• Feb 02, 21
• Shawn Cole
• Best Practices
• 0 comment

IPO | The Ultimate Hiring Guide

Working with both public and private companies, Cowen Partners regularly helps pre-IPO companies ramp up for a successful IPO. This includes hiring for SEC regulations and reporting, to driving sales and increased market share pre-IPO. Because of this, we have put together what we believe is the ultimate guide to hiring for an initial public offering (IPO). Designed for CEO’s, Founders, and HR Leaders, we outline the major issues encountered by an organization when going public.

About Cowen Partners

Cowen Partners is a national executive search and consulting firm. Our clients are both small and large, publicly traded, pre-IPO, and private organizations. Clients are typically $50 million to multi-billion dollar revenue Fortune 1000 companies or have assets between $500 million to $15 billion. Successful placements span the entire C-Suite and include VP and Director level leadership roles.

TABLE OF CONTENTS

• When Should Your Company Start Considering Board Recruitment?
• Pre-IPO Executive Compensation
• Why HR Isn’t Enough For Your Next Executive Hire
• Which CFO Profile Does Your Business Need?
• Executive Recruiter Says Good CFOs are Hard to Come By
• How to Scale Your SaaS Company to $100 Million ARR
• How to Choose the Right Top Performing Salespeople to Hire

When Should Your Company Start Considering Board Recruitment?

While the answer to this question varies depending on the unique growth stage and opportunities of each company, this is a question every founder asks at some point – often with great reluctance.

Understandably, many founders are less than keen on the subject of board recruitment. Stories abound of founders who were pushed out of their companies by the same board they brought on to advise them and help grow the company. Apart from the possibility of loss of control, many founders view boards as little more than a bureaucratic waste of time. 

However, boards are not necessarily set up to rob a founder of their well-earned success and push them out of their company. Neither are they solely bureaucratic organs that introduce unnecessary foot-dragging and red tape into growing companies. 

Many founders actually look back at the founding of their board as a critical moment in the long-term growth and success of their company, as well as their personal evolution as business leaders.

When properly recruited and managed, board leadership represents an asset for most companies, providing the experience and industry-competence needed to scale effectively. As a result, the question often isn’t whether board recruitment is good, but whether it is necessary considering the profile, growth stage, and specific goals of the company. 

Are you considering the merits of recruiting a formal board of directors for your growing company? Here, we explain the options available for company boards and best practices for identifying and recruiting an effective board of directors. 

The value of board recruitment

A formal board of directors is a group of individuals appointed or elected to represent the interests of the company as a whole. They support the management team with niche-specific knowledge and experience, and generally help implement good corporate governance standards. 

Most companies start out with a board of directors. To incorporate a company in the majority of countries around the world, there must be a board of directors – often with a requirement of at least two or three individuals on the board. However, these boards often operate informally, especially in the case of startups and early-stage companies. Privately-held companies that bootstrap their way to success may be able to meet operational challenges and scale at their own pace without needing the input of a formal board.

Formal board leadership often becomes necessary when the company is considering significant strategic moves, such as an IPO or a large funding round. Businesses that face significant threats or operate in an industry with rapidly-evolving growth opportunities may also find a board very helpful. In such situations, board leadership can provide extremely valuable guidance and support to the management team in navigating these challenges or exploiting available opportunities. 

Formal board leadership is critical to success for many companies, as the skillset provided by experienced board members can decide the overall strategy and trajectory of a business. As McKinsey reports, the presence of an effective board can be key to growth-strapping a business with exceptional potential and laying the foundations for a high-performing company. 

Types of boards you can consider

The question of board recruitment is far more fluid than most founders expect. You can recruit a formal board of directors that operates within as narrow a sphere of influence as you desire. Or you can create a board that introduces the highest standards of corporate governance and to which you are essentially accountable to. 

Board recruitment is never an “all-or-nothing” situation. Rather, there are several mutable components that can be reorganized and adapted to suit the specific goals you have for your company, starting with a range of board types you can consider. 

• Fiduciary board: This is a board of directors in the common sense of the term. A fiduciary board functions in a formal capacity, with decision-making powers and usually with the authority to broadly question management decisions. Founders may elect to form a board of this nature to demonstrate good corporate governance and oversight practices that will appeal to investors. There will typically be two options to consider when creating a fiduciary board – founders may opt for a majority of independents, or an independent minority. Boards with a majority of independents are typically found in large privately-held companies and public companies. These boards exhibit a high degree of objectivity and are more likely to drive the company’s strategic agenda. On the other hand, fiduciary boards with a minority of independents aim to keep the number of outsiders low, with board seats mostly limited for people known to the founder or those already within the company. This can be a more comfortable option for founders that want to maintain control over the company while transitioning to more independent oversight. 
• Advisory board: Compared to a fiduciary board, an advisory board operates in a less formal context. The primary function of this board is to provide high-level expertise and outside experience that the founder and their management team can draw on. These boards present an acceptable compromise between gaining the benefit of outside support on a broad range of issues and maintaining authority over the day-to-day operations and strategic vision of the company. 
• Board of insiders: A board of insiders is typically composed entirely of individuals already known to the company – usually drawn from senior management and shareholders. In many respects, this board is hardly distinguishable from any other senior management group. It however provides a good platform to test-run the idea of board recruitment and provide a foundation for future steps towards formal governance. A board of insiders can be a good option for founders that want to transition the business to known individuals, or get the next generation of family owners more closely involved with the company. 

Each of these board types presents different governance profiles that can be adapted to the growth stage of the company and the goals of the founder. 

Rules of effective board recruitment

After deciding which of the board types makes the most sense for your company, the next step is the actual process of board recruitment. Here are key rules of board recruitment to keep in mind: 

• Recruit the best: Board recruitment should be approached in the same way that you would approach recruitment of senior management or key employees. It is important to populate the board with individuals who offer beneficial attributes in terms of experience, skillset, and diversity. 
• Look beyond investors: While investors typically lobby for board seats, especially after participating in early funding rounds, be careful about automatically giving in to these demands. Your board should be representative of where you want to go as a company, and it should be populated with individuals that will help achieve this goal, not just occupy board seats to look after the interests of a specific share class.
• Keep it small: For a first time board, any more than eight directors is probably too much. You should aim for between five to eight directors to ensure a good mix of diverse opinions without overcrowding the boardroom. 
• Prioritize personal fit: Teams that work well succeed not just because of their unique skills but also due to their chemistry and compatibility. The same principle holds true for board composition. Go beyond just considering the resume of candidates to also determine if they would be a good fit for your board profile.

To address concerns over potential loss of control or clash in authority with the board, it is important to be crystal clear about the extent of the board’s sphere of control. With unequivocal delineation of board authority and decision-making power, usually codified in corporate by-laws, founders can regulate the extent of board involvement in the company’s strategy and operations. 

Colleen Brown is a seasoned CEO and executive director of public companies who has helped boards find diverse executives and board members. She recommends expanding the confines of your search to find those talented candidates who can easily slip under the radar if you don’t know what to look for. “It is important to broaden the scope beyond the traditional CEO and CFO backgrounds by recognizing that the complexity and needs in the boardroom have grown and changed over time,” Brown says. “For example, by considering [candidates with experience in] CMO, CRO, and CHRO positions, the number of diverse candidates [in your pool] can grow significantly.”

Conclusion 

While recruiting a board of directors can feel like a prelude to loss of control or authority over the strategic direction of your company, this is not often the case. Many founders actually look back at the founding of their board as a critical moment in the long-term growth and success of their company, as well as their personal evolution as business leaders. The most important thing is to understand the various ways board types can be adapted to your company profile so you can accurately tell when you’re ready for a board of directors.

The Center for Board Excellence is an excellent resource for corporate governance, producing board assessments and related governance and compliance materials.

Pre-IPO Executive Compensation

There were 480 IPOs on the US stock market in 2020, an all-time record. This is +106% more than in 2019 with 233 IPOs. It is also 20% higher than the previous record IPO year of 2000, which had 397. 

This is indicative of two things. First, we are seeing a higher rate of innovation and entrepreneurship as more founders establish high-growth companies and take them public. Second, more companies are increasingly confident about their ability to take on the added complexity and public scrutiny that an IPO brings. 

However, with increasing confidence in the profile and growth-aspirations of these companies, are we also seeing a corresponding rise in how executives of pre-IPO companies are compensated? How can available data inform a company creeping steadily towards IPO about what to expect in salary levels and stock dilution by this stage? 

How can this help in strategizing executive pay and compensation practices, especially to achieve the complex goals of rewarding good executives, maintaining shareholder and investor confidence, avoiding public scrutiny, and ensuring pay and compensation scales retain a flexibility that provides ample leeway in future compensation negotiations. https://cowenpartners.com/executive-leadership-retained-executive-search-firm/embed/#?secret=JYzBQz5qmK

Pre-IPO Executive Compensation Figures: What Does the Research Say? 

The period before going public is an important crossroads for most companies, especially those that have not come under VC tutelage before maturing this far. There are several critical compensation-related issues that companies must consider at this point, including how current pay and compensation practices/structures will scale after IPO. 

Approaches to compensation, whether cash, equity, bonus, or a combination of all three often differ markedly for pre-IPO and post-IPO companies. How significant the issues faced will be, and the nature of approaches used, will also differ based on several factors including the industry in question, CEO-antecedent, the specific profile of the company, and more. 

Research primarily indicates that companies typically adopt a range of approaches that may produce varying results, both at the peer group and industry stage. Broad trends can be understood from this data, and certain lessons may be drawn from isolated cases,

In 2015, Compensation Advisory Partners conducted an extensive study into pre and post-IPO executive compensation data from 65 companies across the biotechnology, internet software and services, and general industry sectors. The study found that cash compensation was higher in mature sectors like general industry, while high-growth sectors such as biotechnology and internet utilized greater equity compensation. Although, there was a general increase in cash compensation post-IPO for all companies. 

One reason advanced for this was the greater stability of companies in mature industries, who also typically have more cash to spend. But in high-growth industries, cash is at a premium and offering more in the way of equity compensation gives executives “skin in the game” and keeps them invested in the rapid growth of the company. 

A further 2019 studyof pay and compensation figures from 124 tech companies pre-IPO, including Salesforce, Square, Google, and Amazon, found again that equity was the most significant pay strategy used to incentivize executives and reward them. Although they found that median salaries have increased to $300,000 between 2008 and 2019, compared to $214,000 between 1996 to 2007, there was less emphasis on cash and more on stock options, which is where the big money lies for CEOs. 

For context, Jack Dorsey at Square collected a salary of just $3,750 pre-IPO, and Jeff Bezos at Amazon took just $64,333. Yet, by the time of going public, both CEOs had 24% and 48% equity in their respective companies thereby earning millions (or billions in the case of Bezos). 

What is the takeaway? High salaries are not necessarily a guarantee of effectiveness. The median salary for CEOs at the most successful companies was only $300,000 a year. However, attractive pay packages can be critical to attracting and retaining top executives, especially for companies in more mature industries with cash to spare. 

CEO compensation more often falls along the lines of equity compensation, which provides mutual benefit overall for both company and individual. How does this research support your pay and compensation practices? 

Executive Compensation Practices at IPO: Factors to Consider 

As you approach IPO, consider the following in designing and implementing your pay and compensation structure: 

• Expect to pay more cash: With the IPO complete, the big winners will have been those executives who obtained equity pre-IPO. Now, executives will expect to be paid in the same way as other public company execs. In addition, due to share dilution and a need to maintain a sufficient share reserve for future compensation negotiations, there will be an increased focus on cash compensation instead of equity. 
• Plan for decline in share-based pay: Apart from the fact that cash compensation is typically more prevalent for post-IPO companies, there will be a need to carefully budget equity usage to manage burn rates over time. This ensures there’s a sufficient pool of equity overhang for future planning and compensation purpose. 
• Fix inequities and imbalances: Prepare for inequities in executive pay, especially as between pre-IPO executives and post-IPO hires. Post-IPO hires should understand that the equity rewards of existing executives constitute the rewards of early loyalty. However, where there are inequities in executive pay pre-IPO, it is necessary to take corrective steps at this period. You will be unlikely to have the means or resources to put all executives on relatively fair standing after IPO. 
• More disciplined approach to pay: Finally, companies approaching IPO will need to start looking critically at their pay structures with a view to developing a more disciplined approach. The goal during pre-IPO is often to secure the best talent and keep them in order to foster growth, and often, this does not admit of a structured approach and things are more likely to be messy. Put in the effort now to clean up your pay structures and enforce discipline to avoid ad hoc negotiations post-IPO. 

What Practices Help Long-Term Pay Flexibility & Integrity? 

How do you march into the future with the confidence that you have developed a pay and compensation structure that lets you achieve security and meet investor and regulator expectations? Consider implementing the following: 

• Establish a compensation philosophy: These are the guiding principles of your compensation strategy. It should ideally include the objectives of your compensation program, your total pay mix, pay-for-performance approach, and more. The core of your philosophy should represent where you want to go compensation-wise as well as accurately reflect how you intend to manage executive pay. 
• Develop a peer group: When thrashing out the mechanics of your pay and compensation structure, it makes sense to prepare an analysis of executive compensation in peer companies within the same industry. This can provide insight into common strategies and help ensure you are not underpaying or overpaying executives. However, you should be careful when selecting peers. Ensure their profile, performance, and revenue truly align with your own company, otherwise this may lead to incentive awards to your executives that are too generous or too small. 
• Design a governance process: As a new public company, you can expect to come under close scrutiny, especially in relation to pay and compensation practices. Designing a governance process can help introduce transparency and integrity into the process. Set up a compensation committee with the freedom to consider and present short and long-term incentive plans to the board for adoption.

Why HR Isn’t Enough For Your Next Executive Hire

Chances are, you have taken calls from an executive search firm. In fact, you may have found a job in the past with a headhunter. Still, many CEOs don’t utilize executive recruiters to make internal hires. In this short article, we will look at how a great relationship with a recruiter can be very advantageous for any CEO.

The Role of a Headhunter

The relationship between you, the CEO, and a trusted recruiter can be one of the biggest assets you have. A great recruiter can help you staff the rest of your C-level offices with talented people you’ll enjoy working with. More importantly, a recruiter can deliver people who can grow your business. What you really want from a recruiter is someone you can call when there’s a need, who will run with it and circle back with a handful of qualified candidates.

83% of executive leaders agreed that they would prefer to use an executive search firm over their in-house recruitment when it comes to hiring senior level positions – Censuswide

The Secret No One Tells You

Here’s the biggest secret that you’ll rarely hear a recruiter tell you: Your headhunter already knows.

Going public with your company? The CFO you interviewed last week already told us.

Experiencing a shake-up at the top? The person you let go already reached out.

Struggling to find someone for a tough position? We know, its been posted for months.

Finding the right recruiter will make your life much easier. More importantly, the right recruiter can make your company stronger and more successful. In fact, it’s our job, our commitment, to deliver the candidates that can make your company much more profitable.

Seven Reasons You Need an Outside Recruiter on Your Side

Here are the advantages to engaging a professional recruiter that make it worth the additional costs.

1.     70% of qualified candidates aren’t looking for work – It’s a hard fact, but the most excellent candidates don’t search the job boards. The best people don’t need to look on the job boards. That’s what a great recruiter can do that you and your HR staff can’t. They know where to find exactly the right person.

2.     There’s no time to lose – You have a company to run. Filling a high-level position requires a lot of time and attention. If you engage a recruiter, they will deliver results faster and more consistently. They can also make sure that you fill that position with the best person, not just the only qualified person who applied. You’re in a hurry and time is money.

3.     Confidentiality – With a confidential search conducted by a professional, your company remains in the shadows. That CFO position that has changed hands five times in two years looks bad every time you repost it on the job board. It looks bad, not just to candidates, but to investors as well because it looks like you don’t have a solution. With a recruiter working behind the scenes, you avoid this dilemma altogether.

4.     IPO time? – As you approach your initial public offering, your HR department starts telling the world. It’s hard to be stealthy when there is a long list of job openings that scream “IPO and SEC experience: required”. By engaging a professional recruiter in a confidential search, you can keep your IPO secret until you are ready to announce.

5.     Not enough candidates – Hard to fill and unique positions can sometimes only get one qualified candidate when you use passive searches, like job boards. An executive recruiter can actively seek out the right people. They will even contact qualified people at your competitors in an attempt to deliver the very best candidate for the job.

6.     HR might not be enough – Even a great HR team can’t do everything they need to maintain, let alone grow, the current staff. Hiring line employees is a very different activity from hiring C-level executives. HR is often tasked with hiring everyone from the janitor to the “CXO”. Executive recruiters specialize in hiring C-Suite professionals 365 days per year, which gives you a clear advantage.

7.     Contingent vs. Retained – Contingent recruiters aren’t usually the bargain that they seem at first. They spend their time on low hanging fruit and have no real incentive to invest their time or resources in filling your position when things become difficult. On the contrary, when you’ve retained a recruiter to fill a position, you’re in control. If someone is working on contingency, they won’t invest the time and effort that a retained recruiter is required to.

Build a relationship with a executive recruiter. They can help you keep your company staffed with the highest quality personnel. In your bag of tools, as the CEO of a company, you can count on a great recruiter as one of the most powerful assets you have – for continuity and for profitability.

Shawn Cole is President of Cowen Partners, a national executive search and consulting firm. To learn more about Cowen Partners and how we help our clients find the best talent, visit our website here.

How to Scale Your SaaS Company to $100 Million ARR

The $100 million annual recurring revenue mark is a significant milestone for SaaS companies that signifies sustainable company growth. While every startup wants to hit this number as soon as possible, it’s a process that takes time. According to Kimchi Hill, on average it takes 4.5 years to hit the $10 million ARR mark and at least 50 percent of companies take between 5 and 10 years to finally hit $100 million ARR. 

Successfully scaling your SaaS business takes time, dedication, and the right business strategy. Below are some tips you can use to scale your business and achieve startup growth. https://cowenpartners.com/sales-marketing/embed/#?secret=Vcj9C4jL9Y

Recognize when you’re ready to scale

The path to the first $1 million ARR is when most SaaS startups go through a strong learning phase. As you work toward $1 million ARR, you should be learning what works for your company and what doesn’t. For example, by the time you hit $1 million ARR, you should have determined the right product for your market, identified new customer leads, secured long-term business contracts, and have repeat customers, just to name a few. If you’ve seen consistent growth for a least two years in addition to ironing out your business strategy, you should be ready to scale your business. 

Avoid common mistakes

Scaling a SaaS company takes skill and not all startups follow best practices. There are a number of common mistakes seen in the SaaS startup realm, but below are the top four you should avoid as you work to scale your business. 

1. Offering too many discounts

Startups are eager to attract customers, and a common strategy they’ll use to gain customers is discounts. People love discount deals, so it can be tempting to offer big discounts to bring more people to your service. The problem, however, is that SaaS companies start offering excessive discounts which can lead to attracting the wrong audience for the product and undervaluing the service. Instead of focusing on discounts, create a plan that includes customer incentives instead. This way customers are still encouraged to purchase the product, but you’re not giving away too much. 

• Ignoring current customers

A common fallacy among startups is that new customers are more valuable than current customers. This is simply not true. Customer retention is a huge aspect of business success. Your current customers can bring you repeat business, and they’re also a valuable source of referral business. Too often startups become overly focused on acquiring new clients or leads and forget to give their current customers the best experience possible. 

• Hiring the wrong people

Hiring decisions are always difficult, but startups seem to have an especially hard time finding the right people. The main problem is that startups tend to focus too much on technical skills and not enough on candidate qualities and culture fit. SaaS startups have unique cultures and expectations that employees need to understand and accept before being hired. If you’re adding new positions to your team, make sure you review candidate characteristics in addition to their overall experience and background.

• Avoid growth hacking

Growth hacking has become such a buzzword in the startup scene. Startup leaders are trying to figure out the fastest way to achieve rapid growth, but don’t be fooled by growth hacking strategies. There are several problems that startups run into when attempting to growth-hack their business. First, growth hacking often involves a number of shortcuts which leads to missed learning opportunities. Second, by scaling too rapidly, startups can’t keep up internally with growth and the management of the company falls apart. Finally, growth hacking often leaves customers feeling unheard and undervalued. All this to say, shortcuts will have a negative impact on your SaaS company long-term if you try to growth hack your startup. 

Build your employee base

A major aspect of scaling is effectively growing various teams. In particular, the $10 million ARR mark is typically when startups begin to hire middle managers to oversee more of the business process and separate C-suite leaders from the general business process. 

Adding another layer of sales management is also done at this time and can be especially difficult. Startup CEOs are accustomed to being involved in the sales process, but now the crucial role of managing sales falls on the VP of sales and department managers. The sales department needs particular attention as the startup scales and becomes larger, too. By the time you hit $10 million in ARR your company should have a dedicated sales team with a reliable sales pipeline in place for acquiring and driving business. As your startup grows, make sure you’re not neglecting this vital growth department.  

How to Choose the Right Top Performing Salespeople to Hire

Hiring salespeople is a serious investment for your business. According to the Harvard Business Review, U.S. businesses spend $15 billion annually on sales training and $800 billion on sales force compensation. Salespeople are the driving force behind customer acquisition and revenue generation so it’s not surprising companies invest so heavily into these employees. If you want to grow your business and increase sales, you should also be investing in your sales team. However, offering more money and perks won’t guarantee you land a top performing salesperson. You have to look for the right characteristics and search in the right places to find the high achieving salespeople perfect for your business.

Common characteristics of top sellers

Not every salesperson you interview will be a top seller. You need a way to separate high achievers from the rest of the average candidate pool. One way to do this is by looking for certain character traits that make a top performer stand out. Below is a list of traits you want in a sales hire.

Clear communication

Underperforming salespeople usually don’t communicate at the right level to connect with customers. High performing sellers, on the other hand, have the ability to speak with meaning and clarity at the same communication level as potential customers. The ability to clearly communicate the benefits of a product while sounding competent and confident is an essential trait of any top sales performer.

Goal-oriented

Research has shown that 84 percent of top performing salespeople have a high achievement-oriented personality score. People who are good at sales love to gauge their progress and set new challenges for themselves. Hitting goals and reaching work milestones is satisfying for top sales performers, so look for candidates with clearly defined goals.

Dominant personality

A strong sales candidate will have a dominant personality, but not in an overbearing sense. A dominant personality in a salesperson is exhibited in their ability to effortlessly control the flow of the conversation. They speak with confidence and conviction and are comfortable arguing their case for a product or service. Submissive salespeople, on the other hand, are more reactive during conversations and have a harder time instilling confidence in potential customers.

Empathetic toward clients

Relationships sell products. Of course, the product or service has to be good, but a large part of sales is building a solid relationship with your customers. High performing salespeople know how to connect with clients and build rapport. Empathy helps high achievers connect more deeply with their clients and remember the important details that form a lasting relationship.

Finding high-achiever salespeople

You have a multitude of outlets to choose from when it comes to hiring salespeople for your team. Not every option is the right fit for your company, though. You need to start looking for the best places to find high achieving salespeople who will make a difference to your company. Below are the three top resources you should be using to find great sales hires.

1. Get referrals from clients

Your clients have worked with a lot of different salespeople over the years which makes them the perfect resource for hunting down top performing sales talent. Ask clients about salespeople who have stood out to them in the past then get the contact information for that seller. Reach out to these salespeople to form a connection and determine whether they’re looking for other opportunities. You may even be able to poach sales talent from a competitor this way.

2. Create a database of salespeople

Keep a roster of potential salespeople on file for when your company has an opening. You can build up your list of promising sellers in a couple of ways. First, any time you meet a salesperson at a networking event who impresses you get their contact information and stay in touch. Second, if you’re hiring for one sales position and have several top-tier candidates, keep the contact information for all of them in your database. This way when you have more openings, you know who to go to first.

3. Engage an experienced sales recruiting firm

Locating high-achieving salespeople is difficult, which is why a lot of companies turn to an experienced sales recruiting firm. A sales recruiting firm has extensive experiencing reviewing sales candidates and sifting through the applications to find the best performers for your company. Recruiters understand it’s not just about finding someone with the characteristics of a top performer, it’s also about identifying the right background and culture fit for your business. Hiring talent is also a time-intensive process, but with a recruiting firm you can spend less time sifting through applications and instead focus on the few top candidates for your company.

Remember, hiring top performing salespeople is an investment, and you always want to invest wisely. If you need helping acquiring more high achieving salespeople for your team, then contact Cowen Partners, a premier sales leadership recruitment firm.

Cowen Partners has a strong record of identifying and recruiting sales leadership for fast-growing public and private companies. Contact us if you would like to discuss recruiting an exceptional sales team or leader for your organization.

Which CFO Profile Does Your Business Need?

The role of the chief financial officer (CFO) has evolved a lot over the years. In addition to the financial responsibilities of a company, many CFOs are now handling technology transformation, outsourcing personnel, and talent management, among other business needs. Given the diverse role a CFO can play within a company, it can be difficult to put together your ideal CFO’s profile.

Naturally, the CFO role varies by company, but it can be helpful to have a general profile pinpointing the top characteristics of the CFO you need.

4 Types of CFO Profiles

Below are four types of CFO profiles, each with different competencies and areas of expertise. Understanding how each of these roles works within a company can help you determine which CFO profile is best for your business.

1. CFO as the Financial Guru

The financial guru CFO has years of experience with different roles related to financial functions within a company. This typically includes duties such as financial planning and analysis, auditing and compliance, treasury, financial reporting, and controlling. The financial guru is often an internal hire, frequently a Controller or Chief Accounting Officer prior, and comes with a comprehensive understanding of the company as a whole. You can expect the financial guru to have an advanced accounting degree, CPA, and to excel at standardizing procedures.

This particular profile is generally suited for businesses with inefficient financial departments or early-stage businesses that are scaling up and need to strengthen their financial functions.    

2. The CFO Who Is a Jack-of-All-Trades

The jack-of-all-trades CFO typically has a broad range of experience and has often worked outside the company with exposure to multiple businesses. Other areas where these CFOs have worked include marketing, general management, and operations. Management and communication skills are often prioritized in this profile over more technical skills. The jack-of-all-trades CFO can be found both internally and externally and is hired at a company where personal influence is highly valued and required for results. 

3. The CFO Who Is the Achievement Leader

Achievement leader CFOs are known for transforming businesses to create results. They modify financial functions and other processes within an organization to promote cost management and the use of metrics. Achievement leaders also focus on standardizing data and systems to enhance efficiency and performance within an organization. 

The CFO with this profile is generally an outside hire with previous CFO or accounting experience. This type of CFO is beneficial for companies looking for exacting analytics and striving for aggressive growth. 

4. The CFO as the Change Agent

The change agent CFO is best suited for industries that experience a lot of disruptions. This type of CFO is an outside hire and has a background working in mergers and acquisitions (M&A) and has an extensive external network of resources as well as exceptional strategic insight. Businesses undergoing mergers and acquisitions as well as PE companies looking to revamp portfolio businesses are a good fit for this CFO profile. In many of these cases, the companies experience a considerable reshaping of the business as well as adjustments in resource allocation so a CFO who has experience with this type of disturbance can make the transition run more smoothly. 

How to Make the CFO Role Fit Your Company: 3 Questions to Ask

These profiles are not perfect. One may not cover exactly what you need in a CFO, but it is a place to start when shaping the role for your company. Use these profiles to determine the characteristics and general skill set of a CFO that will help your company grow the most. When searching for a new CFO, it is also a good idea to evaluate your current corporate strategy.

Below are a few questions you should ask yourself as you start looking for your next CFO.

1. What Is Your Corporate Strategy & Goals?

Your CFO profile should reflect the structure and performance of your company. Knowledge of the industry is highly valuable when selecting your CFO, as is choosing someone whose characteristics fit the company’s strategic plan. CFO candidates will have financial expertise and management skills, but you need to determine where else your company’s CFO can be useful. For instance, if your company is pursuing an M&A strategy, then a CFO candidate experienced with mergers and acquisitions as well as proven strategic insight would be the best fit.

2. What Are the Strengths & Weaknesses of Your Management Team?

Hiring a new CFO is an opportunity to fill some of the skill gaps on your management team. Assess the strengths and weaknesses of the CEO and other leading board members to determine what expertise would benefit the team. A leadership team with a diverse skillset allows team members to lean on each other and build on one another’s strengths. Select a CFO who will shore up any weaknesses in your team. 

3. How Capable Is Your Finance Group?

It is important to determine how capable your financial functions currently are. If your company is currently struggling to efficiently manage basic financial functions such as accurate data and systems compliance, then you need to focus on a CFO with a financial guru-type profile. If your basic financial processes are not going well, then your first order of business needs to be strengthening this area above all else.

It is a good idea to look at potential internal candidates to promote to CFO who have significant financial experience as well as a proven record of results. Of course, if your financial functions are running smoothly, then you can consider candidates with other qualifications such as more management experience and strategic insight. 

Finding the right CFO for your company requires a lot of consideration concerning the right characteristics as well as the needs of the business. As you determine the right CFO profile for your company, remember how the CFO position has evolved over the years and adapt your profile to best fit your needs. 

Executive Recruiter Says Good CFOs are Hard to Come By (Especially IPO and PE / VC Experienced CFOs)

Feb 24, 2020 (Investing Alerts) — According to Pitchbook, a leading financial data provider that covers global venture capital, private equity (PE) and public markets, private equity’s IPO pipeline is filling up after a slow 2019. The number of private equity-backed IPOs in the US, according to PitchBook’s 2019 Annual US PE Breakdown, dropped 50 percent year over year in 2019, going from 46 to 23.

So what has been driving the trend? It comes down to persistent global talent shortages across the C-Suite in many industries and functions, including finance, healthcare and biotech, digital and technology. Specifically, there is a lack of available CFOs that can transition a company from the private markets to the public markets.

By 2018, it was well documented that there was a shortage of experienced CFOs in the Bay Area. To respond to this trend, PE and venture capital (VC) firms resorted to searching outside the Bay Area, investing in the future by starting CFO accelerators, and relying on fractional CFOs wherever possible. While some succeeded, many are still looking for qualified CFOs that can fill this extremely important role of taking private companies public.

The status quo is difficult. Today, we are looking at a national shortage of experienced CFOs. Notwithstanding this fact, 2019 was a great year for IPOs. At least 159 companies went public, including Uber (UBER), Beyond Meat (BYND), and Peloton (PTON).

“2019 was a boom year,” said Shawn Cole, the President of Cowen Partners Executive Search. “However, most of the good ones (CFOs) are already taken. With 2020 shaping up to be a rush of IPOs, many CFOs are not leaving anytime soon.”

What Does This Mean?

Ultimately, an IPO filing is all about timing. With a rush of IPOs in early 2020, fears of an economic slowdown, and an election year, the clock is ticking. Having an experienced CFO at the helm is critically important to the success of the public offering.

According to a Radford Consulting Study, “Unlike chief executive officers and product development executives (who often nourish a startup from infancy to an IPO), CFOs are generally on-boarded much closer to an offering.” A 2020 study by Hunt Scanlon Media also states that “Private equity-experienced chief financial officers continue to be in high demand.” Recruitment firms are busy trying to find these CFOs and pair them up with startups that are ready to enter the public markets.

The demand from private equity and venture capital firms for IPO-experienced CFOs is only growing. This isn’t only a phenomenon in the Bay Area. It is happening throughout the country. Companies preparing to go public are scrambling to find CFOs that can not only navigate the IPO process, but can help their companies thrive in the public markets.

For example, Fundbox recently hired a finance chief with a capital-markets background. A Fundbox spokesman stated that they targeted this particular CFO due to his expertise in capital markets and investing. At its core, the company wanted someone who had experience with the IPO process.

Fundbox isn’t alone in recognizing the power of an experienced CFO to shepherd a company into public markets. Some of the biggest tech unicorns chose to hire new CFOs amid increasing IPO rumors. Those companies include Airbnb, Instacart, Shopkeep, and more. As public markets get more skeptical about these unicorns going public (just look at the WeWork example), these experienced CFOs will be even more valuable.

Finding qualified CFOs isn’t just a problem in the United States. According to Cole, experienced CFOs are needed by startups in other countries who will soon become public companies. “We have a fair number of PE-backed software clients filing in international markets, such as Australia, Germany, and Japan,” he said.

That said, international waters further complicate the matter. Choosing to file internationally demands a CFO have specialized experience in a foreign IPO process, International Financial Reporting Standards (IFRS), and foreign tax laws. Those CFOs who have this experience, however, can make the process much easier. Limeade Inc (LME) is a great recent example. Filing in December 2019 on the Australian Stock Exchange (ASX), the company’s CFO and accounting team had prior ASX experience. This made the filing experience much more seamless, allowing the entire team to focus on delivering substantial value to its shareholders.

The War for Talent

According to the AICPA’s Business and Industry Economic Outlook Survey, talent remained the biggest challenge facing companies in the fourth quarter of 2019. This is the tenth straight quarter where talent has been the most substantial challenge. CFO searches aren’t immune to these challenges. They are plagued by the availability of a tight labor market and the lack of qualified candidates.

Essentially, shareholders know that past experience is the best indicator of future success, which is why companies want to hire an experienced CFO who has done it all before. When a company decides to file, CFOs are the steward of the IPO process. They can make or break a company’s initial public offering.

As a solution, studies show there is little difference in compensation between tenure and when a company files an IPO. Ultimately, private companies may want to consider hiring an experienced CFO sooner than planned in order to identify qualified candidates who can own the IPO process and create substantial value as the company grows. While the task isn’t easy, getting started today can save your company from substantial headaches in the future.

How to Build a Successful Demand Generation Team

Demand generation marketing strategies are tactics used to generate interest and demand for a company’s products or services.

What Is Demand Generation?

Demand generation can include a variety of communication channels from blog posts and social media messaging to targeted promotions and list creation. When all is said and done, demand gen is typically involved in every aspect of a business’s sales funnel. Every marketing strategy should include some sort of demand generation process for attracting people to the brand and pushing them through the sales funnel.  

Demand generation is the focus of targeted marketing programs to drive awareness and interest in a company’s products and/or services. 

Looking for a Demand Generation Job Description? Click here!

Demand Generation vs Lead Generation

A lot of companies actually mistake demand gen for lead generation. These two terms, while related, are not the same thing. Lead generation refers to a specific subset of demand gen. Demand gen attracts people to business and piques interest in the overall brand, product, or service. Lead gen then comes in and turns the interested parties into more concrete sales leads by collecting contact information. 

Every company needs some form of lead generation if they want to continue growing and to see success. Without lead generation, targeted marketing efforts are much more difficult. Once the lead generation is complete, demand gen takes back over to continue pushing people down the sales cycle with more targeted content and value. 

The problem with demand gen is that it takes a lot more work and manpower to accomplish successfully than businesses realize. This is not a process that can be managed by a single employee. To properly run a demand gen strategy, you need a full team or department working on the process. 

In marketing, lead generation is the initiation of consumer interest or enquiry into products or services of a business. Leads can be created for purposes such as list building, e-newsletter list acquisition or for sales leads

What a Demand Generation Department Does

One main role of the demand gen team or department is to bridge the gap between marketing and sales. The overall demand gen campaign process includes multiple components that require a lot of work. A few of aspects of demand gen covered by the demand team are listed below:

Strategy

The demand gen team is constantly reviewing customer insights to ensure the sales funnel is working appropriately. By monitoring what works and what doesn’t, the team can tweak the marketing strategy as necessary to continue generating growth and sales. 

Analytics

The sales funnel encompasses many key metrics, all of which should be tracked by your company. Detailing customer experiences, engagements, and decisions can lead to more efficient and accurate campaigns in the future.

Content

The demand generation team knows not only what to say to potential customers but also how to say it. Value and customer-relevant information are conveyed through a variety of content delivery systems. Each message must be carefully constructed and targeted to convey the most important information to customers. 

Delivery

In today’s tech-heavy world, companies have a number of delivery systems they can use for reaching customers. Email, social media, blog content, and advertisements are all content delivery options available to your company. A demand gen team knows which delivery system is best for your content and goals. 

Revenue generation is one of the most important activities any business can engage in. It is defined as a process by which a company plans how to market and sell its products or services, in order to generate income.

How to Build a Demand Gen Team

There are two positions in the C-suite that facilitate the overall success of the demand generation team. These two positions are chief growth officer (CGO) and chief revenue officer (CRO). A CGO monitors all aspects of the business that help drive growth and the CRO is responsible for ensuring the company is leveraging all marketing opportunities to generate the most sales. Together, these two leadership roles help shape and drive the overall marketing strategy involved in demand generation.  

Under these two important positions you’ll often find the VP sales and the VP marketing. The vice presidents of these two departments are responsible for overseeing the demand generation process, from strategy to revenue goals. These two positions help create the overall demand gen campaign funnel and monitor the progress to ensure metrics are being hit. https://cowenpartners.com/sales-marketing/embed/#?secret=qWs9cSA7VF

Finally, you have marketing managers and sales development representatives. These team members are responsible for executing the overall demand gen strategy and nurturing potential customers throughout the sales cycle. 

These positions are just a few of the main roles needed for a successful demand generation team. Since demand generation touches on sales and marketing, you need people who can confidently handle every part of customer development. In addition to managing customer development and business growth, you also need leaders in these positions who can work well together throughout the sales cycle. Demand gen teams can struggle when sales representatives and marketing managers fail to communicate important data insights and value propositions. 

A demand generation team is a must for the future success of your business. Determine which essential demand gen positions are missing from your company and fill those roles as soon as possible so you can see an improvement in company growth.

Demand Generation Team Roles

• VP Sales & Marketing – $200,000 average salary
• VP of Demand Generation – $175,000 average salary
• Director of Demand Generation – $125,000 average salary
• Demand Generation Marketing Manager – $85,000 average salary
• Demand Generation Specialist – $55,000 average salary

Leading Sales, Marketing & Demand Generation Recruiting Firm

Check out our industry-leading sales and marketing resources, created by 5-star executive search consultants, to see why Cowen Partners is a nationally ranked sales and marketing executive search firm in New York City, Chicago, Portland, Seattle, Dallas, Atlanta, Los Angeles, and beyond:

• Demand Gen Interview Questions 
• Chief Revenue Officer | The Ultimate Hiring Guide
• Sales Executive Recruitment | Building A Winning Sales Team
• The 3 Best Sales Recruiters & Marketing Recruitment Agencies in the U.S.
• Recruiting and Hiring in the Age of Covid-19
• Moving From Theory to Practice When Recruiting for Executive Diversity