Leadership Matters

Perspectives on the key issues impacting senior leaders and their organizations
December 17, 2018

Safe Landing for Parachuting Executives Part 2: Do You Have Realistic Expectations?

I wrote an article last August encouraging MNC executives to discover a different view of private companies. Indeed, a growing number of MNC executives have given it a try in the past year and more. Despite a higher probability of safe landing, “break-ups” are found aplenty. It is hardly surprising that executives come and leave — parachuting is never easy. Stories abound of private entrepreneurs paying high “tuition fees” for hiring parachuting executives and parachuting executives going through hardships in private companies.

Here is one such story.

The evening glow was fading away in the west side of the city. Lights began to spangle the high-rises in Lujiazui. Looking out the window as she hung up the phone, Cathy felt a sudden gush of inexplicable relief — perhaps because she knew today was her last day in this private company. It seemed just like yesterday when she assumed the chief marketing officer role at this financial services organization 15 months ago. The passion of the founder had once filled her with great confidence about the business model and products. But now they ended up with a “peaceful breakup” because the business ran far slower than what was planned. She found herself of little use —a wasted resource — to the company, at least for now. This is not a rare case. Her skillset was just “too good” to fit the role.

How can both leaders and organizations balance current and future expectations of an executive’s skillset?

At the risk of oversimplifying, in most cases, founders just have to identify priorities and decide what to leave out and what to leave in. A growing company is always shorthanded. In fact, the candidate who comes up to the boss’s idea of perfection is either nonexistent, unavailable or too costly. The concept of the ideal candidate can serve as a guide toward finding the right person, but shouldn’t be viewed as a realistic checklist. Additionally, in a fast-paced startup, the definition of “perfect” is constantly evolving; the skills that were valuable last year may not be as important two years from now. Thus, founders need to be flexible as they create specifications for the role and evaluate candidates. riat

To what extent is the skillset appropely advanced? It all depends on the development stage and speed of the company. There are generally three different stages:

  • Early, which means the company has been founded and is trying to find its business and profit models
  • Expansion, characterized by fast growth, though most of the managerial systems are yet to be established or in the progress of development
  • Maturing, which implies steady headways and possibilities of business transition

First stage

Startups in the first stage are looking for partners who have to fill the expected role today and tomorrow. Getting a high-caliber skillset is ideal, but it often depends on a confluence of factors. That’s why Lei Jun spent more than a year building the top core team. In addition to the right industry knowledge, expertise and experience, a good fit must share similar values with the founder. Since many decisions may not prove right or wrong at this stage, we can only count on shared values to lead us to similar judgments or trust-based choices. In case a third-party adviser is engaged, the consultant must have similar values with the founder and be a magnet that attracts like minds.

Second stage

The second stage can be more challenging for founders and executives. The company has basically established its business model and has a relatively large base of loyal customers and a squad of competent employees. The business needs to move on to a new stage, deepen existing business while expanding into new areas, and establish managerial systems for higher efficiency. Many unicorn companies are at this stage. The ambitious boss starts to notice laggards in his/her top management team and expects new recruits to bring fresh talent and experience. Normally, companies at this stage are growing at a faster speed and requiring a higher and broader vision than that of their current employees. The parachuting executive should have a strong sense of ownership of the company, and the boss should be able to decide to what extent the executive is prepared for today and for the future. If a fast-growing company lacks an executive who runs ahead (producing acceleration through learning ability), the top management team will soon lag behind.

As for which function requires an advanced skillset, it depends on the most needed capabilities at present and in the foreseeable future. For example, for a company that has huge financing needs or expects a complex growth spurt in the coming two or three years, a seasoned chief finance officer is a must. For a company that is undergoing business transition or rapid organizational expansion and values a culture of shared principles, an excellent HR business partner is indispensable in that he/she can take over some of the CEO’s HR responsibilities in a more systematic way. For a companies where the structure and efficiency of the supply chain has a close bearing on business performance, it would be helpful to hire an executive who specializes in the function.

Those who are essential to the core business, however, will never be “too good” to fit in. Instead, it is about finding ways to attract the most capable executives. The challenge is to determine if success elsewhere can be transplanted to your organization.

It’s a two-way process. For a parachuting executive, working directly with the founder can be interesting. As a rule, the founder must be strategically insightful, tremendously charismatic and persuasive, who can easily talk others into a fever of excitement. Former MNC executives, in particular, have long been doing the will of the headquarters, and can be easily ignited by enthusiastic entrepreneurs who promise a stage to display their thoughts and talents. An accurate self-perception will empower the executives to understand to what extent they can fit in with and stay ahead of the corporate vision and strategy. How advanced the skillset needs to be depends on the estimated development speed of the company – but this is the hardest part. An executive will probably leave if his/her talents remain largely wasted within two or three years.

An advanced skillset also means a high cost. But it will eventually pay off if the executive can steer the company away from detours and onto a fast lane. After all, the expertise and experience brought along with the executive were also dearly bought with “tuition fees” or considerable time. Besides, an advanced skillset cannot be obtained by just wishful thinking of the employer. The executive will assess the values, ambition, vision and leadership of the founder and the direction in which the company will be heading.

Third stage

For companies at the third stage, their own business models and managerial systems have taken shape. A new executive will normally be required to help the organization enter new venues of business, strengthen its weaker areas, and optimize existing business. The company has already had a clear picture about its future, about the desired skillset and about corporate goals. It will be easier to determine at this stage what kind of executives are most likely to share the growth with the company. The success of executive search therefore rests largely with the fit between the leadership style of the executive and the corporate culture.

Alibaba and Tencent, both originally being 100 percent internet-based high-tech companies, are expanding offline business and need proven talents from traditional companies. In the last two years, nearly 200 former P&G employees have joined Alibaba and another 100 joined Tencent. The business and organizational systems of Alibaba and Tencent, though to be further improved, are complicated enough for P&G experts to demonstrate their prowess.

There are three questions that can help both sides evaluate skillset fit:

  1. Will the new executive be the missing piece of the current business puzzle?
  2. Will he/she still be able to handle the complexity of the work two or three years later?
  3. Will his/her talents be fully unleashed in two or three years?

To answer “yes” or “no”, both sides need to have thorough, frank talks. The clearer the challenges and requirements are made, the better the result will be. A failed talk may happen to be the best result for both sides. A poor fit is a waste of time for the employer and may leave more risks to future successors.

Skillset fit is but one cornerstone to building a good team; cultural fit is another. Elaborate planning and concerted efforts also count. In some of the cases where the two sides failed to develop the right chemistry, underestimating the difficulty of reciprocal adaptation and trust-building shall are commonly to blame. Parachuting executives who have survived five or 10 years are a rarity, but their success is a real win-win that deserves a big round of applause.

This long-term leap is easier said than done. On a Saturday morning, one of my clients sat down with me to discuss with me for the third time the general manager he needed for the new business. Every time, as new thoughts jumped into our heads, the portrait became clearer and clearer.

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Sherry Ding is a member of the firm’s Global Consumer, Retail, Private Equity and Financial Officer practices. She has more than 10 years of experience in executive search, leadership consulting and organizational culture assessment for local Chinese and multinational companies. Reach her via email and follow her on LinkedIn.