you is, how can a company most effectively work with you or with a retained search firm? I mean, it seems to me that sometimes companies, and maybe these are smaller companies, maybe not, but for example, they may not have a great job description or they may not be able to articulate the vision, and they may not be able to articulate why it’s a compelling opportunity for somebody. You’re on the front lines, talking to the candidates, trying to convey on behalf of a company, why they should even entertain talking to you or talking to the company. If I’m the company and I’m looking to fill a CEO or CFO or CIO, whatever the position is, how do you and I best work together?
Chris Craig:
Yeah, the idea of defining and being crystal clear on what the culture is at the company, what the vision is of the company, what the expectation level is for the position itself are all discussions that are had upfront. And to take a step back, for a company to engage a retained search firm and to make that investment on what the results will be, it takes a certain level of the company to make that decision, takes a certain type of leader that knows that in hiring a retained search firm, that we will take care of that, that we will tell the story for them, that we will provide that clarity to the candidate.
As a leader of a company, if you could envision having three to five excellent candidates in the time it takes, whatever time it takes, as opposed to having your people go through the process of trying to post LinkedIn jobs, go on Indeed. Those don’t tend to work at the level of positions that we fill and so in order to best and most effectively use a retained search firm, having those conversations upfront, having confidence that the retained search firm has all the tools and skills and resources necessary to provide those top-tier final candidates to you for you to interview, it makes perfect sense. It is an investment, but it is one for such important roles that we fill, just the ROI is off the charts.
Chris Kramer:
Are you seeing it taking longer to make a placement, let’s say, at a CFO or CEO-level permanent full-time?
Chris Craig:
It is a little bit longer than it was three years ago. Our firm, actually in February of 2020, went through a Lean Six Sigma process looking at every part of our company top to bottom and every touchpoint of every client and candidate and we did an entire revamp of the way we did our business. Ironically, March 2020 happened, and it really set into place systems that enabled McDermott + Bull to fill positions quicker, but with the same effectiveness as some of our competitors. So the time to fill is a little bit longer certainly, but McDermott + Bull, we’ve kept it well below the industry average.
Chris Kramer:
If I hire your firm, what should I expect if I need a new, let’s say, go to the top, CEO?
Chris Craig:
CEO, yeah.
Chris Kramer:
Is that a three month process, six month process? Longer?
Chris Craig:
It’s a three to five month process for a top-level CEO search.
Chris Kramer:
If I did it on my own, what would I do double or triple that or have less effectiveness?
Chris Craig:
You could do it in three weeks, frankly, if you did it on your own, but the quality may not be there and if it was that easy, everybody would do it like that.
Chris Kramer:
Yeah, sure. Okay. Well, finally, what advice do you have for companies to improve retention, to try to minimize the likelihood that their senior talent is going to take your call or a call from one of your competitors?
Chris Craig:
As I mentioned earlier, that assessment top to bottom of who your key people are and to sit down with them with the knowledge that they’re getting called upon and you’re getting called upon and make sure that vision is aligned, even down to the point of creating an equity offering to them or having some long-term incentive plan in place to make sure that they’re locked down as best that can be. Because it is the world that we’re living in and the war for talent is real and they’re getting called upon by companies like ours every day.
Chris Kramer:
Got it. Lastly, in closing, how can people reach you?
Chris Craig:
Well, our headquarters are here in Irvine. Our website is www.mbexec.com. Just type in “McDermott + Bull.” We’re all over.
Chris Kramer
Okay. Awesome. Thanks so much, Chris. Great chatting with you.
Chris Craig:
Thank you, Chris, for the time. I appreciate it.
Chase Hoover:
All right, everybody, hope you enjoyed that conversation between Chris Craig and Chris Kramer. You know the drill, now for the fine print. This podcast is for general informational purposes only. It does not create an advisor-client relationship between Acuity Advisors and the listener or reader and is not intended as advice for a specific situation, and as always, we have to thank our gracious sponsor, Acuity Advisors. Hope you tune in next time and in the meantime, take care.