How Productive Hiring Works

Welcome to Headhunter Secrets, where I’ll share perspectives about the search business. We hope you’ll use our services to execute searches. Nonetheless, I wanted to give you some insights I’ve gained from doing search work since I was 23 years old.

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Headhunter’s Secrets: How Productive Hiring Works
There is a natural order to hiring

One of my oldest sayings, something the recruiting business taught me early:

There’s a place for everyone and everyone has their place, but not every place is for everyone.

There are natural places for everyone to work, and there are natural hires for every company to make, but oftentimes these natural matches don’t happen. Why? Because lots of people don’t understand the natural order of the hiring market.

To understand this natural order, one must understand a company’s infrastructure and resources because the candidates you really want to hire will already be productive with both.

When a candidate comes from a $5B-revenue company, you can assume that this person is accustomed to operating within a pretty established infrastructure and with resources that include outside consulting firms, accounting firms and law firms. A candidate who comes from a $100MM-revenue company will be accustomed to operating with much less infrastructure and far fewer resources. 

That $5B-revenue-company candidate has had lots of help. The $100MM-revenue-company candidate has had to learn how to do more with less.  

The $5B-revenue-company candidate usually has inherited an existing infrastructure. The candidate from the $100MM-revenue company has likely been part of creating and/or significantly upgrading existing infrastructure.

Here’s a practical way to look at this order:

Think of a $5B-revenue-company candidate as someone who lives in an 8,000-sq-ft house. That candidate has “lots of fixtures and furniture” and “lots of domestic service workers.” These candidates naturally get accustomed to their infrastructure and resources. 

Working at a $100-MM-revenue company is more like living in a 2,000-sq-ft house. Where’s the $5B-revenue company candidate going to put all their fixtures and furniture? Where’s the budget, space and need for all the “domestic service workers” who take care of stuff? 

And then there’s the other side of that coin: The 2,000-sq-ft-house candidate doesn’t have the fixtures and furniture for the 8,000-sq-ft house. How will this person know what fixtures and furniture to purchase? The 2,000-sq-ft-house candidate has also never managed a team of “domestic service workers.” Where does this person find them? How do they organize and manage them?  

Another major difference between these candidates is the degree of urgency. Of course, all companies have a sense of urgency. But big companies tend to have very well established systems, processes and operations that require more maintenance than urgency; whereas entrepreneurial companies are desperate to grow as fast as possible. 

The entrepreneurial sense of urgency is not something people learn from working at giant companies. On the flip side, the smaller-company candidate won’t know which systems, processes or operations are best for a $5B company, nor how to maintain them.

Compensation follows this natural order. A CFO at a $5B-revenue company is likely making 5X-10X what a CFO is making at a $100MM company.  

So who are the most productive candidates to hire? They are candidates from companies who are similar in size to the hiring company. Or better yet, candidates from slightly larger companies. Candidates from slightly larger companies are still accustomed to similar infrastructure and resources, but they also have insight into how to leverage them to grow the company.

And then there are the best-of-all candidates, those who have both big company best practices and smaller company entrepreneurial experience. Such candidates understand the infrastructure and resources of both. They can help drive growth in smaller companies because they’ve been on that path before. They can also help drive growth at bigger companies because they know how to do a lot with a little, and they have a higher sense of urgency. 

Bear in mind: There are exceptions to every rule, and sometimes many exceptions. But the most productive hiring normally comes from selecting candidates who are familiar with the infrastructure and resources of your company and how to propel growth from there.

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Hope these insights are helpful. 

We at Leyendecker have been doing search work for 40 years. We’ve completed over 100 C-level searches, most for CFOs. Most have been PE portfolio companies, but we’ve also helped owner/managed and publicly-held companies. Our placements have helped their employers go through almost 50 successful liquidity events.  

Keep us in mind when you seek talent that will get you over the goal line! Hope you have a great year!

Doug