Candidates and current CEOs gains insights from association headhunters

Moderator Mark Graham (left), Julian Ha (center) and Jim Zaniello

March 16, 2018
By Lori Sharn

Search committees and boards are setting higher expectations and getting shrewder about scrutinizing candidates, said panelists at CEO Update's Executive Recruiting Forum March 15. However, there can still be some disconnect on how to measure performance and then compensate CEOs appropriately in today's marketplace.

Candidates who can brag about increasing revenue must be able to put that accomplishment in context, said Julian Ha, who leads the government affairs and trade association practices at search firm Heidrick & Struggles.

"That's a good thing on the face of it," Ha said. "But the question is why did you have to grow the revenue? Was that your mandate? … Growth for growth's sake is not as impressive as what did you inherit, how did you improve upon that?"

Jim Zaniello, founder and president of Vetted Solutions, said many search committees are very savvy about examining past performance. For candidates coming from associations, the committees are looking at the last three years of financial information reported to the IRS and asking sharp questions.

Zaniello said boards are also demanding more knowledge about the industry or profession. Ten years ago, it didn't matter what industry a talented association executive may have come from, he said.

"Now, they often want a slate of candidates who know associations and know the industry, largely from related associations," Zaniello said. "Their expectations from day one are much higher."

The annual recruiting forum is one of the most popular CEO Update Live events, and association executives packed the venue at the Willard InterContinental. Attendees used their phones to ask the panelists questions via the audience interaction platform sli.do. CEO Update Managing Director Mark Graham moderated the discussion.

One audience question: "What widely used KPIs (key performance indicators) do you feel poorly measure CEO performance?"

Zaniello said there is a lack of clarity around financial performance: "I still think there's a lot of work to be done in honest, direct and sometimes difficult conversations around what (are) the right financial KPIs in the organization at that time."

He also said some boards still experience sticker shock, especially in professional societies, when they see how much it will cost to replace a longtime CEO. Zaniello educates boards on KPIs and incentive compensation, which today may be 25 percent or higher of base salary.

Other topics:
What search committees want: CEOs are coming in with a mandate to attract the next generation of members and industry leaders.

"Engaging the next generation … showing the relevancy of why (someone) should be a member is on every board's mind," Ha said. "It comes up in every search. It's a question that we always ask all the candidates."

First-year metrics: Zaniello said groups are putting a premium on how well a CEO gets to know staff and board members and building relationships. He said new CEOs should think about how to structure the first meeting with staff and find a way to connect with everyone at every level.

When to leave a comfortable position: Zaniello said executives really need to think about what their industry needs in the long term, and it might be someone else in the top job: "Thinking differently when you're in that comfortable spot is important because the dynamics may change through no fault of your own."

Countering ageism: Zaniello said being in your 60s is not an issue if you can show you're engaged and excited by the opportunity, and have done the homework to tie your accomplishments to the association's challenges. "The 60s are the new 50s, 40s," he said.

But Ha said clients do look at runway; some groups want to hire a person who will stay a long time.

"It's just a reality. But we like to think that we advocate very appropriately for candidates in saying … they have tremendous energy and bring a lot of experience which, in your situation, you could really benefit from."