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Is Top-Management Hiring on the Upswing?
By: Debby Young Electronic Business
December 1, 2004
After a two-year slump, executive hiring in the technology sector is on the rise. But C-level managers aren't exactly storming the corner offices. Although some tech sectors are hot, demand is far from increasing across the board. And, with memories of high-profile cases of executive misconduct and the industry downturn still fresh, executives and companies are courting each other very cautiously.
"Just in the past year, chief-level searches in the technology and electronics industries have grown to account for more than half of our engagements," says Robert Pearson, CEO of executive search firm Pearson Partners International.
Who is recruiting? "Certain areas in the technology sector are thriving," says John Challenger, CEO of outplacement firm Challenger, Gray & Christmas. "Demand is high for those who specialize in network and IT security. Tech support is another area in which companies are looking for people."
"We're seeing more of an uptick among clients in the consumer electronics and entertainment technology niches," observes Elliot Clark, COO of Kenexa, a recruitment and management consultancy.
In Silicon Valley, there's growing demand for executives willing to shepherd startups. Susan Welch, global staffing manager for Magma Design Automation, says that her colleagues are noticing several executives stepping into C-level roles with startups and taking them through funding and IPO. "With so many C-level executives being casualties of the economic downswing," she says, "a lot of executives are still looking for work. But with pressure from investment bankers to recruit seasoned C-level executives to supervise new ventures, companies are being extremely choosy. They're looking for people who are currently successfully employed. They'd rather poach from other companies than hire someone who's been sidelined for a couple of years."
Given the current economic climate, poaching can be an effective strategy. "Because we went through four years of a dramatic downturn in the market, many outstanding C-level managers stayed in positions they were not especially happy with," observes John Ferneborg, founder of executive search firm Ferneborg & Associates. "Now as the market is picking up, they seem to be eager to talk about new opportunities with companies that show real potential for growth."
Expert opinion is split on whether tech companies will look beyond their own niche markets for talent. Welch believes that companies are more interested in candidates who have run successful companies within their same verticals, noting that the focus tends to be very narrow.
Kenexa's Clark disagrees. Historically, he says, companies choose someone from inside their own industry, usually wooing talent from direct competitors. "Although that still holds true for technologically oriented positions," he adds, "we're now seeing people jumping between verticals in strategic-marketing and communication-oriented positions. Companies are really looking for diversity of thought."
New blood, he says, brings new ideas for tapping into the market. He points to Apple Computer. "You look at the success of a company such as Apple, which was historically a desktop and laptop company. Now it's dominating the personal entertainment market with the iPod. To make that transition, Apple had to bring people in from the outside who had a vision and the business acumen and leadership skills to back it up."
While companies are being more selective about their candidates than in the dot-com era, executives are being equally cautious about stepping into the shoes of their predecessors. "We are finding that candidates are being more thorough in their due diligence," says Ferneborg. Executives considering a move investigate the senior management team to make sure the target company has a good chance for success. And they do their homework when it comes to competitive salaries and options.
Executives are looking for a company that has a solid sense of direction and company goals, says Mike Kendall, president of Kendall Placement Group. "They're also much more interested in companies that preach and practice integrity." If a company's integrity is in question, says Kendall, C-level executives won't even waste time putting a résumé together.
In the wake of the fallout of the Tyco and Enron scandals, Clark notes, executives are also looking to protect themselves from any prior bad acts of a company. It has become commonplace for executives to insist on zero-liability clauses in their contracts for any company activities that occurred prior to their coming on board.
So which executives are securing new positions? "These days, companies are looking for C-level executives who have broad cross-functional experience," says Welch. "They want candidates who have spent part of their time in finance, part of their time in manufacturing, part in human resources, part in supply chain and maybe part in legal." If someone wants to be a CEO, she says, they'll have to gain exposure to more facets of the business than just their own specialty.
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