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Succession Planning in A Volatile Market
Major market fluctuations and disruptions, a pandemic, potential recession, generational challenges in the workplace, and quiet quitting…who can keep up with it all? I have been in the executive search industry for 25 years working across multiple industry segments in the C-Suite with the past 10 years of my career focusing on the not-for-profit sector, and I’ve never seen a market so hot (for candidates), yet so volatile for employers. This type of job market instability not only makes hiring the right candidate difficult but also makes keeping amazing talent and planning for the company’s future leadership seem nearly impossible.
Long gone are the days when employees felt attached to an employer or accepted a position with the expectation of staying at the same company for over a decade, not to mention the rest of their career. Now candidates have so many choices, they’re quick to leave for seemingly greener pastures or more money with little hesitation and can be very selective when considering an opportunity or looking at any company as their “career future” or “home”. In addition, hybrid work models and competitive salaries are driving premier candidates to be non-committal and difficult to acquire. Counteroffers, multiple offers and stay bonuses are abundant and have become the norm rather than the exception. This competitive environment has clients asking me how they can not only find the future leaders of their business, but also how do they keep them at their company long enough to transition them into an executive leadership role?
How Do I Find Future Executive Leadership in Volatile Markets?
When I initiate a search with my clients, one of the first things we do is ensure that the compensation being offered for the role is competitive in market. The last thing you want is to be upside down in a search when it comes time to present an offer. Depending upon how long it’s been since the position has been benchmarked, I will put them in touch with a compensation consultant who can perform a compensation analysis on the role and look at real data to determine an appropriate hiring range. However, in this uncertain market, comp data is being tested in real time by what we are seeing and dealing with in the market in that moment. Similar to selling a home where comps in the area dictate how you will price your home in the market, the same rings true for candidate compensation.
I think it is imperative to request that your search firm or HR department communicate the compensation requirements that they are hearing from the candidates they are interviewing to ensure you are aligned with total compensation expectations for the positions you are filling. Employers are having to pull out all the stops to not only recruit the right executive, but also to retain top performers that can make a positive impact on the future of their company.
What Assets to Leverage when Hiring a New Executive
1. Signing Bonuses
Nonprofits traditionally cannot compete with the salary that the private sector can bear. A way around this is to offer a signing bonus where 50% is paid upon the start date and the remainder after a certain period of time to ensure the new hire will stay. Be sure to include a clause that if they leave before a year, the bonus will need to be paid back based on a prorated schedule to protect the organization.
2. Relocation Assistance
While many organizations, especially nonprofits, are not in a position to buy a candidate’s home, they can help with relocation assistance based on what they can afford to offer.
This can include the following types of assistance:
- Paying to move the candidates’ household goods.
- Offering temporary housing assistance – Relocating and finding a new home can be extremely stressful; offering to contribute to or completely pay for temporary housing will relieve candidate stress, especially in the tight housing market that we find ourselves in now.
- Offer mortgage/rental assistance if the candidate is relocating to an area that has a significantly higher cost of living. I placed a candidate recently who moved from a small town in South Carolina to Salt Lake City and her mortgage alone was going to be 3X that of what she paid in SC. Fortunately, the Board was in the position to offer her an additional $2K/month for a year to help ease her transition.
3. Education/Career Development
Whether it’s to offer your employees reimbursements to go back to school, obtain a certification or take a leadership development program, anything that brings the candidate value and enhances their career skills shows that you are invested in and care about their future.
Succession Planning in an Evolving Candidate Market
So, how does an organization keep up with our evolving candidate-driven market? The pool of specialized talent is smaller than the openings, and that’s clearly an issue. Compounding this obstacle, many individuals elected to take early retirement due to COVID while Boomer cohorts are naturally retiring. Hopefully, your organization is prepared for these departures by having a strong succession plan in place. The #1 reason why my clients come to me to fill their CEO role is due to the retirement of a long-time leader and the organization is not prepared for this departure.
If You are Not Prepared, there are Several Hiring Options for You to Consider:
- Interim Leadership – A quality, quick fix is to hire someone to fill in the role on an interim basis. This approach will give your Board time to determine the best way to fill the role. There might be someone within your organization who can take the internal position. If not, then you will have to find an external consultant through your existing contacts or through an Interim Leadership search firm.
- Look Internally – Promoting your internal employees is a great way to show your workforce that people can move up, and that there is a career path within your organization. I consulted with my clients to assess their internal leaders to determine if they will be a fit for the open position. If they are not a good fit, this exercise provides an excellent opportunity for leadership (or the search firm) to share with the candidates the gaps that exist in their background and areas where they can develop in their career to be prepared for an executive role.
- Look Externally – If you lack the internal expertise that you require and you need to look externally, first determine if you have the internal resources that you will need to perform the search. I have found that nonprofit Boards traditionally utilize a search firm to find their next leader given that nonprofit Boards are volunteers and often have full-time jobs, and it can be awkward for an internal team to hire their boss.
Talent Retention is Key
Once you have a good leader in place, you need to be sure that you can not only keep that individual but also retain and grow the top talent overall within your organization. It’s critical to have a strong new leader assimilation process in place and offer hybrid work options that will provide your employees with the work-life balance that they have become accustomed to in recent years. Offer days off for volunteer efforts or give employees special perks, like their birthday off, to show them that you care about their well-being and mental health. All of us need time to recharge our batteries and when it does not come from their vacation time, it’s very appreciated. Most of all, ensure that you are doing all you can to make your employees feel valued, that their work matters and that they are aware how their contributions are making a positive impact on the organization.
About the Author: Rachel Bender Meyer is a Vice President on the StevenDouglas Executive Search team, bringing a wealth of industry-specific experience from decades working in Executive Search. She works on local, regional, and national searches across multiple specialties and brings a deep understanding of client needs when filling C-Suite roles. If you have any questions about success ion planning, don’t hesitate to reach out to Rachel with questions anytime at 804.334.1646 or [email protected]