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Thursday, May 17, 2012
Department: April 2007
Filling the Bill
The challenges of finding C-level execs for your A-team
Story by Marcella Rojas
A war for talent is being fought in the corporate corridors of the Capital Region, creating structural changes in the workforce and in the compensation packages being offered to C-level employees.
Ed Routhier, president of Hands On Video Relay Services Inc., a Rocklin-based provider of video-relay services for the deaf and hard of hearing, was recruited four months ago to help take the company of 200 employees to the next level. He hopes to recruit a new CFO and COO soon, plus hire 30 more employees this year. For over six months, the company has actively recruited for both positions.
“It’s definitely a challenge,” Routhier says. “There is a deficit of top management in the market because the business growth in this area is ahead of the migration of talent. The labor pool hasn’t caught up yet.
“The vast majority of the employee pool has been trained and planted roots in Silicon Valley and the San Francisco areas,” Routhier continues. For this reason, Hands On VRS decided to re-assess their compensation package and is looking at a broader candidate base throughout the United States.
Routhier relocated to Rocklin from Sonoma, where he ran a private equity firm for five years. The opportunity at Hands On VRS was one he couldn’t resist. “It was a very appealing business opportunity for me,” he says.
“The business growth in this area is ahead of the migration of talent.”
— Ed Routhier, president, Hands On Video Relay Services
Founded four years ago, Hands On VRS uses the Internet to provide an audio-video link to an interpreter. Hands On VRS’s products include hardware, software and call center-interpreting services, marketed to the 28 million Americans with hearing loss.
The company is the second largest player in a $3 billion market. This year, their objective is to become No. 1. But to do so, they need to find seasoned executives. Part of the challenge is the lack of universities in the Sacramento region.
“The region does not offer a solid feeding ground,” Routhier comments. “You don’t have as many universities in this immediate market, making it difficult to select a good pool of people.”
He is convinced the first step to recruiting top-notch executives is having a blue-chip board of directors.
“You can take the best business idea in the world, but if you don’t have top-quality management in place, it will fail,” he says. “Once you put them in place, then top-quality candidates will migrate toward an organization with management that has had their ticket punched.”
Hands On VRS CEO Ronald E. Obray is a 20-year veteran of the sign language-interpretation industry. Though he is excited about his company’s growth, he admits it is going to be tough.
“It takes good management and a finance team to grow a company rapidly. In the last four months, we have accomplished a lot, but this year we are turning up the jets and opening five call centers nationwide,” Obray says.
According to Abby Adlerman, managing director of executive search firm Russell Reynolds Associates in San Francisco, the hiring market continues to be active.
“You’re limited by the number of C-level opportunities within the region.”
— Diane Miller, president, Wilcox Miller & Nelson
“It is being driven by what appears to be fundamentally a strong economic environment that fuels growth and expansion strategies. Strong stock markets give employers the currency to give candidates more upside. The buyout activity, given the availability of capital, is helping as well,” Adlerman says.
Oleg Kaganovich, CEO of the Sacramento Area Regional Technology Alliance, says many executive-level searches in Sacramento involve relocations from the Bay Area — specifically Silicon Valley.
“Real estate work, for example, has involved relocation from all areas of the country, notably the East Coast as well as Chicago,” he notes.
Keith Pronske, president and CEO of Clean Energy Systems in Rancho Cordova, recently recruited an executive vice president from Wyoming and a vice president of research and development from San Diego. He hopes to find the rest of the talent his company needs locally.
“I think the talent is here,” Pronske says, “but it is a question of supply and demand balance. There are a lot of companies looking for talented individuals. It is a matter of being able to attract the right people to meet the company’s needs.”
Founded in 1993 and incorporated in 1996, Clean Energy Systems has developed a high-energy gas-generation system that powers turbines and produces electricity with no emissions or pollutants.
The company has 20 employees and plans to add a half dozen this year, primarily on the manufacturing side, to help Clean Energy Systems make the transition from research and development to commercial deployment.
“Executives can expect 10 to 20 percent higher salaries
in the Bay Area than in Sacramento.”
— Richard Pinsker, author, “Hiring Winners” and “Getting Hired”
“It can be a challenge to compete for talent with the more established and mature companies in town,” Pronske says, “but a younger company can offer those longer-term incentives such as stock options. What really counts when it comes to a compensation package is whether the employee thinks we are measuring up to other areas.”
Richard Pinsker, president of Pinsker & Co. in Granite Bay, an executive-selection consulting firm, has authored two books: “Hiring Winners” and “Getting Hired.” He moved to Granite Bay six years ago from Saratoga.
“Salaries here are lower than the Bay Area,” Pinsker mentions. “Executives can expect 10 to 20 percent higher salaries in the Bay Area than in Sacramento.”
He says some Capital Region companies can’t afford the fees search firms in the Bay Area would charge. According to Pinsker, recruiter fees there are approximately one-third or 25 percent of a position’s annual compensation.
It’s a different game in Sacramento. Pinsker had to get used to recruiting for luxury resort investment companies, homebuilders and even nonprofit agencies in Sacramento rather than the high-tech companies of the Bay Area.
Pinsker’s struggle is trying to get people to relocate to the Capital Region. “It doesn’t have the buzz that other areas have. But housing is a plus coming here from the Bay Area. The housing market has made a good appeal.”
SARTA’s Kaganovich agrees that the lower cost of living is attractive to executives. He sees a flurry of executive recruitment happening in the state.
“The market is hot,” he says. “Much of the California-based activity is in the Bay Area. Southern California is also hopping on the media, consumer, life sciences and biotech fronts. Sacramento has a growing clean-tech and semiconductor sector, and quite a bit of activity in the real estate industry.”
Adlerman of Russell Reynolds Associates adds that active industry areas also include financial, energy and healthcare. “Healthcare feels like it will always be hiring, given its increasing importance in the growing and aging population in the U.S. and California in particular,” she says.
Diane Miller, president of Wilcox Miller & Nelson in Sacramento, provides executive search, consulting and outplacement services on a national level. Her concern is that, “at a C level, you are limited by the number of C-level opportunities within the region. You move your family, the job doesn’t work out ... at a C level, you most likely will have to leave to stay within industry.”
Executive search party
ExecuNet’s Recruiters Confidence Index reached an all-time high last year in December amid expectations that executive-search assignments will increase by more than 20 percent for the second consecutive year in 2007.
Based in Norwalk, Conn., ExecuNet tracks executive recruiting trends and provides proprietary employment market research.
According to its survey of 120 executive recruiters, 83 percent of recruiters are confident or very confident the executive employment market will improve during the next six months — up from 72 percent in November 2006. Confidence among recruiters has never been higher in the history of the index.
“Based on the volume of quality job opportunities that are being created as companies look to increase revenues, we expect a large number of executives to jump into the market in search of a new challenge or opportunity during the next three months,” says Mark Anderson, president of ExecuNet.
Demand for executive talent rose sharply in 2006. Executive recruiters reported a 23 percent increase in the number of search assignments they received from corporate clients during the year — the largest increase since the height of the dot-com boom in 2000. This year, search firms are forecasting a 26 percent increase in executive-level job opportunities.
Recruiters’ short-term outlook also improved in December, as 82 percent said they are confident or very confident the employment market will improve in the next three months — up from 77 percent in the previous month.
