When You Need One, But Can't Afford One

Growing pains...there are a few remedies, and the remedies are not always painless. Companies are constantly in need of top executive talent. Some of it is grown organically, but much of it is imported, and that bodes well for companies attempting to achieve 'executive equilibrium'. Organizations possessing top talent in their functional areas are able to offer more quality recommendations to their CEO on critical and strategic issues. But what if your company is not quite at the point where in can attract a highly compensated executive? Consider this...

One of our clients is a solid performer in its market space, with revenues in excess of $50M (USD) and strong operating margins for their peer group. But a few years ago, they had smaller revenues, fewer employees, and far fewer customers. With a solid growth record, they wanted to bring an industry veteran onboard as a Chief Operating Officer. They looked around, talked to some of the top recruiting firms, and put the pencil to the paper. The privately-held firm discovered that the total compensation package required was more than they felt they could handle at the time. The conservative owners, afterall, had always drawn relatively low salaries, opting to take dividend distributions at the end of each fiscal year. COO candidates were expecting strong six-figure base salaries, hiring bonuses, interest-free loans, relocation assistance, deferred compensation, income tax gross up, equity, multi-year contracts, outplacement, T&E perks, etc.

When we learned of the company's dilemma, we approached them with an alternative...consider contract to hire. We had several seasoned executives with multi-national company experience in the same vertical industry. One was a former SBU President and General Manager; another a former COO; and another a former SVP. None of these was really interested in a full-time gig, but would entertain an interim assignment if the numbers were right and the challenge was there.

After a series of interviews with both the client and the candidates, we arrived at a mutually agreed upon solution. The company would commit to a one-year contract at the market rate, but at a minimum of 30 hours per week pro-rated. Performance bonuses were part of the formula, but there was no relocation required, no outplacement, no equity, no deferred compensation or interest-free loans, and no hiring bonuses. The interim position and candidate could be eligible for a permanent position, when created. The savings to the company exceeded fifty percent, and our executives performed above forecasted levels. At the end of the first year, we and the interim COO received a substantial performance bonus, and the contract was extended.

MM
CEO 24/7