This is part two of a two part interview with David Boehmer, Regional Managing Partner of the Financial Services Practice for Europe and Africa at Heidrick & Struggles. He is based in London. (Part one in here: http://j.mp/1CvlIiX.)
Q. David, entrepreneurs will tell you that the worst mistakes they made involved hiring the wrong people. What can they do to minimize the risks?
A. If you look at why those things happen, you’ll tell clients not to hire someone just because they have a big name. Some of these attributes we talked about – agility, low ego, the ability think strategically but still roll up your sleeves – might belong to someone you haven’t heard of.
The second piece is, you do find – and I get it because you need to move quickly – you’re running and feel you can’t take the time to keep looking. But you need to look for the best person for the role, not the best person available at that time. Be rigorous about ensuring you are covering the market and be thoughtful about the culture you’re building, especially if you’re hiring five or six important pieces at the same time.
Q. What makes for a good interview process?
A. We work with startups to build an interview process and a recruiting process, or even act as their head of talent, if they need us to.
We help our clients become aware of their unconscious biases. That’s hugely important in the interviewing process. As is ensuring that appropriate referencing is done. I know it sounds simple, but it’s so frequent that people don’t do the appropriate referencing. Make sure you’re doing competency interviewing. Lastly, do a cultural assessment. Get at not just what the candidate has done but how they’ve done it.
When you look at why people fail or why they don’t work out, it’s not because of what they did or didn’t do in the past, it’s more likely a reflection of how they did it if that’s not a match for how their new company wants to do those things.
Q. With increased competition for certain types of talent, are firms reaching across borders to broaden the pools they recruit from and can talent move where it needs to be?
A. They absolutely are. There aren’t thousands of people walking around who can do these jobs, so the aperture has to be increased. For example, in London, for most of the searches we do in this space, we are looking in San Francisco or looking across the Continent. Our searches are more often than not global and if not global then certainly multi-country. There’s a practical part of it, which is to say we’re hoping to find someone who already has the ability to work where they’re needed. You might look for an expat who is ready to move home. You keep those things in mind because, to your point, it is difficult to move people across borders. The short answer is we are looking and we are moving people, but there are challenges and it won’t be easy.
One thing I’ve found interesting: it’s easier to move people from California to London than from California to New York. The weather may be worse here but I can sell the adventure.
Q. What is your preferred method of working with clients?
A. A true partnership. That sounds cheesy but by partnership I mean we want constant feedback and transparency. In these searches, that’s the way we learn that candidates we think are interested aren’t interested, or that we think are interesting aren’t interesting. Only by being transparent and learning together does the process go well. When it turns into more of a vendor relationship, it’s much more difficult to move quickly. A true partnership – hands down – always makes for a better search.
Q. Let me ask a few questions about the established firms. Last year there was a steady drumbeat of announcements from established firms – mostly from European banks – saying that they were going to let thousands of people go and reinvest the savings in a digital transformation. Lloyds said it, RBS said it. Is the financial services industry undergoing a wholesale change in talent?
A. Not wholesale. There is – at times – a thoughtful evolution. So where hiring someone from outside the industry into these firms was unusual five or six years ago, that is much more usual now. You’re seeing different types of talent joining these organizations.
So, you’re seeing – at the edges – some interesting evolution going on. The truth is that in 2015 you can hire whoever you want from the outside but you need the culture to shift as well. And so what we’ve seen is that cultural shift is the piece that’s lagged a little bit and as culture changes, then things will really accelerate.
Q. People who can drive that kind of cultural shift, is that skill found outside the industry? Digital transformation of established financial services firms will require large-scale organizational change. Finding people with vision who can define and lead change of this magnitude is a make-or-break factor for these firms. Do you look inside financial services or is it easier to find the necessary strategic acumen elsewhere?
A. It’s hard to find inside or outside. The people who know how to build a bridge between legacy and new, how to be disruptive while getting people to come along, and have the leadership skills to push those changes through even when the road gets bumpy, is rare, is difficult to find. This kind of change is going to cause issues, is going to cause people’s jobs to change, and is going to cause PR issues. And especially in Europe, there’s media pressure to be concerned about. Those shifts really require leadership. Either inside or outside the industry, it’s a small group of people who know how to do that. People who know the space, who know how to drive change, and are innovative and are senior enough to do it? Finding those people is a home run. At the senior most level, someone who can drive that transformation, be credible inside and outside the industry, deal with regulators, deal with the board, deal with shareholders – there are a lot of constituencies here – those people are the hardest to find. All the banks are working through this and each is doing it in a slightly different way.
Q. If you are an incumbent firm and you succeed in attracting innovative, entrepreneurial executives to affect change, how do you prevent them from being rejected like a transplanted organ or fought off like a virus?
A. There are the things that are being done, and there are the things that I believe need to be done. I presented on this exact topic at Davos a couple of years ago. (See: “Hiring an Oddball”) Things that are being done include location strategy: this can mean opening labs and offices in Silicon Valley. Or design strategy: you can see this here in Canary Wharf where your bank towers might have a floor for the digital team that looks very cool and different.
But I think there are additional things that need to happen, and one is just being pragmatic about it. There are certain areas in a bank that would be very appealing to someone from Google or Apple. Take data, for example, or cyber security. Those areas offer interesting challenges, and top people in those fields love that. The payments arena is also attractive to top technologists. Getting someone to come from Google to maintain your fixed income trading platform? They’re not going to do it.
So I think it’s being pragmatic about what roles make sense. But the other piece that, quite frankly, I think is still a challenge is compensation structures and reward systems. There isn’t that same wealth creation home run potential in a large institution that there is in a startup. That’s just a fact. A lot of these really innovative individuals want the opportunity for the big hit. They want the home run. They want ownership.
The second piece is – and the banks actually have started to change this in pockets – is that at a bank, you get paid more and you get promoted if you lead more people. It can lead to empire building. But if you look at a lot of the really innovative tech companies, you’re rewarded based on the value of your contribution, not purely for the size of your team. It’s less about how many people you lead and more about the quality of your ideas and the impact you have. And so what is valued and what should be rewarded requires a cultural shift away from the question of “how senior am I in the hierarchy” and toward other measures.
When you look at hiring away from some of the places we’ve mentioned, when they know that the only way forward in terms of career advancement is to manage hundreds or thousands of people, and when they’re really only motivated by the opportunity to do cool, transformational stuff, then they’re never going to come.
Q. Has the FinTech boom had an impact on hiring at venture capital and private equity partnerships that are recruiting VPs/Principals/Partners?
A. Yes. There has been demand for hiring people who have either run or been part of FinTech teams at private equity firms. I think if I go back four or five years, FinTech would have come under the financial services umbrella or just the software/data umbrella. Now you have much more specialized groups around FinTech and the desire is to have people who have the relationships, operating experience or investing experience in the space.
Q. Do you have any advice for executives who have spent their entire careers at the established financial services firms who now want to make the leap into startups?
A. I get a lot of these calls, by the way. The answer is that it is difficult but not impossible. Someone at a FinTech startup will look at that resume and think “big company, no way.” They have their own biases going into the conversation.
The key is to be seen in action. What I mean is that you could join a board at a startup. Or join the advisory board of a private equity or VC firm that invests in FinTech startups. It could mean some consulting gigs. It’s about letting people see you in action so they can say, “Oh wait, there’s something there.” So you can get past that initial bias.
Q. Are there any other thoughts you want to leave us with?
A. Yes – understand that there are different versions for each leadership role. Take the CEO of a FinTech startup – there is the sales-oriented version, there is the experienced GM version, and there’s the abstract-visionary version. And a couple more CEO versions beyond that. But, the take away – is that each version is applicable to a different situation. Above all, be aware of what it is you need as an organization. Don’t make a hire with one eye on the press release.