Gary Payne Interview

GARY PAYNE INTERVIEW
Finding C-level Talent
for
Family-owned Businesses

The Gary Payne Interview was conducted by the editors of the Family Business Experts, the web organization for the Family Business Institute. FBE: Why is it a good idea for a Family-Owned Business to use a Retained Executive Search firm when outside leadership is needed?

Gary Payne: First, the primary advantage that an Executive Search firm should be able to bring to a family-owned business is a search process that will ensure that your business is hiring the BEST candidate, not just a SUITABLE candidate or the best candidate in your Rolodex. As you move forward from generation to generation, statistics show that survivability percentages decrease dramatically. The best way to mitigate this risk to the family-owned business is to ensure that you are getting the absolute best fit available for your critical need.

FBE: What are some good questions that we can ask a Search firm to ensure they can deliver on the best candidate for my company’s critical outside the family leadership need?

Gary Payne: Some good questions to ask an executive search firm to ensure they provide quality service include:

1. Is the firm accredited by the AESC? (Association of Executive Search Consultants)?

2. Does the firm have written, clearly articulated and consistently executed search processes that you fully understand?

3. What is the firm’s successful delivery or completion rate? Offer acceptance rate?

4. Does the firm track its performance? Retention rate?

5. Few executive placements fail occur because of an inappropriate resume. Most fail due to a misalignment of other critical success factors such as contribution, culture, character, attitudes, behaviors and aspirations. How do they assess these factors?

6. Does the firm conduct comprehensive primary research? Do they depend primarily on databases and informal networks?

7. How many personal contacts will be made and who specifically will make them?

8. How many of your competitors are off limits to the search firm?

9. Does the firm include specific performance expectations in its search spec?

10. Does the firm utilize structured interviewing? Who will conduct the interviews?

11. Who conducts reference checks? When? How many? In what format?

12. Who conducts background investigations and in what manner?

13. How long will the search take?

14. Who specifically will be doing the work?

15. Is the firm flexible and capable of customizing my specific engagement?

FBE: What are the critical success factors that determine whether an executive will be successful in a family business?

Gary Payne: As we have refined and developed our Search Process, we have evaluated over 3000 searches performed by other search firms. Rarely is there not a match of the resume with the job description.

However, The Harvard Business Review reports that research indicates that the Retention Rate of Executive hires, across all industries at the two year mark, is an astoundingly low 54%.

The reason for this low retention is not the resume match. In our research, Executive failure typically is attributable to mismatches in factors such as Culture, Values (Family and Corporate), Mission, Valued Behaviors, Political environment, upfront understanding of family involvement/leadership in the business, leadership attributes, management abilities, the opportunity both now and in the future, specific performance expectations, the location of the opportunity… the works!

Therefore, you must have a specific methodology and process to make sure all of these key factors are addressed specifically.

FBE: How does your process ensure that these factors are addressed appropriately?

Gary Payne: The first step in the our Search Process, which truly sets the stage for a successful search, is the Needs Assessment Phase.

During this phase, a number of critical pieces of information is gathered which is critical for the Search firm to focus on during the search.

At the most basic level, information on the company’s mission, vision, strategy and most current initiatives are developed.

Then, the issue of culture would be developed - questions such as the current morale within the company, marketplace perception of the company, an understanding of the behaviors that are valued by the family, how does the family stakeholders view humility, what style of leadership is valued, etc.

This information is then developed in order to tailor the specific candidate questionnaire which each candidate will document and fill out. This allows the search firm to see how each candidate specifically addresses issues that are unique and specific to the family-owned business.

Next, the Search firm will interview the candidate in person, often several times, addressing these factors in detail. If the candidate is chosen as a potential finalist candidate, one of the most important aspect of the qualification process is performed – the 360 degree reference check with 2 each of the candidate’s prior superiors, peers, and subordinates.

We tailor the specific reference questions specifically to the information which was gathered during the Needs Assessment phase.

In almost every case, the results of the 360 degree reference checks require us to revisit specific issues with the candidate which need to be addressed.

If the candidate makes it to a finalist stage, a 30-40 page document will be delivered for each candidate with information on work history, the results of the candidate questionnaire form, specific results of the 360 degree reference checks (anonymous) which also includes a rating of the candidates attributes which are compared to a self assessment as well as the client’s rating of importance of various attributes.

All of this information is of critical importance to ensure that family stakeholders and others are able to conduct the most efficient and effective interviews possible to determine fit.

Our process has led to a 92% retention rate of executive placements at the 2 year mark as opposed to an industry average of 54%.

To achieve these results takes a commitment to the process and focus on the critical success factors developed up front with the family-owned business.

FBE: How do you assess a candidate’s ability to effectively operate within the specific culture of the family owned business?

Gary Payne: First, during the initial stages of a search, a clear understanding and picture of the culture of the business must be established, including the personalities of active family members as well as other executives within the business.

In addition, behaviors that are valued within the family and corporate culture must be understood, especially how humility is viewed.

Our process uses from three to four specific methods to qualify culture and personality fit. One is through a series of specific tailored questions during the Candidate Self Evaluation questionnaire stage. Candidates are asked to document specific examples of how they have handled environments and situations that are similar to that found in the Family Business.

Second, specific questions around culture are addressed during the 360 degree reference checks of two each of superiors, peers, and subordinates.

Third, the candidate is asked specific questions in the personal interview process to give examples that are pertinent to the Family Business’ culture.

And, finally, for some searches, we will do a personality profile test for final verification of fit.

FBE: Do you handle leadership needs only in the U.S. or do you have capability internationally?

Gary Payne: Approximately 30% of our work is for executive leadership opportunities outside the U.S. For one, our firm has offices overseas in Singapore and China.

We are affiliated with Transearch which provides us access to over 60 Retained Search firms throughout the world, all of which have been evaluated for quality of services and customer satisfaction.

In addition, our Search Process is designed to source and qualify candidates using a specific strategy that our clients are intimately involved in helping to develop – for example, who are the highly regarded competitors from whom we should be sourcing candidates from, etc.

Because the Search Process is developed and agreed to with client input, there is no stone not unturned as to how we source quality candidates for each search.

FBE: How does the search for an outside board member differ from a hired executive employee in a family owned business?

Gary Payne: In essence, the process to ensure the right fit for a potential outside Family Business Board Member is very similar to that which we use for other leadership/executive searches. Industry experience, background, culture fit, sensitivity to family issues, performance expectations, etc., are all critical factors to ensure the Family Stakeholders get the right value from the services of the Board Member. These are in addition to the experiences and background that the potential Board Candidates would bring to the firm.

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