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CTO/VP Software Engineering for VC-funded Cleantech Start-up Changing Consumer Behavior

Measuring & Delivering Energy Savings

Our client  is a leading energy software company founded in 2007. Based in Boston, MA and privately held, The Company has developed patent-pending technology that enables them to retrieve utility data on behalf of virtually any household in America. Utilizing that technology, the company is the richest residential energy efficiency platform available today, and serves both customers and a variety of institutions that care about energy efficiency with its platform and the technology that underlies it. Its platform helps people to understand their energy use and be incentivized to save, as well as enables individuals to interact with and track their electric, gas, and water usage online.

The Position

The CTO/VP Engineering’s role is to oversee day to day activities of the software product development team for all of Company offerings. The role will build out and directly supervise a team of architects, software developers, quality assurance, and business analysts; identify risk and opportunity areas; and coordinate all software development activities.

This role will also work closely with Product Strategy and manage the Lead Technical Architect to envision and define features in the product roadmap and be accountable for the features development, deployment and support.  In addition to the technical leadership of the team, this role will have full management responsibility and oversight for a cross-functional group of engineering and quality assurance personnel.

Reporting directly to the CEO, the VP Engineering shall:

  • Be chief in charge of translating business goals and objectives into technical framework
  • Manage software architecture, design, development, procurement, and integration. Also manage tier-2 and higher support with business-to-business partners including utilities, etc…
  • Manage short- and long-term staff planning, recruitment, performance management, work assignments, training, mentoring, career development, and recognition or disciplinary action.
  • Achieve cost, schedule, technical and quality performance for delivered software. Compile, maintain, schedule, resource, execute prioritized lists of development projects, including planning and managing the budget and scheduling personnel and vendor contracts to meet project needs. Collect metrics on development performance and report on them.
  • Collaborate with other functional managers (customer facing business units, systems engineering, QA, and operations) to ensure architectural integrity, effective integration and test, and ongoing system stability.
  • Direct any technical subcontractor management including contract negotiation, technical support, budgetary management and program management of various contracts and associated budgets.   Coordinate vendor contracts, deliveries and schedule with affected company parties.  Contract with vendors for services to support engineering while addressing Intellectual Property, Non-Disclosures and Statements of Work.
  • The successful candidate must also have the ability and experience to lead a multi-disciplined organization in a multi-location environment.

    Qualifications

  • Senior-level or leadership experience in a web-based software development environment with 10 or more direct reports.
  • Experience working with product managers and other business stakeholders to set timelines, budget resources, and manage expectations and quality of the development process
  • Advanced understanding of web application programming architectures, including standards for security, scalability and configurability
  • Expertise and experience in implementing and overseeing measures for data security, business continuity, disaster recovery
  • Deep understanding of load balancing and performance optimization  principals for cloud-based high volume/transaction web applications
  • Experience leading development efforts using a variety of different SDLC approaches (RAD, Agile, Scrum, etc.)
  • Experience developing service-oriented architectures for both business-to-business and business-to-consumer customer sets.
  • Outstanding collaboration skills, excellent communication skills, an ability to look at the big picture
  • Essential Job Functions/Responsibilities

  • Lead software and front-end engineers in the specification, design and development and support of all our applications, including websites/products, our core services and our internal and external tools
  • Provide hands-on technical management leadership and support to software development team soon to grow to 12 – 15 engineers
  • Identify skill and performance gaps in current organization and provide improvement plans
  • Improve existing processes and establish new processes for efficient development and high quality output
  • Evaluate and enhance overall development environment, release practices and Quality Assurance methodology
  • Instate and maintain development standards, code reviews, unit testing and integration testing frameworks
  • Maintain overall ownership / accountability for data security, business continuity, disaster recovery
  • Work in tandem with Technical architect and development team to identify and implement new measures for system performance optimization under high load using cloud backbone
  • Lead, recruit, develop and supervise the development team members
  • Evaluate and take accountability for decisions on key technologies adopted
  • Ensure proper development of technical specifications and documentation.
  • Estimate resource usage and timelines for development team
  • Review team members’ detailed design of components/modules/code
  • Provide a good balance of experience and skills in several front-end and/or back-end technologies
  • Strong relational database skills
  • Knowledge of latest web technologies with particular understanding of browser behavior when automating data scraping, open source development platforms like Ruby on Rails, etc.
  • Ability to translate technology choices into business implications
  • Ideal Candidate Profile

    The diagram below illustrates the intersection of competencies critical in the position:

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    VP Product for Online Consumer Community Changing the Face of Healthcare

    This executive search is for a private equity-backed, revenue-generating, 7-year-old high-growth company that represents the next generation in healthcare innovation—PatientsLikeMe brings together patients in e-communities who create insights on their diseases and treatments by sharing information that improve their conditions.  At the same time, these insights bring value to large pharma and biotech companies, influencing the way they develop and deploy drugs.  With more than 100,000 registered consumer patients, PatientsLikeMe re-balances the healthcare system, ultimately returning power to the patient.

    BSG Team Ventures is  retained to identify the VP of Product, an expert in e-community consumer acquisition, engagement, and retention.  With current pharma customers like Merck, Novartis, and Sanofi-Aventis, the Company’s goal is to grow to 2+ million registered users in the next several years.   This role will lead consumer online acquisition, experience & engagement, serving as the internal voice of the consumer.

    MORE COMPANY DETAIL:

    The roots of the company are anchored in one of three brothers who developed ALS, a neuromuscular disease that ultimately proves fatal.  Ben and Jamie wanted to do all they could to help their brother Stephen, and—leveraging their prior career experience and entrepreneurial leanings—decided to try to help their brother gain insights from other patients with ALS in order to improve the understanding of how the disease progresses and what might be done to ease and improve one’s condition.  And so was born PatientsLikeMe, a health data-sharing platform.  The Heywood family’s fight to save Stephen has been chronicled in the book His Brother’s Keeper as well as the documentary “So Much So Fast.”  For more, preview an interesting short video piece on their story at http://www.patientslikeme.com/about.

    The Role

    As VP Product, this consumer web expert needs to have the following 4 experiences as builder-leader:

  • Success in companies whose mission is to acquire & develop vibrant online B2C relationships with consumers who are drawn to affinity groups and online associations
  • Ownership & leadership of the entire consumer lifecycle and product roadmap, from acquisition through engagement & retention
  • Strong grow-it/scale-it-stage experience, having grown companies or divisions from at least $10M to 25M or more in revenues
  • Prior track record of recruiting A-caliber teams with the skills and experiences required to deliver a world-class web-based consumer experience
  • Companies that might be part of this executive’s career progress (although less likely their most current position) include horizontal social networks (Facebook, LinkedIn), online affinity groups (Eons, Weightwatchers, sports fan communities like FanIQ, etc.), social commerce properties (BuyWithMe, Gilt, Groupon), or social gaming destination sites (Gamesville, Worldwinner, Zynga).

    Below is a bubble diagram outlining  key career & functional attributes critical to success for this role:

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    Is Charisma a “must-have” Ingredient for Successful Leaders?

    [This is part 1 of a 3 part series on the evolution of leadership theory—the history, most recent thinking on the topic, and what to look for when trying to identify it, including a look at charisma, executive presence and their contributing roles to successful leadership]

    ___________________________________________________________

    As retained executive search consultants, we are constantly interviewing and assessing executive talent for our clients.  After interviewing these candidates, our clients often reference key characteristics they found (or didn’t) in an executive that are not found in their resumes—charisma, executive presence, or other purported leadership behaviors that are generally thought to be important to success.

    But clients continue to ask questions about these traits that sit in the invisible spectrum.  Is charisma an essential ingredient to leadership? If so, for all sizes and types of companies?  Are there other types of leadership where charisma isn’t present and are they successful and in what types of circumstances? What about management versus leadership?  How do we define the differences, and when is a manager better suited than a leader?  And what’s up with “executive presence”? Is that just another term for leadership, or is it different? How? Are these differences important?

    All great questions.   And—although we won’t be able to answer them all here in appropriate depth and breadth—we’re going to try to lift the curtain a bit.

    With the book and now movie, “Moneyball,” the question of what to look for and what to measure in picking leaders for organizations should be rethought.  In “Moneyball,” the fulcrum of the book is based on a different way of measuring the potential and future performance of pro baseball players.  In the book, the Oakland A’s general manager turned upside down what had been considered the gold standard for sports talent assessment by baseball scouts in favor of a much less obvious and intuitive set of statistics.   Pro baseball would never be the same.

    So, adapting this concept, it’s worth reviewing some popular (mis)perceptions of what makes a leader.

    First principles—What does an organization need: Leaders or Managers?

    Leaders/leadership by its own definition indicates the following situational characteristics—

    Where one is now is not where one should be.  Rather

    1) One should “follow” someone or something to another place, in theory a “better place”

    2) This “better place” is both NOT self-evident (convincing is required), AND

    3) It requires effort to get there, and is not frictionless, calorie-free, or zero-cost.

    Managers, on the other hand, are most often those who create efficient operating systems once the “better place” has been reached.

    Charisma as an essential ingredient to successful leadership—True or False?

    The world “charisma” comes from the Greek word for “gift.”  Charisma is better thought of as a skill that enhances leadership effectiveness by dint of a superior ability to influence others to change their initial positions, perspectives, or opinions.

    I was first offered a deeper insight into the concept of charisma in leadership by the teachings of Rakesh Khurana, a professor at Harvard Business School.  Dr. Khurana has done extensive research and writing on the topic, from articles in Harvard Business Review (“Curse of the Superstar CEO”, HBR 2002, http://hbr.org/2002/09/the-curse-of-the-superstar-ceo/ar/1) to complete books on the topic (Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs http://www.amazon.com/Searching-Corporate-Savior-Irrational-Charismatic/dp/0691074372).  More popular business authors like Jim Collins, author of Good to Great, wrote about “Level 5 Leadership” and addressed charisma in relation to this “top leadership level.”  Collins has been quoted as saying, “Being charismatic and wrong is a bad combination,” and “I’d go so far as to say that [The Level 5 leaders Collins chronicled in the good-to-great success case studies in his book] were uncharismatic for the most part.”  (http://www.amazon.com/Good-Great-Companies-Leap-Others/dp/0066620996/ref=pd_sxp_grid_pt_0_0)

    Regardless of good or bad use of charisma, there is still a great deal of additional research and writing on the topic.  Clearly we associate the effects of charisma with enhanced motivation, inspiration and intellectual stimulation it engenders in the listener.  But can it be taught?  One branch of research surrounds this argument.   If you read the works of Professor Robert House at University of Pennsylvania’s Wharton School, he deconstructs “how” charisma works.  From House’s work, one could infer that charismatic behavior may be both “born in,” but also taught with enough study and practice (http://knowledge.wharton.upenn.edu/papers/674.pdf).

    The Dangers of Charisma

    What are the pitfalls of charisma in the corporate context?

    • Charismatic executives tend to suppress individual thinking and leadership development in subordinate teams.  Leaders with charisma can create a culture of “followers,” rather than young, budding leaders and the next generation of a company’s executive team.  Narcissistic tendencies don’t allow others to flourish instead creating dominant monolithic thinking, “I don’t even argue with him anymore because I always lose.”

    • This in turn leads to challenges for succession planning.  Often charismatic leaders leave a vacuum of next generation leaders, having created instead a strong set of followers.

    • Life of the party isn’t always “engine of achievement.”  Charisma can be used to achieve personal goals as the primary objective, at the expense of organizational goals.  There is no question it is always best to have alignment of personal and organizational goals so that by achieving one, the other is also achieved.  However, this mandates that the charismatic leader be programmed to strive for a “win-win,” vs. a “win-lose.”   In fancy organizational behaviorist language, this ends up being the difference between those leaders who have “higher activity inhibition” and those who have lower levels.  If a leader has lower activity inhibition, they tend to seek win-lose outcomes with the “win” side being the individual over the organization.

    What can the charismatic leader do to counteract negative repercussions?

    The charismatic leader needs to ensure that they either surrounds themselves with others who have strong self-confidence and ideation, or that the charismatic leader makes a great deal of effort to cultivate an environment open to sharing other opinions, perspectives, and ideas rather than defaulting to “the charismatic boss.”

    As referenced earlier, charisma is really more situationally valuable.  Typically, charisma is most valuable when change is the goal.  Innovation, revolution, new paradigm adoptions are the best projects for the charismatic toolbox.

    Some popular examples of positively and negatively directed charisma include the following:

    Good = Sir Ernest Shackleton, and the failed Antarctica expedition he saved | John F. Kennedy | Martin Luther King

    Bad = Hitler |Jim Jones and the 909 deaths in the Jonestown massacre in 1978 where Jones as dogmatic cult leader got all his followers to commit mass suicide

    A few additional interesting links to resources on charisma and leadership

    http://money.cnn.com/magazines/fortune/fortune_archive/1996/01/15/207161/index.htm [lighter reading]

    http://www.aom.pace.edu/amj/february2001/waldman.pdf [heavier reading]

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    VP Sales Executive Compensation Highlights, SaaS Software

    As executive recruiters, we often get asked about executive compensation.

    So often—after we finish up a search—we aggregate the compensation data we’ve collected across the search, and share it back with the innovation community. In this case, we recently finished a VP Sales  search for a profitable SaaS software client located here in the Northeast  in November, 2011.

    Here is the snapshot of compensation highlights from our search—

    The footnote at the bottom of the image above articulates the following criteria for the majority of companies in this data set:

  • SaaS software companies (all B2B)
  • This compensation data was specifically from those who had at minimum national sales responsibility for the U.S.  Regional Sales VPs were not included (i.e., Eastern, Central, or Western Regional VP Sales titles)
  • Although a number of these companies had venture capital/external funding, many were also larger publicly traded companies
  • Profitable stage
  • Companies were located in across the US, with about half located in the Northeast, 25% in the Southeast, and 25% in the Northwest US (Northern CA & WA)
  • There are many variables to consider that influence where to pinpoint one’s own compensation vis-a-vis the above:

  • The more  urban locations,  the more likely compensation will be higher
  • The later the stage of company development, the lower the incentive compensation, the earlier the higher.  Yes, this is counter-intuitive, but usually the larger the company, the more mature and capped the incentive compensation plans become
  • Note that no equity has been included in this data set of compensation highlights.  This does not mean to imply that no equity was held by many of the VP Sales executives surveyed.    However, in general, equity is considered less important for the sales team and sales leaders, as their incentive compensation plans serve a similar purpose, simply allowing the sales team and sales leadership to “cash-and-carry” on a quarterly and annual basis more so than the rest of the executive team members who do not share in the same incentive structures and therefore rely on smaller annual bonuses, and typically a larger stakeholder role.
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    CEO Survey, Fall 2011 | Questions

    How & What Growth-stage CEOs Are Ending 2011 & Planning for 2012

    Below is the hyperlink to take the Q4 CEO peers speed-survey, exclusively for growth-stage CEOs. This survey focuses on “How & What Growth-stage CEOs are Ending 2011 & Planning for 2012″

    This shouldn’t take more than 5 minutes of a busy CEO’s time–

    We here at BSG Team Ventures periodically take the temperature of the markets we serve. The survey is no more than 15 questions, most simple multiple-choice.

    These surveys are created and compiled by BSG Team Ventures as a courtesy to our executive ecosystem with the belief that knowledge is power. Aggregated peer-provided knowledge is “actionable power.”

    To compare how you’re feeling a year later with the survey results from Q4 2010, titled “CEOs Plan for 2011”, go to http://www.bostonsearchgroup.com/blog/q4-2010-ceo-survey-of-growth-stage-companies/

    We make an effort to survey only those who fit the category (in this case, sitting CEOs or board member/founders of technology/science-driven growth-stage companies). [Note, if you don't fit the aforementioned description, please refrain from responding.]

    Feel free to forward to the qualified CEOs in your sphere of influence. The more data generated, the more accurate the trend lines.

    All responses are anonymous due to the web-based survey technology employed.

    We will forward the survey results within the next two weeks to the email address on file. Please let us know if there is another email address you wish us to send the results to as well.

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    VP Sales Americas Search for Leading Enterprise IT Security & Compliance Provider

    The Company

    Securing Business

    The Company is one of the largest global providers of IT-security solutions and IT-Services with a focus on consulting, implementation and services.

    The Company has offices in 8 countries – UK, Germany, USA, France, Switzerland, Austria, United Arab Emirates and Singapore with around 500 employees. The Company has more than 3,500 blue-chip customers and a range of government agencies.

    Offerings include:

    • Consulting in all aspects of IT-Security

    • Continuous development of a holistic IT-Security Service Portfolio via our Managed Security Service Center and Call Center

    • Close relationship with the key product vendors

    • Holistic portfolio of IT-Security Solutions and Products

    The Position

    As a key member of the Americas executive team, the VP Sales will be the primary owner and driver of revenues for the Company, responsible for selling Managed and Professional Services (MAPS) solutions keying off of its core overlapping areas of service excellence:

    o Data Protection

    o Mobility

    o Threats & Vulnerabilities

    o Risk & Compliance (GRC)

    o Cloud (securing the cloud)

    The VP Sales will be part of the senior operating team for the Americas with principal responsibilities including:

    • Exceed quarterly and annual revenue targets

    • Develop & execute strategic sales and distribution plan: provide strategic and tactical thinking, as well as broad business insight. Take a leadership role in developing the sales strategy to support the growth of the business, while continuing to drive gross margins, quarterly bookings goals, and other KPIs

    • Peer with the Professional Services team on client prospecting, engagement, and delivery

    • Divisional revenue ownership

    • Sales team-building

    • Sales leadership and sales pipeline management

    • Develop and managing detailed budgeting & forecasting

    • Lead the management, maintenance & development of key partnerships in upstream indirect sales channels

    • Foster teamwork and create a positive work environment for a geographically disparate sales force

    • Lead and develop a dynamic and creative sales infrastructure that fits the needs of the business and the products the Company provides to its customers

    • Drive internal discussion about strategies, ideas, new opportunities and the best methods for achieving success in a changing marketplace

    • Consult with customers on their needs and provide feedback to other departments supporting sales efforts

    • Forecast, track and report sales performance using internal tools and applications such as Salesforce.com

    • Conduct internal pipeline meetings and reviews with the executive team

    • Manage overall budget associated with sales plan

    • Lead team in structuring strategic and integrated partnerships with key customers

    • Personally assist in closing large deals and managing strategic accounts

    • Travel as needed to ensure that sales and client needs are met and exceeded

    Ideal Candidate Profile

    The diagram below illustrates a comprehensive intersection of competencies critical in the VP Sales position:

    Team

    Reporting to the President of the Americas, the VP Sales currently manages and leads a sales team of 11.

    Compensation

    Compensation is competitive with the position’s requirements. In a performance-based environment, this will include base salary and incentive bonus structure based on both individual and company milestones.

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    VP Marketing Search | Venture-backed members-only deals e-commerce start-up

    The Position

    Reporting directly to the CEO, the Vice President of Marketing will play a senior leadership role within the management team, overseeing all branding, customer acquisition, public relations, and channel marketing efforts.

    Core Responsibilities: This position will be responsible for the overall success of the Company’s consumer offering, including user acquisition/adoption/retention and general management of the brand.   The VP Marketing will build a business-to-consumer marketing function focused on the customer experience. He/she will also identify opportunities for increasing value and optimizing revenue growth and will ensure consistency in messaging across integrated marketing channels.

    The VP Marketing will lead the Company’s  strategic and tactical consumer marketing initiatives and will assist with the development of the overall corporate strategy, vision, messaging, and product direction. He/she will be responsible for the creation of an innovative marketing strategy and outreach program for the Company.  He/she will also act as a key external evangelist for the company when called upon.

    Specific responsibilities include:

  • Drive the Company’s  market research and segmentation, brand strategy, demand creation, channel definition and affiliate marketing programs, marketing communications, advertising, public relations, events, web presence, and sales support efforts
  • Driving quantitative marketing metrics and dashboard that support a real-time feedback loop and test-and-learn marketing approach
  • Digital Marketing – eg, social media, blog marketing, SEO, SEM, etc.
  • Linear Marketing – e.g., radio, TV, etc.
  • Brand – Define and integrate a unified corporate message, image, and brand across the Company’s  product, its website, its presentations, and its marketing collateral.  Positioning, messaging, and the managing of any agency or design resources.
  • Lead the budgeting and execution of marketing plans encompassing all products and consumer channels, driving a very cost-effective program that is appropriate to the company’s stage and funding
  • Work with supply-side partners  to define and drive programs that increase the leverage effect of their brand involvement and reach
  • Be the leading advocate for the evolution of the end user experience that is enabled by the Company’s  products
  • Lead participation within relevant industry forums
  • Working closely with internal engineering resources, and in particular with the VP of Customer Analytics and Pricing, and VP Product
  • Qualifications & Experience

  • Prior successful experience as a consumer oriented marketing executive focused on the delivery of a shopping experience to consumers via the web and mobile devices that significantly and positively impact business results and revenue
  • A strong understanding of the overall business models used in the sale of consumer focused e-commerce
  • Extensive understanding of U.S. consumer markets with the ability to sense and adapt to consumer requirements at this time and in the future
  • Current relationships with key executives at consumer applications and content providers, and media and entertainment companies
  • Prior experience and recognition as a market and brand creator
  • A successful, hands-on track record managing all marketing functions in a dynamic, start-up environment
  • Proven ability to developing and implementing creative and resourceful guerilla marketing strategies and programs
  • A smart and decisive executive with proven analytical ability and strategic business and product development/management skills
  • B.A. or B.S. is required. An M.B.A. or other advanced degree is desired.
  • Skills & Personal Characteristics

  • Defined by others as smart, capable, hands-on, energetic, and someone who possess a strong entrepreneurial spirit.
  • A product and corporate evangelist with outstanding strategic and conceptual thinking skills.  Someone who is able to adjust rapidly to changing market conditions and new opportunities.
  • A strong, assertive personality, able to make a creative contribution and build buy-in for ideas as well as integrate with the ideas of others.
  • Ideal Candidate Profile

    The following diagram illustrates the intersection of competencies critical in the VP Marketing position:

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    5 Hiring Tips for Recruiting Executive Talent in 2011

    Planning for executive staff additions or replacements seems to be higher on CEOs’ New Year’s resolutions again in 2011. Just a year ago, in December 2009 and January 2010, CEOs broke out of their executive hiring deep-freeze and search activity showed unprecedented momentum.  CEOs had been holding their breath for all of 2009, witnessing Wall Street carnage, plummeting consumer spending, and massive macro-economic uncertainty.  Just as consumers in the 2010 Christmas season finally decided to spend more,  boards of directors and CEOs are counting on better economic conditions in 2011 and executive hiring is again back on the corporate shopping list (see recent growth-stage CEO survey, Q4 2010, http://www.bostonsearchgroup.com/blog/q4-2010-ceo-survey-of-growth-stage-companies/)

    So, what to be aware of when looking at executive talent acquisition this year?

    Here are 5 tips:

    1)     Candidate shelf-life is shorter than you think

    Just as the warning on automobiles counsels that “objects in mirror are closer than they appear,” a similar mantra exists for talented executives.  Recession is a great retention tool, and has allowed many CEOs to keep their executives with little fear of their departure.  However, today’s market for executive talent is heating up.  We’ve read the articles about companies poaching Google talent, but this is not exclusively in Silicon Valley, or with the big tech behemoths.  Talented executives may be willing to consider a move, but they are savvier than ever, will look to try to identify several opportunities to evaluate in parallel, and pick the best perceived fit in a narrow time window.  Companies who in 2008 and 2009 had the luxury of interviewing twice as many candidates as normal due to temporary supply/demand imbalances no longer have that extra time on their side to interview more, or take longer to make decisions.  Candidate shelf-life is finite.  And the market window is shorter than we might think for any given talented executive.

    2) Q1 2011 bonus payouts make candidate resignations difficult

    Candidates may have a hard time giving notice in Q1 due to pending 2010 bonus payouts.   There are often 2 options—

    a)     The finalist candidate will accept the new company’s offer, but won’t give their notice until after bonus checks have been cut (sometimes coming as late as February or early March)

    b)     Finalist candidates will ask that their new companies include in the offer a signing bonus that helps to “keep them whole” on any bonuses they are walking away from.  This can quickly get expensive for the new employer, with numbers ranging from $50,000 or $100,000, to $.5M or more, depending upon the position, the compensation package, etc.

    3) Relo has always been hard, but today’s real estate values make it much harder

    Many executives are upside down in their residential real estate.  Again, this creates a two option decision for the new employer—

    a)     Increase the boilerplate relocation package to include relief on any equity deficit the executive faces in selling in a down market.

    b)     Be more flexible on where the executive can live.  Yes, there is no question that a best practice is to have the executive live within an easy drive of corporate HQ.  However, with ubiquitous email access in trains, planes, and automobiles, there is an every growing body of evidence that “local” isn’t the only choice for executive domicile.

    4)  Equity is often no longer the great equalizer

    When the public markets allowed IPOs more readily, and there was generally more liquidity for fast growth and mature companies alike, the tradition of 10-20% base salary increases  in moving from one company to another became subordinated to “how much stock/equity can I get?”  That popular refrain has been replaced by a much more pragmatic and balanced approach to executive compensation, where cash is again king.  Except in rare circumstances, executives want to have some of their incentive on a cash basis, balanced off with an equity upside. (for example of CEO Equity Compensation Calculator, see http://www.bostonsearchgroup.com/blog/ceo-equity-compensation-calculator/)

    5) Executives know now more than ever what their peers earn

    Whether it be due to frequently published executive compensation surveys, unprecedented numbers of databases providing comparables earnings info, or newly imposed Sarbanes-Oxley disclosure rules on public company executive compensation, executives are much more sophisticated about what their worth on the open market may be.  They also share much more readily with their peer group.  Employers in 2011 should be cognizant of this when crafting a package, and care should be taken to engage the executive in what they feel their worth is, and the data/information they are using to establish that value. (for example, see http://www.bostonsearchgroup.com/blog/venturebacked-executive-compensation-study-vp-levels-west-east/)

    6)     [bonus tip] International is more important than ever in ‘11

    Yes, China and India may both represent great offshoring opportunity and new revenue markets, however talent from these markets are an equally or more important asset.  Just sending US citizens abroad as ex-pats doesn’t cut it anymore.  Hiring foreign nationals with experiences in certain international target markets is key to breakout performance.  An Indian national with several years experience selling/managing in Asia is a wonderful combination of skills and experience critical in driving companies through the next level of global growth (for more, see http://www.bostonsearchgroup.com/blog/collision-course-between-executive-leadership-succession-and-global-demographic-trends-in-coming-decade/)

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    Q4 2010 CEO Survey of Growth-stage Companies | CEOs plan for 2011

    Each quarter we survey growth stage CEOs who are running innovation driven companies.  This quarter,  we had more than 60 CEOs responding.  CEOs were running companies in broadly defined technology (software, hardware, semiconductor, telecom), Internet (e-commerce, media, social, entertainment), medical devices, biotech, and cleantech / renewable energy sectors.

    A note on methodology.  We send these surveys only to those who fit the category (in this case, sitting CEOs or board member/founders of technology/science-driven growth-stage companies).    All responses were anonymous due to the web-based survey technology employed. The majority of respondents were in the United States, with the highest concentration on the East and West coasts (New York, Boston, and San Francisco/Silicon Valley areas).

    For prior survey results from Q2 2010, titled “Impact of Economy and Renewed Growth”, go to http://www.bostonsearchgroup.com/blog/ceo-survey-results-q2-2010-%e2%80%93-impact-of-economy-renewed-growth/ .

    ECONOMIC CLIMATE

    The first set of questions was around the economic conditions in which each CEO felt s/he was operating.    One question we continue to ask and re-ask over the last six quarters or so targets the turbulence in the macro- economic climate.  It is interesting to compare CEO responses to the same question, “Do you anticipate a double dip in the near term future?”

    * In Q3 2009, more than half  (54%) of CEOs polled were expecting a double dip, and planning accordingly

    * In our Q2 2010 survey,  again 50% felt a second economic correction was likely, the biggest percentage of those CEOs believing it would be in either Q3 2010 or sometime in 2011.  The other half  of CEOs felt the specter of recession was behind them

    * Currently in Q4 CEOs were consistent with prior quarters with a bit more than 50% indicating they didn’t feel a double dip was likely, and the other half of the CEOs saying either a 50/50 probability or greater (16% feeling more likely than not)

    So less than 1 in 5 CEOs feel another economic dip is likely.  No CEOs selected the ” greater than 75%” probability.

    It’s interesting to do a meta graph of the changing CEO sentiment on this question.  Surprisingly, the graph would be sloping downward, but not as much as many would hope.  The high point was certainly back in Q3 2009, but even throughout 2010, as many CEOs were fearful of a negative correction as those who felt it was behind us.  No doubt this “lack of confidence” index doesn’t inspire the CEO with a swashbuckling, damn-the-torpedoes-full-speed-ahead attitude toward growing their companies.  Rather, it makes CEOs think in short-term windows, perhaps 3 months at a time, with little appetite to make medium or long-term bets.

    Those CEOs who felt another downturn was likey referenced several factors that might tip the scales negative–  gridlock in Congress due to midterm elections and likelihood that Democrats lose congressional majority, a belief that a bad Q4 holiday retail shopping was likely, and the persistent overhang of ongoing commercial and residential loan defaults.

    As for when another economic dip might occur if it were to occur, the vast majority of CEOs pointed to Q1, 2011, with Q4 of this year and Q2 2011 tying for second at 18% each.

    STRATEGY

    Almost 50% of CEOs polled said that they had either made a shift in strategy in 2010, or were planning to in the near future.  Granted, growth-stage companies are prone to shifting strategy until they land upon the best formula for significant and sustainable growth.  However ~50% is a big number, and clearly a chunk of those companies have been driven to rethink their strategies because of the challenging economic climate, the concern over the future, and the possibility that 2010 might represent “the new normal” where with no economic “rising tide” no help generated to float all company boats as in periods of economic expansion in the past (1997-2000, 2005-2008, etc).

    CASH FLOW

    The majority of CEO survey respondents (49%) indicated that they were still planning on burning cash over the next 2 quarters.  24% indicated they would be profitable.  CEO comments regarding this question indicated an overwhelming drive toward cash flow break even.  That was the big push and focus for their companies in 2010, and if they hadn’t achieved it yet, they were gunning to by end of the first quarter of 2011.  CEOs also commented that they were trying to run their companies at break even, with any extra EBIT being reinvested back into the company for additional growth.

    COST REDUCTION PLANS

    When asked what were the top 3 areas CEOs were targeting for cost reduction, the following table summarizes their responses, representing a combination of spend reduction and staff reduction in non-core areas.  There was a preference by CEOs to favor non-staff cuts over cutting headcount if at all possible, but many acknowledged that in order to make meaningful cuts, staff had  to be considered in the equation.

    CEO responses when asked about increasesin spend were logical.  The top three in order were sales, marketing, and R&D.  Many of the comments about this question noted the fact that outside of directly growing revenues, additional spend was hard to build in when many CEOs are driving toward a minimum cash-neutral mandate and economic uncertainties are driving CEOs to think conservatively rather than expansively.

    [Click on "more" below for remaining 8 slides and narrative from Q4 2010 CEO survey]

    More…

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    How long do executive searches take? How many get completed? How many candidates interviewed?

    Survey of 50 of the Fortune 500 companies reveals how long executive searches take, the average number of candidates interviewed,  how many of them actually get completed, and what percentage of those candidates are female or minority.

    As executive search consultants, we often get asked a series of questions by our client companies surrounding the executive search process.  Many of these questions are driven at gathering market intelligence around our executive recruiting.   The aim?  To create some third-party benchmarks to help companies understand whether a search has gone about average, better than average, or (gulp) “below the mean.”  Keep in mind, these could be internally run searches done in the “DIY” fashion.  Or searches executed by in-house recruiting departments or human resources staff.

    Historically, there has been precious little data generated by third-party sources with enough statistical heft to garner much credibility.

    One of the sources that at least aims to collect good data is created by David Lord, who heads the Executive Search Information Services organization.  David is a veteran observer and analyst of the executive recruiting industry, and has run a roundtable of senior talent executives from Fortune 500 companies for the last 20 years or so.  For further information, see www.davidlord.com.  Some of the data that ESIS collects is via an annual survey of those senior human resources executives who participate in these roundtables.

    For our clients, we often reference ESIS data when made available.  At our request, below is a data table we created from some of the information ESIS kindly provided that shows some longitudinal data over the last 4  years, 2006, 2008, and 2009.

    Trends worthy of note?

    Search completion times have come down by almost a month from near 5 months down to 3.5 months.  Good news for all, the company, the candidates, and the search firm.   It will be interesting to see if this flattens out, or jumps back up for 2010 due to tightening talent pool on the supply side as the economy began to pick back up this year.

    Number of candidates interviewed per hire dropped from 6.5 to ~5.  This could be an indication of a company’s increasing confidence in what they’re looking for, or an indication of sense of urgency around key hiring to help companies as they struggled through a very tough 2009.

    Female and minority hiring at the executive level has improved, but not as much as many would have thought. Women executives were hired 29% of the time in 2009 versus 23% in 2006.  Compared to the workforce percentages of women to men, this is still inversely proportioned.  Minorities have seen a nominal increase of 1% more hired over  the last 5 years, which–when considering rounding errors– is effectively no increase at all.

    Search completion rates have remained flat, with 4 out 5 searches engaged getting completed. Over the last 5 years,  search completion rates have hovered around 80%.  This is reported by corporations only, so subject to different numbers search firms might proffer.

    Retained executive search statistics, 2006-2009

    For deeper data, please contact ESIS.

    Additional footnotes worthy of note:

    1) For some reason, executive search firms specializing in the financial services sectors and related areas often calculate their “days to complete” numbers counting only business days, excluding weekends and bank holidays.  This can often make comparing normative data a bit more troublesome

    2) Days to completion numbers are calculated using the date of accepted offer of employment, not candidate start date/first day of work.  This is done because resignation periods vary widely and would undermine data integrity.

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