While the COVID-19 crisis has led to hiring freezes and layoffs affecting many ScaleUp companies, Insight Partners sees a significant number of executive hires still taking place within our high growth portfolio. Companies still need strong leaders to guide them through the current situation and position them for long-term success.
Our initial data shows a ~30% reduction in new executive-level searches since the beginning of March 2020, but we still have 70+ active searches in the portfolio. Hiring continues as everyone works remotely, and it’s happening in a different environment, one that brings its own recruiting challenges.
Challenge #1: Getting Candidates Comfortable Taking a “Virtual” Job
1) Invest More Time Getting Candidates Comfortable
For many candidates and employers, a 100% virtual hiring process is undermining their confidence in making critical employment decisions. To compensate, some companies have doubled the amount of time spent with candidates to get them comfortable making a career change in a virtual environment. This means both the CEO and the executive team need to spend a lot more time educating the candidate about the company and culture at every stage of the process.
Based on Insight Partners’ data from over 400 executive searches, we know that when the CEO takes initial candidate calls and attends weekly search calls executive hiring success increases by 2.5x (both by increasing the number of good hires and avoiding poor hires). Typically, a CEO might spend an hour on an introductory call with a candidate and then move into a hard evaluation phase. Now, we are seeing candidates want more time with the CEO and their direct reports as they work through the process of understanding the company and the job responsibilities and purview. We estimate candidates need 2-3x more time getting to know company culture, the team and metrics when they cannot make a site visit and meet face to face. Candidates seem to need more reinforcement at every step in the process.
2) Employer Branding
A key tactic that can help in this environment is strong employer branding. While candidates may not be able to visit your office, they can visit your website. Employers who understand their prospective employee personas and create messages targeted to those personas have a better shot at getting candidates over the hump of accepting a job in today’s environment. The best employers have compelling content in the “voice of the employee” to authentically convey what it is like to work at the company.
3) Consider Reverse Referencing to Demonstrate Your Appeal
Candidates for executive roles have traditionally sought out “off-book” or “back-channel” references on prospective employers with both peers and customers. Since executive leaders are unable to meet their future boss, we recommend you encourage candidates to conduct “reverse referencing” by providing finalists a short list of people that the CEO or their future boss has worked with. Candidates will benefit significantly from speaking to customers to understand the value that customers experience by working with your company. While proactively providing references is unconventional, we believe this shows candidates both strength and confidence in your company, your vision and what you’ve built in a time where they need more of a push to commit.
Challenge #2: Assessing Candidates in a Virtual Environment
We always emphasize the importance of a disciplined hiring process. This is even more critical in a virtual environment. Insight’s Talent team has analyzed hiring best practices to identify which of the process steps produce the best performing hires. We believe the following steps are the most important for de-risking your hire in a virtual office environment.
- Online Executive Assessments: Our data show that using structured online assessments predict success at a 37% higher rate than a hiring process without them. Insight uses Wonderlic or Criteria for Executive assessment. The value derives from getting insight into a candidate's behavioral attributes so that you can probe on these attributes during interviews and reference checks.
- 360 Referencing and Background Checks: We see that comprehensive 360 referencing increases hiring success by 32% versus processes without reference checks. This includes both on-list and off-list (backchannel) references, where you speak to those who have significant direct experience with a candidate. If you use use off-list references, it’s important to vet the actual closeness of the candidate to the references. How exposed has the reference been to the candidate’s activities as a leader? Does the reference have first-hand knowledge? We find investors and executives tend to stick to a tight network they trust, and therefore end up with “hearsay” content or a “board only” perspective—rather than getting to sources with deep working knowledge of a candidate. Off-the-shelf background checks are always a wise choice to avoid unpleasant surprises.
- Scorecards: Write a role position scorecard to increase alignment internally and ensure you hire someone who is the right fit for the job. Scorecards, when used in conjunction with several other best practices, increase hiring success by 1.5x. A scorecard is a detailed, stack-ranked list of 5-8 skills, traits and experiences that you will test candidates on during the interview process. Scorecards should never be shared with candidates and there should be clear alignment from all stakeholders (including the Board) on this skills and attribute list prior to kicking off a search.
- Operating Partner Interviews: We believe that experienced executives who have led teams in the relevant function (e.g. engineering, finance, marketing etc.,) are the best people to interview finalists. They are an important part of de-risking hires. At Insight, we have former CEOs, CRO, CMOs etc., that interview finalists for our portfolio. We have found that by doing so, hiring success increases 56% versus searches run without Operating Partner interviews.
Challenge #3: Small Personal Touches Are Still Important
A crisis like COVID-19 may present an unexpected opportunity to gain or share perspective with candidates, and to demonstrate your personality and leadership philosophy. Some tips:
- Don’t change your Zoom Background when interviewing a new team member. It’s tempting, but given the lack of personal interaction already in place with video calls, consider letting candidates see your real work space. The occasional dog or toddler in a video call humanizes interviewers in a time when meetings are all digital.
- In the same way you would provide a meal if a candidate interview is in person, make sure you offer to order a meal for your candidate during interview sessions that you are doing over a meal.
- Virtual office tours: If you have this, make sure you share with candidates. In the future, try to make these videos to use as a recruiting tool.
- Send candidates information about your company culture, and potentially some branded swag. They would “experience” your company culture if they visited your office, but since this is no longer possible, consider ways to provide them with a similar experience. They are making a decision to join your company and contribute to leading it. They need to feel connected to your mission, your company culture and you, as their future boss or peer.
Like many things, hiring an executive in a post-Covid world will require adaptation to new realities and constraints. Against a backdrop of uncertainly, it’s still possible to successfully hire a strong senior leader if you run the right recruiting process, one that includes both thoughtfulness and two-sided diligence. It may take longer to reach the right decision for both sides, but there’s no reason that the outcome can’t be as effective or successful.