Why executive hiring stalls: causes beyond the recruitment process

It is not uncommon for positions in corporate planning and CFO classes to take a long period of time, six months or even a year, from the time they are advertised. We often hear from business owners and human resources managers that even if they use multiple agents, the number of referrals does not increase, and even when they finally meet a candidate, they "lack a decisive factor" or "they end up being chosen by another company."

However, the situation of not being able to hire management personnel cannot be dismissed as a problem only in the recruitment process. In many cases, organizational design issues such as requirements definition and decision-making processes are hidden in the background. In this article, we will explain the causes of long-term recruitment of management personnel and points of review that should be addressed beyond recruitment activities.

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1. What happens when management personnel cannot be hired?

If a company's corporate planning/CFO level positions remain unfilled for a long time, it will affect management in two ways: sluggish business performance and deterioration of internal controls.

If decision-making proceeds in the absence of human resources responsible for functions such as strategy planning, financing, and management accounting, not only will business implementation be delayed, but there will also be an increased risk that important decisions will be passed without proper checking functions. We cannot overlook the side effect that the president and existing executives will continue to take on corporate planning and financial functions in addition to their original roles, and top management's time will be taken up by day-to-day operations, making it difficult to devote enough time to medium- to long-term decision-making, which should be the focus.

Furthermore, the long-term hiring process is also communicated to people outside the company. If decision-making is delayed every time interviews are held with candidates, it will give the impression that the company is slow in decision-making, and the more talented candidates will choose other companies sooner. Prolonged recruitment is not just a problem in recruitment activities, such as not being able to meet good people, but it also manifests as a weakness in management itself.

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2. Why can't we hire management talent?

When looking at companies that are stagnant in hiring for corporate planning and CFO positions, there are four common causes, regardless of industry or company size.

2-1. Cause 1: Unrealistic and unclear candidate requirements

A common situation - Everything from business strategy planning, IR, financing, management accounting, and even M&A is required at a high level - The term "ready-to-work" has taken on a life of its own, and requirements include even experience that does not fit the company's business phase - Different parties give different weights to the experience they are really looking for - Conflicting assumptions, such as seeking experience at a listed company but also expecting the speed of a startup

Points to review There are almost no human resources in the market who can meet all the requirements to a high standard. In the current business phase, the starting point for defining requirements is to narrow down among all the parties involved what they want to prioritize in the first year. In particular, what is often overlooked is the perspective of thinking separately about “What should I be entrusted with in the first year?” and “How will my role expand in three years?” Rather than looking for people who meet all the criteria from the beginning, you can widen the pool of candidates by creating a step-by-step design in which you clearly narrow down your initial role and then leave future expansion to the company based on your track record after joining.

2-2. Cause ②③: People involved in selection who understand management are not fully involved and the decision-making process is not organized.

Common situations – Who will be the final judge is not clear at the beginning of the selection process – Executives who understand business management are not sufficiently involved in the selection process and try to judge candidates based solely on personnel matters – Executives are busy and it takes several weeks just to arrange interview schedules – Feedback after the first selection is slow, leaving candidates waiting – A new evaluator joins in the middle of the selection process, and the agreements made up to that point go back to square one – It is difficult for candidates to see the growth path of the company itself (how to grow the business in the medium term), making it difficult to make decisions.

Key Points to Review Most of the time, candidates for management positions are approached by multiple companies at the same time. The speed of decision-making and the involvement in the selection of people who can speak about management are in themselves a competitive advantage when compared to other companies. It is effective to decide before the selection process begins who will make the decisions, by when, and what.

2-3. Cause 4: Remuneration and position design remains an extension of the existing salary table.

Common situations – Attempts to fit existing grades and salary tables create a discrepancy with market standards – Incentive designs other than compensation, such as executive appointments and stock options, are not considered – Terms are renegotiated after an offer, which damages confidence – Offers are made below market standards because of concerns about the compensation balance with the current management team

Points to review When hiring management personnel, there are many situations in which it is necessary to consider position design separately from the existing grade system. By agreeing on the compensation range with candidates at an early stage, you can prevent mismatches in terms of conditions at the end of the process.

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3. Countermeasure: Align requirements, decision-making, and compensation within the management team

What the four causes so far all have in common is that the decision-making axis is not aligned within the management team. Before you start recruiting management personnel, we recommend that all parties involved confirm three things: “Which themes should be given top priority in the first year (management strategy/fund raising/management accounting/IR, etc.)?” “Who will make the final decision on success/failure, and how many steps will there be before making a decision?” “Will the remuneration range be within the existing grading system or will it be considered separately?”

If you start recruiting without knowing these things, even if you meet a good candidate, you will miss the opportunity during the decision-making process.

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4. Plan for retention after hiring

Recruitment of management personnel does not end with joining the company. At the hiring stage, we told them that we wanted them to play a central role in management, but when they actually joined the company, they found that the existing executives' involvement in decision-making was limited, information sharing was only partial, and the position was in name only.Management personnel are more sensitive to such gaps at an early stage.

If there is a difference between the role and discretion that was discussed at the hiring stage and the authority that is actually given after joining, the decision to return to the job market will be made sooner. The key to retention is to match your message at the time of recruitment with the reality after joining.

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5. It’s not just about improving the hiring process.

So far, we have looked at measures to take in the recruitment process, but the fundamental causes of “ambiguous requirements” and “unaligned decision-making axes” cannot be resolved simply by reviewing recruitment activities. This is because these are essentially design issues for the management system itself.

Defining requirements and organizing the decision-making process is the gateway to recruitment activities, and at the same time provides an opportunity to review the division of management roles and the organizational structure itself. By involving an external third party from an early stage, it is often possible to draw out the true feelings behind each executive's statement from a position one step removed from internal dynamics, and to sort out requirements in a neutral manner. The role of human resources will not only be to search for candidates, but will also expand to draw out the expectations of each management team and verbalize them as a requirement definition.

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Summary/Conclusion

The reason why recruitment for corporate planning and CFO positions is not successful is not only because there are no candidates in the market, but also because there is room for review in internal organization such as narrowing down requirements, decision-making process, and compensation design. These issues go beyond the framework of recruitment activities and are also issues of designing the management system itself.

It may seem like a long shot, but the quickest shortcut is to stop chasing after people who are not in the market and narrow down to one role that is truly necessary for the current business phase.

At Global Career Incubator (GCI), our consultants with practical experience as managers and hiring managers provide comprehensive support, from introducing management personnel such as corporate planning and CFOs to defining requirements and organizing the decision-making process. Please feel free to contact us if you have any concerns about not only improving the recruitment process but also reviewing the organization and management structure.

Author

Global Career Incubator Co., Ltd. CEO Shinichi Ikawa

Biography: Entered the business world after working for the Ministry of Defense (National Class I) and the Australian Ministry of Defence. After working at a major real estate company, he started a real estate venture and experienced management and recruitment at a domestic fund, domestic business company, and overseas tech company before founding our company.

Based on my experience as a corporate management and recruitment manager, I support corporate management, organization, recruitment, and training, as well as individual career selection and ability development. At the point of contact between Japan and the world, we face the challenges faced by companies and individuals alike.