When people set their minds to something, it’s hard to change them. That is true in life and it is true in executive search when a board determines the type of CEO they want to hire. I see it often in the staffing industry where a company intently focuses on hiring leadership talent only from within their domain. If their focus is light industrial (LI), they want a CEO out of LI. If their focus is healthcare, they are determined to keep their candidate lists clear of any talent outside of healthcare staffing.
Often, when I suggest to a search committee that they should consider looking outside their staffing domain for a CEO, the response is a “we would prefer not to.” Am I asking too much? Are staffing domains so specialized across the industry that a talented, experienced leader from a different niche might be confounded by the practices, culture and rules? I don’t think so and here is my case for why.
Reason 1: It Works — I’ve Seen It
Let’s start with the point that’s hardest to argue — the hard evidence of past successes. In my work, I have helped several staffing industry CEOs leapfrog smoothly from one staffing domain to another. Over the last year, I have guided three staffing industry CEOs through leadership transitions to new domains. In one case, a CEO from an IT staffing firm moved over to head a legal staffing firm. Another time, a CEO from light industrial switched niches to lead a healthcare staffing organization.The final of these recent placements was a CEO from outsourcing who moved to commercial staffing. To date, each of these three CEOs and the staffing businesses they lead is thriving. In addition, the leader has found motivation and inspiration in the learning that comes with embracing a new domain.
Reason 2: The Industry Is Too Small for Limits
At just under $150 billion in total revenue, the staffing industry is relatively small. Walmart alone is a nearly $500 billion business.By narrowing candidate choices to CEOs within just one vertical segment of the staffing industry, businesses are creating a limited pool of prospects. Staffing leadership talent pools are limited enough without cutting them down by niche.
Reason 3: Outsiders Can Infuse Innovation
When you have been in the same role, niche and industry for decades, you can become blind to the challenges (and sometimes to the opportunities) that arise. A staffing leader who has taken a different path to the top and leveraged different processes, technologies and resources brings new ideas and perspectives. At a time of unprecedented disruption across all industries, sometimes the CEO you need is not the CEO you planned or expected. It’s a sanctioned disruption that businesses can leverage for competitive advantage.
Reason 4: CEOs Have Learning Curves Too
It is true that staffing niches have very specific processes, challenges and approaches. Take light industrial staffing which has unique compliance issues and workers’ compensation considerations to manage. You cannot simply switch a light industrial staffing team for a professional services staffing team and expect business to continue as usual. That said, I do think the CEO role is different.
By the time senior staffing executives have advanced to the CEO role, their daily work is focused on P&L management, growth strategy development, merger and acquisition execution and other critical business building and innovation driving activities. Those advanced leadership capabilities and skills cannot be learned in the first few weeks (even the first few years) on the job, but domain nuances can. Highly talented CEO candidates can and will do whatever it takes to quickly learn the business, from its customers and employees to the candidates, processes and traits that make it unique. With every new role, there is a learning curve and that is true for CEOs as well. In my experience, staffing domain nuances can be a part of that curve.
Exceptions to the Rule
While I am clearly a proponent of keeping the leadership talent pool deep and wide for CEO roles in the staffing industry, I do have two caveats. First, I would suggest being thoughtful when selecting a novice CEO for a new staffing domain. While I have placed new CEOs who did not have experience in their “new domain,” it takes a special and highly experienced executive to make this double jump to 1) senior-most leadership and 2) a new vertical. In the cases where this has worked, the new CEOs were coming into roles where the P&Ls were significantly smaller than those they had previously managed. While it’s often preferred to have an established CEO, new CEOs must bring with them extensive financial and operational management experience.
Secondly, make sure that executive leaders who are switching domains have a powerful reason for doing so. Be it a passion to dive into a new specialization or determination to manage a bigger P&L, I make it a rule to ensure that the leader looking for transition has strong, career-driven reasons to do so. Ambition is always a critical litmus test for a leadership role. If ambition isn’t reflected in the candidate’s motives for transition, I would not recommend the hire.
Fewer Limits, More Opportunities
In executive placement, it’s essential to have high standards. My advice to executive boards is to keep those standards high but apply them to the bigger, more diverse and growing pool of the entire staffing industry. It certainly can’t hurt and may be just the kind of measured disruption needed to drive growth and innovation.