Situation: A company’s Sales Manager is likely to retire in the next two years, but has no strict timeline. This individual is the chief rain-maker and has been for many years. The subject of replacing this individual has been sensitive when mentioned in the past. How do you replace a Sales Manager and how do you manage the transition?
Advice from the CEOs:
Have a frank conversation with the current Sales Manager. For the company to thrive it is necessary to start selecting and training an individual to take his place when he retires. Have him help develop the recruitment and transition plan. Also involve your Customer Service Manager.
o Hire a person like the current Sales Manager and allow for up to two years for the new individual to get up to speed.
o Find someone who is currently associated with one of your key customers and who has contacts.
o Adjust your compensation scheme to focus on growth and customer diversification with enhanced commissions for bringing in these accounts.
To ease the transition, start to build a different customer relations structure – one where the CEO has more engagement with key customers.
An alternative to replacing the Sales Manager is to create a different organizational structure. For example, hire a COO who will eventually take over business development as well. Think longer term about to how you want the management structure to grow. Build your future vision of the company into this process.
Situation: A company has been advised to augment their Board of Directors. The principal objective is to access mentorship and advice, particularly in the areas of gaining critical mass and marketing. How do you select and pay Board members?
Advice from the CEOs:
If the principal needs are mentorship and advice in growth and marketing, pursue an Advisory Board first. Compensation for Advisory Board members is much lower and saves the need to purchase expensive Directors and Officers Insurance for Board Members. If, in the future, you decide to expand your Board, you can elevate your best Advisory Board members to your Board.
Offer Advisory Board members one-year service commitments. Particularly if the company is early-stage needs may change rapidly.
As to specific members, select Board members who will help you hold the company to its vision and mission, including a member who offers financial advice and experience for the CFO, a resources and benefits expert, and industry leaders. Align these selections with the business model of the company.
If your patent portfolio is a critical asset, consider an attorney with experience in infringement issues – as distinct from expertise in IP.
Compensation for Advisory Board or BOD members need not be uniform. Key advisors often are compensated more than strategic advisors. Enthusiasts may serve as advisors for free.
Stock compensation for Board members may be as low as 1%, pre-funding. They will be diluted as you go through successive rounds of funding. You may offer your chairperson more than regular members.
Situation: A Silicon Valley company finds it difficult to find good candidates locally, and also to attract qualified distant candidates to the Bay Area. They want to explore hiring talented individuals out of local colleges and developing them within the company. What are best practices hiring right out of college?
Advice from the CEOs:
Hiring out of college or graduate school is a good way to find long-term hires who can grow into positions. It is less useful if your need is for experienced and tenured individuals who can immediately get up to speed in a position of significant responsibility.
As in any hiring situation, you should review your hiring process before you start to hire. Many companies hire locally based on who applies or who’s a friend of a friend, rather than making an effort to recruit the best candidates.
What is your infrastructure? Do you have a system for identifying candidates who best fit your culture and needs? Do you have personnel who can mentor a new college hire, or are you willing to devote significant time to this?
An alternative is to hire consultants to develop a recruiting process or to mentor the new hire in specific areas of development during their first year or two on the job.
One CEO sponsors an annual competition at Santa Clara University for papers in his company’s field. This has won him considerable support at the school, and gives him access to promising students, several of whom he has hired. An advantage of this program is that the company gets to know the individuals and the quality of their work before making a commitment to offer them either an internship or a full-time position.
Be cautious using candidate assessment tools with college hires. An individual’s profile may shift significantly once they start working because there is a significant shift in priorities once an individual leaves student life.