How to Buy Top Talent
“Boy, he really married up.”
It’s a refrain we’ve all heard, or uttered, sometimes in jest – as a jabbing compliment to a lucky young man – or sometimes in befuddlement –spoken in wonder at an unlikely partnership.
In either case, the message is clear: you’re looking at someone who swung for the fences.
As part of our Return on Values research project, I want to introduce you to four companies who have continually found ways to marry up. These companies have hired – and retained – exceptional talent, in many cases out of their league. The employees’ backgrounds demand a high price tag these small to mid-size companies can’t afford. And yet, the CEOs have found a way to make it work, bringing the big leaguers to the small time in order to have them as a guiding force in the company.
How can you hire talent that’s out of your league? We’re presenting this content as a series. Here are the first two of five insights gained through our research:
1. Buy when they are available, not when you are ready.
Top talent is hard to find. At Blue Plate Catering, one of Chicago’s premier food service companies, new hires are made through networking rather than job listings. CEO Jim Horan will identify a gifted professional, such as now CFO Calvin Gin, and build a long term relationship, meeting regularly for lunch or coffee. Horan and his leaders watch the market for signs that exceptional professionals are about to come available. When the prospect is ready, the company makes an offer – even if a position isn’t currently open.
This strategy helped restructure the senior leadership team during the recent recession, bringing top talent to the firm who might have otherwise been out of Blue Plate’s league. Now that the company is emerging from the recession, Gin says they also use this “buy when they are available” strategy to hire top sales professionals.
“One of the things we’re always looking for is talented sales people,” says Gin. “Even if we don’t have an open spot available. A lot of times we’ll say let’s make that hire now because we have a person that’s available. Not we wait three months or six months for when we may have planned to do it—who knows what will be available at that time.”
This strategy, says Gin, is part of an overall long term view of the business and helps the company meet personnel needs in the future by getting top talent on board now, as they become available.
2. Find creative options for financial packages.
“You have to hire people who have done before what you’re looking for,” says Paul Spiegelman, founder of BerylHealth. The problem, Spiegelman admits, is those experienced leaders come at a high price.
When Spiegelman needed to hire senior leadership positions for his growing company, he needed a level of talent that came with an oversize price tag. So Spiegelman created an equity program for senior leaders and top new hires.
Spiegelman set a floor value on the company of five times EBITDA, a low valuation for companies in his industry. “Let’s say that floor is thirty million and I give them a one page letter that just says, okay, we’re placing the value today when you come in, at thirty million that the delta between thirty million and whatever happens if there’s a liquidity event you’ll get one percent of that, or two percent of that, or five percent…it’s all different. And the only contingencies are you have to be here when it happens.”
This non-traditional financial package is enough to attract top leaders who are eager to work in Spiegelman’s energetic, growing company but don’t want to put their own financial progress at risk. When Spiegelman sold his company in late 2012, he made good on his financial arrangements, giving the top talent the rewards they earned.
Want more ideas on how to “Marry Up”? Read part 2, How to Build & Retain Top Talent.