CEO turnover boosts top job opportunities

By Ruth Mantell, MarketWatch | July 6, 2011

WASHINGTON (MarketWatch) — For executives waiting by the phone for a headhunter to call, now could be a good time to take a more active role in the job search. Turnover among top executives at top companies is increasing this year, and job seekers can reach out to executive search firms with a targeted application, recruiters said.

“When senior people come to us with an introduction we’ll try to be helpful to them,” said Jay Gaines, chief executive of a New York-based boutique executive search firm specializing in financial services, among other areas. “And if they fit a search we doing currently, we are thrilled to have an opportunity to talk to them.”

However, search firms working for companies typically reach out to prospects with great reputations and top performance records, and unless an individual fits a search, prospects are dim.

“We’re inundated with unsolicited resumes, and we try to respond to people who send a note, but it’s sometimes an overwhelming task because so many come in,” said Peter Crist of Crist|Kolder Associates, a Hinsdale, Ill.-based search firm for top-level executives and board directors. “In most cases they are of no use for active searches. Every once in a while something floats in at the same time that there is some correlation to a search.”

Theodore Dysart, who works on board and chief executive searches for Heidrick & Struggles, said job seekers can submit materials through his firm’s Web site, but that the best strategy is to develop relationships with recruiters.

“If a recruiter calls you about a job you are not interested in it, spend some time and get to know them” and suggest other candidates, Dysart said. “Recruiters remembers those sorts of things. We keep notes on whoever returns phone calls.”

Top-level job seekers should make sure that they are using online professional networks such as LinkedIn, though vetting a candidate remains a key element of the search process, and job seekers should prepare.

“The most critical element in making a match is culture fit, and over time culture is more critical than variations in experiences, and thank God that LinkedIn can’t do that,” Gaines said.

Candidates can go through hours of interviews with a search firm, and are subject to detailed assessments.

“I’m in a body contact sport,” Crist said. “At my level I’m flying into any number of cities every week to physically visit with a No. 2, 3 or 4 who wants to be a No. 1. First and foremost, I’m trying to validate what I’ve seen on paper. I’m trying to determine if the person has leadership capabilities, if they have empathy, if they are malleable, if they can fit in a position. I’m trying to determine what their risk elements are. In the high-end game, you are looking for the real deal.”

When submitting application materials, candidates should pay particular attention to making sure their skills are accurately portrayed, said Charles Wardell, chief executive of Oak Brook, Ill.-based Witt/Kieffer, which specializes in executive searches for health care, education and nonprofits.

“The workforce is looking for experience. They are doing everything they can to maintain their business and their margins, and they don’t want to train people,” Wardell said. “They want people who can do what they say they can do, and that generally takes experience. There is a very big premium on candidates who articulate exactly what their skills are.”

Higher churn

There’s evidence that demand is growing for top-level workers.

Search giant Korn/Ferry International recently reported a 14% gain in fee revenue for its fourth quarter, compared with the prior year, on a 12% gain for the number of executive recruitment engagements billed.

Volatility for both chief executives and chief financial officers at Fortune 500 and S&P 500 companies is higher this year than in 2010, creating possible opportunities for top managers, according to a preliminary mid-year report for 2011 from Crist|Kolder. The mid-year report, expected to be released later this summer, estimates a volatility rate for CEOs of 11.7% in 2011, meaning that 11.7% of the companies covered in the report had new, permanent CEOs, up from 10% in 2010. The rate for the full 12-months is typically a bit lower than the mid-year level. The rate is expected to rise again in 2012, said Matthew McGreal, a principal at Crist|Kolder.

“We think that there was some pent-up demand. Companies were waiting to replace CEOs until the economy or the company stabilized,” McGreal said. “Companies believe that they are in a better situation than they were for the past two years. A lot of companies held off on replacing executives, thinking that stability was what was needed. And now that they are on better footing, it’s a good time to make a change.”

For CFOs, the volatility rate is estimated at 14.1% in 2011, up from 11.5% in 2010.

Volatility is higher among CFOs than CEOs for various reasons.

“When you are the CEO, there’s typically no bigger job to go to. CFOs sometimes aspire to be CEOs,” McGreal said. “Also, in difficult times or for companies looking to make a change at the top, it’s less dramatic to change out the CFO than the CEO.”

For CEOs, volatility is expected to be highest this year at health-care companies, reaching 15.9%, compared with a low 6.7% in the energy industry. For CFOs, volatility is expected to be highest in the financial industry at 26.3%, compared with a relatively low 8.5% for CFOs at industrial firms.

“Specifically in financial services you saw how hard-hit that sector was in the recession,” McGreal said.

About 82% of CEO hires this year are internal, up from 73% last year, while CFO internal hires declined to about 64% from 70%, according to the report.

Tough times present opportunities

Tough times can present opportunities for top leaders.

“Even in difficult times, when companies are in trouble they just have to have a CFO, CEO, and if they’re public they must have a board,” Crist said. “In good times and bad times the high-end game is always active.”

“In down cycles, boards have a short fuse on talent, and they will make changes aggressively,” Crist said. “Companies get into trouble and the board comes to the conclusion that they have to make wholesale change. Then people get recruited away and so it’s domino effect.”

Within the past couple of years, there’s been very high demand at the most senior levels in areas such as risk, audit, finance and, more recently, information security, Gaines said.

“We have seen a real pick-up in our business,” Gaines said. “Now there seems to be more continuous inquiries, more continuous demand.”

New column title

A note from the author: Readers might notice that we have changed the name of this column to “On the Job” from “Diary of a Recession Baby.” After all, the recession has officially been over for quite a while, and my baby has grown into a toddler (a climber and a jumper, too).

I will continue to write about the intersection of life and work, as well as national trends for job searches, hiring, wages, benefits, raises, workplace regulation and more. In the next few weeks, “On the Job” is going to cover a wide range of topics, such as the curse of technology, and really awful work environments. It would also be wonderful to hear your story ideas. You can email me at rmantell@marketwatch.com .

Ruth Mantell is a MarketWatch reporter based in Washington.