How to Recruit & Build Top Managers : Top Six Things to Do for Companies Wanting to Scale-up Their Business

The entrepreneur faces a moment of truth when he and his partners have grown the company to a sufficient degree to take it to the next level. At that stage it becomes imperative to hire a professional as a functional head say a CFO. Obviously the top manager needs to fill in the skill set the founders may lack. It must also be recognized by founders that this skill set is absolutely vital to succeed.

The founding partners find it difficult (esp. when founders are friends and family ) to cede control to the CFO designate, since it also means giving up certain powers and also business secrets (which the entrepreneur is paranoid about) .


The Top Six Things to consider while setting up a top management team are outlined below

Try and first source from professionals in your network.

They might not be the best person suited for the job, but 'trust' is an important criteria at this stage, esp. for a CFO. In circumstances where you cannot find individuals who match at least 50% of skill set required, then use a professional head hunter and do an extensive reference check.

Have an extensive interview process to determine fit

For a business at an early stage, it is important that the top manager can hit the ground running fast. To do this the prospect should broadly agree with the vision of the founders, should have a first hand experience of the company culture and should be exposed to the business model. After both sides are convinced , then the prospect should be made an offer. One cannot over-emphasize the need to make the interview process extensive and lengthy.




Have a defined job role and also outline the powers that will be delegated

The entrepreneurs are very task/activity driven. So they are not great in putting down detailed job description that outlines the scope of work, key responsibilities, key success factors and powers that will be delegated to the top manager. The top manager typically will be coming from the environment where he expects the job description to be given. Entrepreneurs could take consulting help to map out the various competencies they need and how they need to develop.

Implement a performance management system like a Balanced Scorecard, and explain to the senior managers what role they play in value creation and what will the measures to track the value being created by an individual, team, function and the business.

In many businesses that are working in a fast changing environment it is important to tell the senior managers that business tactics may change on a frequent basis, which will impact the requirements of the job and also the key success factors. It is useful to define 'flexibility' as a key competency and sound out the senior managers at the ouset.


Work out the compensation and a credible risk-reward equation



Most firms at early stage may not be able to attract talent by paying best-in-class salary or perks. Besides they also do not offer the security of a good established brand name. So any top manager joining firms at this stage is taking some amount of risk. The compensation should have a significant upside in case the top manager is able to achieve the desired business objectives, and the business achieves a desired scale.

Although ESOPs are a good tool to tie-in the top managers with the company's future, most entrepreneurs do not have a disciplined approach to work out the company valuation , capital structure etc. Some consulting help can be used to work this out and communicate it to the top managers. External help makes the process objective and unbiased and gets greater buy-in from the top managers.

A useful practice is to look at valuations of listed companies in the domain, and peg your company valuation accordingly. This benchmarking is also easily understood .
Typically a pool of 5-15% is necessary.



Founders need to spend a lot of time with their top & middle managers

Typically founders are fairly passionate about their products and their customers. They are not used to spend a lot of time on their managers. This can seriously affect alignment and motivation of senior managers in an growing company. The founders need to put up certain disciplines of touching base (30 minute meeting or at worst a phone call) with their top managers on a daily basis. They need to work on consciously at program , which gets the team to spend quality time together, plan together, review together and often resolve issues that are causing confusion/conflict.

Most founders will be shocked by my recommendation of at least 33% of their time committed to senior management team . But there is no point in hiring professionals if they are not aligned, motivated and guided by founders.

Consciously Work at Soft Issues of Culture, Employee Morale & Organizational Climate

While a lot of example abound about great working culture being consciously created (like the Google college culture) every organization will have its own value system , have its own cultural context determined by the vision, beliefs and the personality of the founders.

Most founders are not very aware of the culture that they have created and are not very equipped at following a strategy to develop rituals , events, activities that supports the culture of the company and boosts the employee morale. They may need to use outside help to define and manage the cultural environment and map the organizational climate.

Founders need to know that senior managers work for myriad of motivations esp. at early growth companies. One of the key motivations is to work in a vibrant, exciting and a motivating company environment. Besides, it also acts as a significant draw for a potential recruit (an oasis to a desert-starved corporate monotony) .

Simple practices such as an open-door management policy, company news board, company night outs, interesting design of work spaces, opportunities for interaction (company cafe, gym etc), flexibility ( telecommute, timings etc.) encouraging volunteerism for non-profits etc. can make a big difference to employee morale and top management motivation.

It is important to institute practices that the founders are comfortable with and define their vision of the company and its culture.