Trends in Executive Employment Could You Be A Successful Interim Executive?

1
Trends in Executive EmploymentCould You Be A
Successful Interim Executive?

Peter Rugg Managing Partner Tatum
Partners February 26, 2004
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Small vs Entrepreneurial Growth CompaniesA Key
Distinction

• Whos Creating Jobs - Cognetics
• Gazelles accounted for more than 90 of the
  growth in US job growth although they represent
  only about 4 of firms population.
• Gazelle Size Manufacturing Companies grew 6 times
  as fast as large Manufacturing Companies.
• Companies that began growth spurts with 100 or
  more employees ( only 2.7 of Gazelles) created
  well over half of the entire job growth indicated
  above.

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Tatum Partners Survey Participation
DemographicsFebruary 1, 2004

• In the past thirty days
• business conditions -
• Improved for 42 of our respondents,
• Got worse for 11,
• Stayed about the same for 47.

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Tatum Partners Survey of Business Conditions
Trends

• In the next sixty days,
• business conditions are expected --
• To improve for 65
• To remain about the same for 29
• To get worse for 6.

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Executive Employment Update National

• No downturn for CEO/CFO/COO replacement positions
• Always great jobs for great people
• Not seeing growth jobs in mature companies
• 2003 was improved year for national search firms
• 2003 especially second half strong for Tatum
  Partners
• Tatum CFO leads/inquiries up sharply in last 60
  days

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Executive Employment Update - Local

• Philadelphia lags national trends
• More opportunities in Mid Market - 10m-60m
• VC/PEG funding activity improving
• Early stage and technology improving
• Executive recruiting in these segments improving
• Weak management teams
• CEO/COO picking up
• CIO still slow
• CFO good in smaller companies and early stage

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Recruiting Tips

• Network, Network, Network
• Must meet all the job requirements or have a nice
  day!
• Be brutally honest in self assessment and match
  to position requirements
• Integrity is always in vogue
• Preparation for interviews
• The art of conversation vs email
• In transition vs employed being recruited go
  extra mile
• If you wont relocate, be prepared for sacrifices
• Chronological vs functional resume/customized
  approach
• Hardest thing you will ever do is get this job!
• Contact frequency for networking

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Dual Oscillating Career(s) The Future of Careers

• Career management today is a dual trajectory
• Employment assignments
• Project assignments
• Opportunities in one leads to the other
• The death of career management - singular
• You take care of your company and it takes care
  of you
• Free agency
• In sports free agency works for the elite players
• In business it is largely the same. For truly
  great people it still works not for all.
• The Tribeless Warrior www.Wareham.org

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Dual Oscillating Career(s)

• Most C levels today still desire to slide from
  last employment situation to next of same or
  greater opportunity
• For many this is not real
• Next opportunity via project assignments as
  interim execs or consultants
• Move from career management to career(s)
  management
• Project work and employment is the framework

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Dual Oscillating Career(s)

• Fundamental question career(s) management
• Career management do I want to work for a
  company or be a consultant
• Career(s) management will I make enough money
  in project work
• Consultants paid more than permanent employees
• Bureau of Labor Statistics data indicates fastest
  growing area of interim work is
  managerial/executive
• 98-2001 executive temporary positions grew 227
• Tatums business model is thriving
• Adecco survey suggests 72 of people in temporary
  assignments find next full time jobs at same
  company

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Dual Oscillating Career(s)

• Mastering the skills necessary for dual
  oscillation
• Affiliation needs
• Employment team loyalty, valued member of
  winning team
• Project affiliation is counterproductive.
• Independence/objectivity
• Know when you are done
• Talk about separating gets you invited back!
• Mastery of content
• Employment move from doing work to managing
  others
• Leaving behind technical mastery
• Project assignments may require technical skills
• Advice stay sharp technically

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Dual Oscillating Career(s)

• Relationship Management
• Employment screened limited outside contact
• Project Outside contact is life blood
• Successful dual oscillation requires lots of
  outside contact and networking
• First day on new employment assignment have a
  outside lunch!
• Become a driven networker
• Keep the network warm

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Dual Oscillating Career(s)

• Mastery of dual oscillating careers is the
  closest thing to job security most execs will
  know in the 21st Century
• From work by Laurence J. Stybel Maryanne Peabody

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Success in Dual Oscillation

• Understand affiliation needs differences
  employment vs. project
• Keep both leadership/managerial and technical
  skills sharp
• Develop and maintain outside relationships be a
  dedicated networker
• Build your network year after year, keep it warm

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New Assignments Creating Impact and Fit

• First impressions are everything
• The honeymoon is over and never was
• Do your homework
• The industry
• Goals of company and senior management
• Organizational norms, culture, history
• Get a mandate What is the homerun they are
  hoping you will hit.
• Learn your predecessors strategies and priorities
• What was working, what wasnt

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New Assignments Cont

• Develop good working relationships
• Failed new execs almost always have poor working
  relationships
• Usually poor relationships drive fatal poor
  performance not the reverse
• Effective relationships
• Begin with listening
• Reduce fear
• Build trust
• Meet with key stakeholders

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New Assignments Cont

• Each subordinate one on one
• Learn what they think is expected
• Get feel for their skills, desires, and fears
• What will make us more successful
• Take notes act interested
• In meetings
• Ask more that tell
• Share your background and goals
• Soft pedal your views too early to be specific
• Know all are hungry to know where we are headed
• Being too closed mouthed fosters distrust

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What is Tatum CFO/CIO?

• Tatum is the largest professional services firm
  in the US of Financial and Technology leadership
  executives in the US.
• We work through two separate firms, Tatum CFO
  Partners, LLP and Tatum CIO Partners, LLP

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The Tatum Partnerships

• Largest national professional CFO and CIO firms
• 400 highly experienced CFOs and CIOs
• All service providers are limited partners
• Typical partner profile 25 years of experience
• Practices in 30 U.S. cities
• Limited brick and mortar
• Growing rapidly... by 2004
• -- Practices in 35 U.S. cities
• -- 400 CFO partners
• -- 70 CIO partners

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Tatum CFO CIO Growth
Tatum CFO Tatum CIO
CFO
Date Offices Partners
1/96 1 10
1/04 30 340
CIO
Date Offices Partners
4/01 4 34
1/04 8 64
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Business Model Drivers

• CFO Tenure is shortening
• The average CFO Tenure is now 28 Months
• CEOs view their job as a project, average
  tenure is 24 months
• CIO Tenure is 22 months
• Dual Oscillating Career(s)

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Three Service Models

• Permanent Finance or Technology Executive W-2
• Interim or Part Time CFO or CIO W-2 or 1099
• Provide executive leadership to specific
  financial and / or technology management projects
  or service as a director.

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The Tatum Value Proposition

• Proven expertise is available immediately.
• The risks -- and fixed costs -- normally
  associated with the traditional hiring model are
  virtually eliminated.
• Contractual arrangements are highly flexible
  (interim or open-ended full or part time,
  employed or contracted etc.) and are typically
  cancelable with 30-days notice.
• Partner compensation can reflect unique
  circumstances.
• The full Intellectual Capital of the firm is
  available to any client.

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Marketing / Sales Channels

• Over 80 of new business is from referrals
• Major referral sources
• Accounting Firms
• Law Firms
• Private Equity Firms
• VC Firms
• Banks and other Lenders
• Investment Bankers
• Insurance brokers
• IT Vendors
• Other Trusted Advisors Service Providers to
  CEOs

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Private Equity Firms Demanding Buyers

• Over 150 recently completed or current private
  equity portfolio company assignments
• Koch Ventures
• Texas Pacific
• GE Capital
• Weiss, Peck and Greer
• Heritage Capital
• TriVest Capital
• Chase Capital
• Westar Capital

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Retained Executive Search Traditional Channel

• 15 Partners presented by Retained Executive
  Search firms to their clients in a recent month
• Phoenix Partner placed by search firm as a Tatum
  Partner and Regional CFO of a 2.3 Billion
  revenue region in a 20 Billion public company
  relocating to Dallas
• Retained Executive Search is becoming an
  important channel for Tatum Partners

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About Our Clients

• Over 100 industries are represented.
• The size of business ranges from start-ups to
  major multi-national corporations.
• The major concentration of activity is in
  emerging growth and middle market sectors with
  recent success in Billion companies.
• 20 of clients are venture capital funded
• 10 of clients are public companies.
• 60 of clients employ the partner permanently as
  CFO/CIO 40 engage the partner on a
  project-specific basis.

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Our Competition

• The traditional hire
• CEOs misunderstanding that we cost more
• Not a competitor Retained Executive Search
• Tatum Partners are now presented as permanent
  employment candidates by large national Retained
  Search Firms

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Accumulate and Transfer Knowledge

• Intellectual Capital Organization (CFO/CIO Brain
  Trust)
• Knowledge
• Experience
• Contacts
• Leveraged with technology (PartnerLink - Virtual
  Private Network)
• Current Trends

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Recent Examples of Intellectual Capital Exchange

• Biotech Venture Capital Sources
• Bridge Financing Fast
• Minimizing costs in MA transactions
• Due Diligence on VCs-terms
• Managing Options within the Capital Structure
• Accounting Software Selection
• Sales Tax in E-Commerce

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Summary

• Executive employment outlook is improving
• The positive change may not be visible in
  Philadelphia
• Look at your prospects for long term average
  compensation associated with career management vs
  career(s) management Dual Oscillating Careers
• Follow recruiting tips
• Work very hard on your campaign in transition and
  keep your network warm when you are employed or
  doing project work