Executive Search Evolution: How Are Executives Like Cars? Buy vs. Lease
Like the auto industry, executive search is evolving. The age-old model of hiring an executive through internal recruitment resources or hiring an executive search firm needs to adapt to the needs of organizations looking for a more flexible, scalable, and cost-effective model.
Sitting in rush hour traffic starting a three-hour commute from San Francisco to Monterey Bay, the endless stream of taillights weren’t the only red lights I saw. My dashboard’s Check Engine light was on, yet again, and I had no idea what it could be this time. My car had served me well for thirteen years, but at five months pregnant, I knew it was time to trade it in.
Both my husband and business partner had been telling me this for the past couple of months. They knew that as much as I loved the car, it was no longer practical, and likely no longer safe. They thought the prospect of a new car would excite me, but it was a dreadful decision. With our first baby on the way, our active lifestyle, and no idea where the Marine Corps was going to send us next, I faced too many unknowns to possibly decide and commit to a car for the long term.
I preferred to own cars. But in this instance, there was a strong case to be made for leasing car for the next three years, until we figured out a few other pieces of the puzzle. As much as it pained me at the time, looking back now, that was the best decision we could have made.
In a discussion recently with a CEO regarding talent, I was reminded of my experience. I realized after eight years of owning Cerius Executives how similar the model of interim management is to the process of deciding whether to buy or lease a car. My curiosity was piqued, and I did a little research:
The most recent statistics show that 28.28 percent of new cars on the roads in the United States today are leased. With the contingent workforce now accounting for approximately one-third of the U.S. workforce, it is not difficult to draw parallels between these two pools of short-term, non-“owned,” needs-based solutions.
Executive Search Evolution: Getting More for Less Money
As with a car lease, you can upgrade and get a higher caliber of talent for less money when bringing in an interim executive to a business on a part-time or temporary basis. Rather than committing to a full-time fixed salary, plus bonuses/profit sharing, plus benefits, plus allowances (such as a car), interim staffing on a part-time or temporary basis only takes a bite out of the budget for the time you are receiving the service. This leaves more room for concurrent business needs and allows you to hire a full-time staffer at the appropriate time with perfect-fit experience and expertise.
We usually see interim executives invest more time up front, at the start of an assignment. As time goes on, their daily involvement is less and less demanding. Their knowledge and experience are being leveraged and paid for rather than fulfilling all the bullet points of a job description 5+ days a week. As their knowledge and experience are transferred and implemented throughout the enterprise, we expect to see less ongoing need for the executive’s ongoing services.
Total staffing cost over 2.5 years: $196,100
Y1 results: $2,400,000 added to EBITDA
A full-time President for this company would have cost an average of $300k per year.
Executive Search Evolution: There’s No Crystal Ball – Mitigating Risk
When I decided to lease a vehicle, my biggest concern was not picking the right car for my growing family’s needs while balancing my own preferences. I was taking a risk either way. But with the lease, I was able to minimize the risk. It was only for three years, after all—not the usual 12+ years that I keep a car.
Organizations and the business environment are changing at a more rapid rate than they have in past decades. Three to five-year plans are now nine to eighteen months. Business owners are no longer looking at the calendar; they are looking at the watch because that is how quickly customer base preferences are changing. With that, the needs of the organization are changing, including what talent and expertise they need.
Any opportunity to embrace a more flexible, scalable talent model helps mitigate the risks of too much, too little, or not the right kind.
When I turned in my lease, I pulled up to the dealership, handed in the keys, signed a piece of paper, and walked away. It was that simple. Of course, I also had the choice to convert my lease to a purchase and keep the vehicle. It was great to have so many options.
In America, it still seems a little novel to many business owners that great executive talent is available under similar terms.
From a seasoned executive’s perspective, however, interim assignments make sense. Executives are often judged on their resumes: the companies they worked for, what they did, and what they accomplished during their tenure. As a result, executives are more careful than ever when accepting their next full-time roles. They need to choose as carefully as the company does. Between full-time assignments, though, high-caliber executives don’t sit still. They want to keep themselves busy even while they aren’t as quick to jump into their next role as they may have been in prior decades. Through advisory or interim projects, such executives are able to gain valuable insights about a company to determine whether they can provide longer-term value in a role.
On the day I started driving to Monterey Bay, I never imagined I’d trade in the lifelong habit of owning, maintaining, fixing, and driving a vehicle into the ground. But times change. Driving off the lot with a freshly leased vehicle I can hand back at the end of the term with no hassle was an innovation in the way I manage my transportation needs. It was more than time for me to reevaluate all my assumptions, and once I made the leap, my only question was, “Why didn’t I try this sooner?”. In the same way, interim management is the new executive search. An extended interim or temporary executive assignment offers both the executive and the hiring company unparalleled opportunity to get to know each other’s strengths, opportunities, work style, personality, needs, and synergies in real time.