By John Casey

CEOs have had good and bad experiences with retained and contingent recruiters and often wonder when they should use a recruiter and how to get the best value. Recruiters are best used when it is: a critical position, important to hire the best candidate, an unusual (a purple squirrel) job, or necessary to include passive (employed) candidates. Companies have had success in finding key team members from both retained and contingent search firms but they operate very differently.

A Retained Search

Retained firms will only do exclusive searches and typically charge 30-35 percent of base and bonus with one-third up front, one-third on presentation of candidates and the final payment when the candidate is hired. They also have minimum fees and seldom work on searches for positions with a base below $150-200K. Retained search firms employ researchers to seek out employed executives who match the needs of the employer defined profile created with the recruiter. You can expect regular reports during the search and an excellent pool of four to six hard to find candidates at the end of a 60-120 day search.

Retained searches work best when there is a strong chemistry with management and the partner, and a demonstrated functional and industry expertise. The risk is when a retained firm doesn’t listen carefully and take the time to understand the culture, pushing their ideas and candidates. Avoid recruiters with a high sense of their worth. They do not know what is best for the client.

A Contingent Search

Contingent firms typically work on a non-exclusive basis, charge 20-25 percent of base pay and only get paid when a candidate is hired. They often work in competition with other contingent firms so they must work quickly to make their financial model work. They also tend to be used to recruit for lower level positions. Typically the recruiter will work with both clients and candidates.

Contingent searches are best when there is functional expertise. Chemistry is also important. The risk is working with a “spray and pray” recruiter who sprays resumes without understanding needs, praying that one of them sticks. If time is spent filtering resumes to find the best candidates then there’s no need to pay a recruiter.

The Exclusive Contingent Model

A new model, incorporating the best elements of the retained and exclusive models, is an “exclusive contingent” agreement where the company agrees to give the recruiter exclusivity for a limited period of time and doesn’t pay anything until a candidate is hired. This gives the recruiter the incentive to research to find the best candidates while providing the client a pay-for-performance agreement. This way both the company and the recruiter have a vested interest and the recruiter is committed to an in-depth search.

CEOs who see their recruiters as trusted business partners, committed to the success of their companies, will derive the greatest value from their assignments. Both parties need to be engaged. CEOs need access to the best talent with the necessary skills who are aligned with their corporate culture.

John Casey is founder of John Casey & Associates, a Dallas specialty search firm matching candidates with clients’ cultures and providing human resource consultants and coaches. John was CEO and CFO for 19 years and earned his MBA from Harvard Business School. www.jcaseyassociates.com

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By Joe Zente

Fast-forward 12 months. The year is winding down and it’s time to reflect on 2012. The presidential election recently concluded and you are wondering if the new knuckleheads in Washington will continue to spin wheels and create even more chaos and uncertainty than the previous ones. Who knows?

How quickly the year has flown. Your company has done OK, but there are several important objectives, including several important personal ones, that you just didn’t have time to achieve. And you were so busy. You may even be exhausted. You’re thinking to yourself, next year will be different. But will it?

During the last several months, I’ve visited with over a hundred of the most successful business owners in Texas. I interviewed them about their success. These are the private business CEOs that consistently win performance awards for rapid revenue growth, profitability, leadership, best workplaces, superior entrepreneurship, etc. You’ve probably read about these people.

When surveyed, the vast majority of these outstanding company builders reported a record year in 2011, despite a lackluster economy. Interestingly, most also reported a much lower level of stress than last year and said that they spent a much larger percentage of time doing things that they really loved, all while increasing their company valuation. More profit, more vacation, more peace of mind…

Will this be your story next year?

All of these successful CEOs and presidents have unique businesses. How did they do it?

Instead of blaming the economy and worrying about things outside of their control, each took proactive responsibility for the beliefs and activities they could control, leading to remarkable results and personal freedom.

Here are five simple choices – each of these outstanding owners chose to make unconditional commitments prior to starting their year:

They committed to start with the end in mind. They developed a clear, inspirational personal vision. They then developed a clear vision for their business (including a succession plan or exit strategy) that aligned perfectly with their personal vision.

They committed to allocate sufficient time for themselves. No matter how many fires were burning.

They committed to eliminate mediocrity and entitlement mentality. They raised their expectations and then raised everyone else’s expectations. They insisted that their company would have the right people on the right seats on the bus. Then they held everyone accountable to the new higher standards.

They committed to have enough capital to operate their business and execute their plans.

They committed to use their time in the most effective way and used delegation as a critical element of highly leveraged successful leadership. They committed to proactively use a process to focus their precious time and energy on the true priorities, executing the essential, non-negotiable components of an effective CEO job description:

They planned. They improved operational health, financial health, and executive and communication blind spots. They analyzed & improved stakeholder satisfaction, the leading indicator of future results. They met with peer CEOs, and held themselves accountable to ensure effective execution on the commitments above.

If these things seem time consuming, think again. These decisions are all massive time savers and stress removers. Choosing to take responsibility for behaving like an effective business owner will help to generate improved results for the company and more freedom to spend time doing the things you love most. No magic, just choices.

Joe Zente is the President/CEO of Z|three Performance Development. Joe founded Z|three over a decade ago to help private business owners exceed their sales, business and life goals. Z|three is located in Austin.

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By Laura Patterson

The Institute for Supply Management recently bottom lined a business confidence and economic update report by stating, “Slow growth – if any – remains a top concern among American businesses.” With forecasts like that, it’s not surprising that the leadership team’s expectations and pressure on marketing continues to rise. CEOs continually want to know how marketing is impacting their business.

For many CEOs, it really isn’t about money as much as it’s about understanding the value and impact of what’s been spent. Many marketing organizations may visually present some data or provide a status report, but for the most part, the C-Suite is still waiting for marketing to help in strategic decision making by understanding what is and isn’t working. Metrics need to be displayed in a usable and actionable way.

There are five fundamental steps every CEO can encourage, support, and demand to optimize marketing. Understanding the impact of marketing on a business starts with measurement. This initial step is the essential ingredient for performing the useful analysis needed to optimize marketing efforts – measurement and metrics are the foundation. Marketing needs these two basic elements to present actionable data and develop models to support fact-based decisions.  Here’s how the C-Suite can help:

1. 1.       Enable Alignment

Marketing organizations that align their efforts to the business are perceived as having the greatest impact on the business. The best marketing organizations create a direct line of sight between marketing activities and business outcomes. Marketing needs to understand how many new customers need to be acquired and ideally from what markets; how many existing customers need to be retained, and if there is a churn issue, what’s causing it? What customers need to grow and will this growth come from existing or new products? With this information marketing activities can be properly aligned.

2.       Collaborate on Metrics

Marketers have many tracking tools available to them and many of them are free: website visitors, twitter followers, and email open rates. There is so much, in fact, many marketers are drowning in data. The challenge isn’t measuring but rather measuring what is meaningful. By starting with the business outcomes and aligning marketing efforts with these, marketers can focus on metrics that matter to the leadership team. Mapping marketing metrics to outcomes improves the quality of the marketing objectives and facilitates collaboration between marketing and the leadership team. People perform to how they’re measured. If the metrics are based on activity such as traffic to the website and email open rates, then that’s what the leadership team will see, even if that’s not what will help the business. There’s no silver bullet marketing metric. No single measure, such as Return On Investment, completely encompasses the value and impact of marketing. More than likely, a mix of financial and nonfinancial metrics such as the number of qualified leads, the rate of customer acquisition, the cost-to-acquire, cost-per-lead, marketing win rate, sales pipeline contributions, share-of-wallet, customer retention, and referral rate, are better measures of success.

3.       Expect Performance Setting and Tracking 

With alignment and agreement on metrics, a strict policy of setting performance targets for all marketing activities needs to be enforced. Replace broad brush targets such as increase awareness, grow share, keep customers, and do more business with existing customers, with specific quantifiable objectives. Expect marketing to have a performance and cost target for every marketing activity such as the number of new contacts, new conversations in play, new qualified leads, number of demos, number of trials, the number of samples, cost-per-contact, and cost-per-lead. Expect marketing to track and report on the performance and costs. Keeping track of marketing costs and results by objective, program, channel, geography, segment and medium can greatly improve understanding the effectiveness of the marketing investment. Store the results in a data base and use the information to help set targets in the future. This step is about having the discipline to consistently establish performance targets and capture marketing performance. It is at this step an organization truly begins to understand the value and impact of marketing.

 4.       Require Analysis and the Use of Analytics

With performance data and a repository of results, organizations can now leverage analytics. Analytics enable companies to make decisions related to business operations, competitive moves, staffing and skill requirements, customer strategy, positioning/messaging, and, of course, marketing optimization. As Dave Frankland of Forrester Research once said, “The goal is not to collect data, but to develop insights.” Insights are the purview of analytics. Analytics are algorithms: advanced and/or mathematical techniques on large volumes of data that help marketers translate data into actionable insights. The analysis drives marketing and customer strategies and optimizes marketing efforts. At this step building models will help answer questions like, “How likely will this group of customers adopt this new product?”Or, “How likely will this group of customer respond to this offer?”

5.       Request a Marketing Dashboard 

There are all sorts of marketing dashboards – from the bad, to the ugly, to the good. A dashboard is more than just a visual representation of data; a good dashboard is actionable because it visually reflects the output of the measurement efforts.  A dashboard is typically populated with metrics. In fact, the design of a dashboard usually leads to a conversation that entails the first two steps – alignment and collaboration – and captures the data in the third step. A good dashboard answers two questions:  “So What?” And, “What’s Next?”

“So What?” That’s what was gotten for the effort and what difference it made to the company. “What’s Next?” That’s what the options are now, based on what’s now known. Marketing dashboards should be a catalyst for decisions and action.

Laura Patterson is president and co-founder of VisionEdge Marketing based in Austin. Ms. Patterson’s newest book is “Metrics In Action:  Creating a Performance-Driven Marketing Organization,” a primer for improving marketing measurement and performance.

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North Texas is the fastest growing economy in the U.S. We are still in a sluggish economy nationwide but the Dallas workforce saw the second largest improvement nationwide over the second half of the last decade. This did not happen by accident; it happened by emphasizing private/public partnerships, leveraging our strengths in key business sectors and most importantly a mindset that understands how to create an environment for business growth.

Public/Private Partnerships

A strong component of creating jobs in our community involves our public/private partnerships with corporations.

The Dallas workforce system, including Workforce Solutions Greater Dallas (the local workforce board), Dallas Regional Chamber, Dallas County Community College and City of Dallas economic development has been active in public-private partnerships for more than a decade. Workforce Solutions Greater Dallas (WSG Dallas) is an employer led non-profit board appointed by the Mayor of Dallas and the Dallas County Judge. We are very deliberate in these appointments to insure growth industry representation.  Federal, state and local government funds are used to supplement workforce training and workforce screening for involved employers.  Employers have multiple points of entry into the process and can easily find a partnership for any workforce need.

In fact this partnership help create the number one employer of the year as awarded by Texas Workforce Commission – NorthGate Constructors, a joint venture between two construction companies, joining together to implement a major highway project. NorthGate Constructors saw an immediate need for a trained and diverse workforce and approached WFS Dallas to meet this need.  They were able to reach a trained, diverse workforce to begin work immediately and proud to say that in the first 50 hires, 22% were women and 22% Veterans.

Key Targeted Business Sectors

By targeting key business sectors in our city, we are able to capitalize on the areas that promise the greatest economic growth:  Healthcare, Technology, Finance and Logistics

Healthcare:

Healthcare has been a prominent industry in recent years and has garnered the attention of the chamber in developing a Healthcare Cluster to leverage funding for necessary workforce shortages.  Most recently, state funding of over $1M has been approved to support new hire training and re-training for three mid-sized hospitals.  This will result in new jobs, better trained healthcare professionals already employed and ultimately, better healthcare for the citizens of our community.  We have focused on utilizing our community colleges to develop training opportunities in the healthcare field, creating a pipeline that will feed highly trained individuals into a growing workforce.

Technology:

Dallas has a great tradition in breaking new ground in technology.  Texas Instruments created Dallas’ tech corridor and the area is attracting more high tech companies and professionals.  University of Texas at Dallas has been a magnet for great students who want to break new ground in this field and has just recently opened a new center for embryonic businesses that have come out of technology breakthroughs at the University.

Finance:

Dallas has always been known as a banking and finance center. In the last decade it has become a hub for hedge funds, private equity shops, real estate funds and family offices looking for the next exciting investment. This focus on capital is key if we want to continue the growth we have seen in recent years. Many professionals are graduating from SMU’ s Cox School of Business, one of the nation’s fastest growing and hottest business schools.

Logistics:

Our unique geography will be fertile ground for this industry. Dallas’ central location is prime shipping to either coast, Mexico and Canada.  Because of our world class airport, DFW is the fourth busiest airport in the world -not just in passenger traffic but air cargo which is a major part of its business model.

A SPECIAL ATTITUDE

Growing jobs is about growing businesses. And, to grow businesses a region must provide the personal as well as the professional needs of management. So, besides Dallas’s great network of professional services like legal, accounting, and marketing, we also tout a high quality of life with recreation, sports, the arts and education. But, importantly we must prepare our workforce for tomorrow’s world as well. By supporting and investing in initiatives and partnerships that train workers to succeed in these fields, we are ensuring that Dallas will grow its economy in the most efficient and successful way possible.

We identify, train, and prepare citizens for the challenges that our economy presents. One way Dallas has utilized these ideas is by partnering with our local community college, like Mountain View College, where there is a skill development project underway. These unique initiatives allow us to reach a group of citizenry who might otherwise be ignored. By giving more people an opportunity to succeed, Dallas will make the most of its most important resource; its people.

The Mountain View Skill Development Project provides cost effective, flexible and robust Information Technology solutions for businesses of all sizes and company capabilities for internal operations, supplies and customers. Through this initiative, Clear Technologies provides solutions that help organizations of all sizes increase organizational effectiveness. Owners, managers and employees of businesses of any size or type can benefit from this type of Information Technology training. Clear Technologies offers training that will prepare employees to not only succeed in meeting the needs of enterprise but to sustain success in the growing IT industry.

Dallas will continue to be a leading force for the economy of Texas by continuing to look forward in job creation and economic development opportunities. Because of our unique location within Texas and the country, we are afforded unique opportunities for growth, and plan to capitalize on those opportunities. As we continue to emphasize forward-looking job creation and leveraging our “Dallas Can Do Spirit”, the Dallas economy will continue to grow and our residents will be employed in jobs that can provide a high quality of life.

Dallas Mayor Mike Rawlings has been a businessman, CEO and volunteer civic leader. He was CEO of Pizza Hut and Tracy-Locke Advertising, Dallas Homeless Czar, president of the Dallas Parks and Recreation Board, and chair of the Dallas Convention and Visitors’ Bureau.

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By Marsha Cameron

In the past two years, modest compensation increases in the U.S. reflected improvements in business results, while here in Texas, economic growth exceeded other parts of the country. Texas CEOs indicate there are continuing concerns about the economy, which impacts the willingness to drive up compensation costs and/or reduce flexibility. Texas companies, on average, maintain more conservative compensation practices and preserve a higher level of discretion than their counterparts on the East or West coasts, which has served the economy well. On the other hand, many Texas CEOs are starting to ask questions about how effectively their companies are addressing current compensation concerns:

1.  Do We Need to Increase Pay?

Given the shaky economic recovery, low inflation and high level of unemployment, many Texas employers have concerns about increasing base salaries. The first question to consider before giving increases is affordability. If a company is continuing to experience economic distress, salary increases are probably out of the question. If this is the case, it is important to communicate with employees and engage them in measures to help improve profitability.

Once company performance improves, it is hard to continue withholding salary increases. However, companies should balance the maintenance of hard-earned cost reductions with pay increases, and certainly, focus on rewarding high performers. Many companies have increased incentive opportunities which are “self-funding” (i.e., linked to profit improvements) instead of base pay increases. Generally, if communications are clear and consistent, employees will accept temporary sacrifices. On the other hand, lack of communication or perceived unequal treatment of employees at the top of the organization versus mid-levels or rank and file is a morale killer.

2. How Do I Know Our Compensation Structure Truly Motivates and Rewards High Performance?

Most organizations have placed higher emphasis on pay-for-performance plans in the past decade. Incentive pay programs have grown in many organizations as base salary increases were low or non-existent. However, motivating high performance requires more than adding or increasing an incentive opportunity. It’s important to remember the axiom “what gets measured gets done,” and communicating with executives and other eligible employees is key. Does your company set goals that can be communicated with eligible employees? Do employees understand the company’s and their personal goals? Are the reasons for merit increases or bonuses clear? In companies where there is a clear connection between pay and performance, the answers to all of these questions is a resounding, “Yes.”

3. Obtaining Shareholder Support For Public Company Executive Compensation Plans

New SEC rules in 2011 mandated shareholder “say-on-pay” votes at least once every three years. Many companies are seeking to improve their margin of favorable votes. There are a number of ways that companies can proactively influence a say-on-pay vote. Proxy advisory firms look for incentive plans with structured metrics and an objective basis for awards, a well-defined peer group for supporting compensation decisions, and transparent disclosure about both relative and absolute performance. In short, less discretion is highly preferred. Second, companies can reach out to institutional investors that voted against executive compensation previously and, to the degree possible, address concerns. If the company made changes to executive compensation plans or approaches in 2011, or are introducing changes in 2012 that are responsive to shareholder concerns, explain those in the “Compensation Discussion and Analysis” section of the proxy.

4.  How Does a Private Company Compete With Incentive Opportunities?

It’s possible for private companies to have the same equity instruments as public companies, so the true limitations are likely to be relative liquidity of awards, ease of communication, and corporate philosophy regarding ownership. Lack of liquidity (i.e., limited ability to obtain gains without a triggering an event such as a change in control) can be a competitive disadvantage unless there is a clear plan for an IPO. Further, communications about award value are more complex because there is no easily referenced stock value to track. Also, private companies often have issues with diluting ownership. These are obstacles that can be overcome with more sophisticated plan design and effective communications, but a long-term cash program can also be considered. In this case, it is important to establish truly strategic metrics where achievements will make a critical difference to company success and also allow a significant upside in awards, depending upon results, that could match the value of stock options or restricted stock.

5.   How Do We Attract and Retain the Best Employees in the Industry?

First, recognize that there is no one formula. Companies in varying stages of maturity attract diverse employees motivated by different compensation approaches. For instance, it would be typical to see higher incentive opportunities and lower base pay in a high growth, early business cycle company. It might be challenging for this type of company to attract employees from large, mature companies with highly competitive base salaries and less pay at risk. Further, generational considerations have become an important part of attracting and retaining employees in some industries. Industries employing a high proportion of younger employees have found themselves providing more flexible time-off programs, a casual work environment and an emphasis on work/life balance to attract the best employees.

There is no “one way” to address compensation concerns today. What worked for the company down the street is unlikely to work for another company unless there is a comparable stage of business maturity, similar strategies, economics, ownership structure, industry characteristics and employee demographics. Consider each business situation and priorities, understand the competitive landscape, and then maintain or implement programs and make decisions that drive the desired business results.

Marsha Cameron is a Partner and Co-founder of Dallas based Paradox Compensation Advisors. Marsha has over 25 years of experience in both public and private companies in the areas of compensation consulting, performance management, and the use of human resources approaches during mergers and other business transactions or strategic changes. 

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A Commentary By Veronica Edwards

I literally failed first grade because, according to my teacher, I wasted valuable classroom time daydreaming out the window, talked too much and was unable to color within the lines. My future career prospects at the age of seven were bleak.

I did in fact survive first grade (twice), completed my MBA and am currently a doctorate student with a dual concentration in health care administration and organizational leadership. Having overcome my own challenges, I am optimistic about the future.

Repeatedly asked how I achieved high revenue growth in my own company, I eventually came to realize my company is an entrepreneurial puzzle wrapped in an enigma. The factors most responsible for success are the very qualities criticized long ago. I chuckle when I realize that the secrets of my success were revealed 40 years ago in a scathing old report card written by a very prophetic elementary teacher. Daydreaming in class has been frowned upon and discouraged.

Business, however, demands CEO’s daydream to visualize the endless possibilities of tomorrow. I spend a large percentage of my time, energy and resources gazing at my company and strategizing future endeavors to achieve a savvy competitive position.

I did not and I still do not consistently “color between the lines” and as I look around, our entire society is encouraged to exercise imagination. The use of iPads, iPhones and iEverything demonstrates the highly imaginative and adaptable qualities of our country’s younger generations. It is up to us as leaders of the business community to direct their attention to the opportunities. A student we support today in my industry of health care, even if just with words of encouragement, may one day save your life or the life of a loved one.

A redirection of labor into the health care sector is sure to benefit the U.S. economy especially given the fact that skilled health care specialists continue to be in high demand and short supply. I am encouraged and driven to foster future doctors, nurses, scientists and technicians and have instituted company scholarships for retired military and other students pursuing health care occupations.

I have chosen to ignite and encourage diverse generations to enter the medical field and to inspire the under or unemployed to embrace a second career. I am not an educator but adamantly understand that education can unfold new avenues. Have you ever seen an RN who previously worked in the oil fields, a pharmacist who previously walked the halls as a teacher or an insurance agent that went back to school to become a chiropractor? I have, and I hope their stories serve a beacon to those who dare to pursue rewarding medical careers.

Making the shift to a new occupation is a risky endeavor. I know from experience — I was downsized from an executive position within the telecommunications industry. During my first few days of unemployment I honestly assessed my skills and applied all my analytical acumen to determine how I would make a living. My experience in human resources and the dramatic growth of the health care industry led me to focus on medical staffing. With no medical experience, a modest savings, an MBA that enabled me to temporarily teach to pay basic bills and the internet as my library, I chose to embrace an entrepreneurial dream and build a business focused on health care staffing. Although I was in survival mode, I chose a particularly daring path that included transitioning and learning a drastically different industry. My friends laughed and politely pointed out the odds against my hallucinations of success especially in a field I knew nothing about. Despite passionate warnings I marched forward blissfully daydreaming about the possibilities.

My weaknesses from four decades ago have become my strengths. I survived first grade, brutal economic recessions and a second career which involved a transition from the wireless industry into health care. I’ve managed to grow my company, oversee its monetary portfolio and maintain 100 percent ownership during one of the worst financial crises in history. So what advice would I give other CEOs? Remember that during the toughest economic times the hardest skill to master and maintain is optimism.

Veronica Edwards is the CEO of InGenesis, a medical staffing firm based in San Antonio. Along with overseeing one of the fastest growing companies in America four years in a row, Ms. Edwards was recognized by the U.S. Hispanic Chamber as “Businesswoman of the Year” for 2011. 

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By Mike Maslanka

Employment law often makes no sense. Because of its counter-intuitive nature, up is down and down is up. So let’s play “lawsuit or no lawsuit” and match our wits versus the law.

Employee gives birth. She is later terminated. She sues, claiming a violation of the Pregnancy Discrimination Act. The company asks for the case to be dismissed; after all, she was not pregnant when she was fired. No luck. The court refused to toss the case, saying that she was suing for giving birth, not for being pregnant and the PDA, by its terms, prohibits discrimination based upon giving birth. Result: lawsuit.

Or look at Julia Poucher who worked in Dallas for Automatic Data Processing. She mentions at a company holiday party the she and her husband are considering starting a family. She is later terminated, sues under the PDA and the company tells the court she was not pregnant when she was terminated, so we win, thanks for playing. Not so fast says the court, the PDA covers female employees who are intending to get pregnant and firing them as a result violates the PDA. I guess our parents were wrong: you can be just a little bit pregnant.  Result:  lawsuit.

Let’s go from the PDA to the FLSA (Fair Labor Standards Act) and the strange case of employees who admitted violation of a company policy but convinced a judge to rule for them. Two employees went to work for ADT Security Systems, which sells and installs home security devices. Not unreasonably, the company had a rule, to which these employees agreed, that they could get fired for disclosing confidential customer information. After all, it’s hard to beat back a home invasion if the bad guys know the access codes.

The employees believed they were not being paid the commissions and bonuses that were promised to them and filed a wage complaint with a state agency, attaching customer contracts they believed supported how much they were owed. The agency had asked them for any supporting documents.

The company got the complaints, saw the disclosed information, and fired them. The judge granted summary judgment for the employees. Why? She said that the FLSA prohibits retaliation when an employee “participates” in a complaint process; part of that process was filing a claim, with supporting documents; and the company admitted it fired the employees for providing the documents. Result:  lawsuit. Tidy, but unrealistic reasoning.

Wait, there’s more. The amendments to the Americans with Disabilities Act became effective in January 2009, and the EEOC regulations were adopted earlier in 2011. Their effect cannot be understated and are spreading in courtrooms throughout Texas.

If you believe that a “disability” is limited to the most serious or obvious medical conditions, you would be wrong. Sleep apnea? Covered. Obesity? Covered. Enlarged prostate? Covered. The bottom line is that lots of conditions once excluded pre-amendments from coverage are now covered. The upset:  An employer has an obligation to reasonably accommodate the employee’s disability to help them perform the essential functions of the job. Don’t do so and guess what?  The result is a lawsuit.

Finally, cases are coming down using the law against sex discrimination to protect transsexuals. Last month, a federal appeals court in Atlanta reasoned it out this way: an adverse employment action against a transgender employee because he or she changed sexes is an action “because of sex” and therefore a violation of Title VII. No different, than say, firing an employee “because of religion” because she switched beliefs from Christianity to Buddhism.  Result?  Lawsuit.

Mark Twain remarked, “It isn’t what you don’t know that hurts you, it is what you think is so that isn’t.” True in life, true in the law. So the next time you think that something just can’t be so, that it makes no sense, take a deep breath and think again. It just might be.

Michael P. Maslanka is the Office Head of the Dallas office of Constangy, Brooks & Smith. His latest book is “Maslanka’s Field Guide to the ADA and Its Amendments,” published by American Lawyer Media. You can read his blog at www.texaslawyer.typepad.com/work_matters or email him at mmaslanka@constangy.com

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Years ago, when a farmer needed a new barn, he’d gather his neighbors together and turn it into a community project – a “barn-raising.”

The premise was simple: Many hands make the work go faster. As important, it brought the community together – everyone had a stake in building something new and better.

That “barn-raising” ideal – working together for a common good – is still relevant today. In fact, it’s a strategy we strongly believe in here in Fort Worth as we seek to expand economic growth and opportunity.

Embracing that cooperative spirit has been crucial to helping Fort Worth attract enterprising and expanding businesses. It’s all about producing sustainable, well-paying jobs even during these challenging financial times. The key has been community-wide cooperation. Public/private partnerships are the backbone of what we do.

One only has to look at the example of Alliance Texas to see the power of strong partnerships between business and local government. Alliance Texas represents a public investment of a little more than $400 million that has produced a $40 billion economic impact for North Texas.

Anchored by the world’s first industrial airport and one of the world’s busiest inland ports, Alliance Texas is home to 265 companies and more than 30,000 employees.

Despite the nation trends, Fort Worth continues to use public/private partnerships to create jobs. This past summer, GE Transportation announced it will invest $96 million in a new plant in North Fort Worth creating roughly 700 new high-tech manufacturing jobs by 2016. Long-time Fort Worth-based Alcon Laboratories plans an expansion that will bring more than $200 million in investment and hundreds more well-paying jobs to Fort Worth. The list goes on and on, providing examples of how we work just as hard to help existing businesses expand as we do to attract new business partners.

So, what’s Fort Worth’s economic development strategy? The answer can be found again in public/private partnerships. Yes, we have a dynamic economic development tool box, and are keen on finding ways to help businesses build and expand within their margins. In return for economic incentives, in Fort Worth we look for specific business commitments – not just goals – when it comes to hiring tax paying Fort Worth city residents, utilizing Fort Worth-based minority or women enterprises, or investing in a particular part of our community.

When it comes to encouraging business development, it’s a partnership, and one that’s paid great dividends for the businesses and people of Fort Worth. In the end, that’s how things work: Many hands grabbing hammers and working toward a common good that benefits all.

There is a sense of stewardship here in Fort Worth. We understand that each investment is precious – not only to those investing, but to those that investment will impact.

And so, we work hard to encourage the kind of growth that will benefit both. Growth for growth’s sake is not sustainable, but building something that is an asset to the fabric of your community will leave a lasting legacy – like a strong new barn.

Betsy Price is a Fort Worth native and began her career in public service as Tarrant County Tax Assessor in 2000. She graduated from the University of Texas in Arlington and before being elected to office, owned Price Cornelius Title Service.

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By Jerry Dilettuso

According to CristKolder Associates, a search firm specializing in C-suite searches, the number of Chief Operating Officers is in decline and has been since the year 2000. In that year 47.5 percent of all companies on the Fortune 500 and S&P 500 lists had a COO. By contrast, in July, 2011, the number of companies on these two lists with a COO had declined to 38.3 percent. These numbers reflect my own perspective.

I once joined a struggling company with two operating divisions as its president. Not more than three weeks after my arrival, the head of our most profitable division, who was universally revered by his colleagues, decided to leave for another opportunity. I knew absolutely no one at the company – never mind their strengths and weaknesses; I didn’t even know many of their names. What’s more, we had zero time to conduct a lengthy replacement search, and by “lengthy” I mean more than a couple of weeks.

After some reflection, I consulted with our Chief Financial Officer, who had been with our company for a couple of years and was familiar with all of the company’s executives. I had an idea, but I certainly wanted to discuss it with someone. Simply stated, the proposition was to request the department heads within the division to select their leader. After considerable discussion, my CFO and I agreed that I would meet with the department heads; explain I needed their help, and ask them for a recommendation.

When we met, I said they need not provide an answer during the meeting, but in all of our best interests, they had to move expeditiously. Much to my surprise, one of the department heads asked if they could meet separately and immediately. They returned in a couple of hours. Not only had they chosen a leader, but also they suggested a restructuring that separated the division into two units, named the head of the new division, and suggested the new division head report to me. We implemented their plan exactly as presented and the individual who succeeded the resigning division head is still in that position today.

The point of this story is not the process of choosing a division head; it was my reliance on our CFO for wise counsel, as well as the CFO expanding his purview beyond his traditional role. Here’s another example. We had an invoice that was considered by everyone, including our customers, virtually unintelligible.  It, along with other factors, caused a perception that we were not easy to do business with.

Our CFO and I got together and decided he would conduct a series of focus groups with some of our customers to simplify the invoice. Once everyone agreed on its structure, our CFO had to work with our IT department to construct the desired end product.  Sure, there were plenty of compromises made during the process, but we ended up with an invoice the customers liked and improved payment time.

Again, the point is not about the invoice; it’s about the CFO taking on responsibilities beyond finance. I want to provide one more example before drawing some conclusions. Many companies compete on “time.” For our company competing on “time” meant reducing cycle time. We defined cycle time as the number of days from the moment a salesperson received an order until the order was placed, in perfect condition, in the hands of the customer.

Consequently, reducing cycle time required that we flowchart the process and take “time” out wherever possible, not just speed the order through the plant. The “front end” of the order consisted of the sales person entering it and finance determining the credit worthiness of the customer. We reduced our guaranteed delivery time from eight weeks to five weeks with a considerable number of days coming from the credit portion of the “front end.”

Our CFO understood that cycle time reduction, a key element in our competitive strategy, required every element involved in the flow to provide a contribution in terms of days. Finance was not sacrosanct; it was merely a piece of the puzzle.

Now, let’s count up the number of functions in which our CFO became involved. The first example involves the most important task of the CEO: who to hire. It is, however, essentially, a human resources task. The second example involves marketing and sales with a corollary benefit to finance. The third example involves strategy and IT. Even more important, the third example involves a realization that finance is an integral part of a value chain that helps determine a company’s unique capabilities, competencies, and competitive advantages. There are additional functions in which our CFO became involved, including manufacturing, merchandising, communications, and legal.

There is a two-fold point to be made here, which is almost circular in nature. The first is: because finance is inexorably intertwined with every aspect of a company, the CEO must, by necessity, rely upon the CFO for perspective on every major decision made . . . and some minor ones as well. The second is: because the CFO must be consulted on a wide variety of issues relating to every division and function in the organization, the CFO must be able to think broadly. After all, what I am describing here is the principal confidant or counselor to the CEO.

The CFO cannot just report numbers, rather, the CFO must be able to interpret the numbers. The CFO must possess that unique ability to get “behind the numbers,” and get out of the office, walk the corridors and shop floor, forge relationships with divisional and departmental people, and understand their issues – not only to provide wise counsel to the CEO but also to assist the divisions and functions in the resolution of their issues.

I have never liked the term “number two,” as it suggests there must be a number one, which, in turn, leads to some sort of pecking order. I’ve always fostered a team approach where everyone is important and no one worries about who is more important than anyone else. If, however, we use influence as a measure of importance, I would suggest that, by default, a CEO’s CFO must have primary influence so long as that CFO is equipped to do so. I would also suggest that smaller companies cannot afford the additional highly paid position of COO. Finally, I believe there is too much redundancy in the COO/CFO positions to merit the additional COO head-count.

Mr. Dilettuso is a CEO adept at reversing distressed situations. He is a member of the faculty of the Business Leadership Center at the Cox School of Business at Southern Methodist University where he teaches a seminar entitled “The Five Roles of the Chief Executive Officer.”  He may be reached in Dallas at jerryd@dilettuso.com and 972-569-7848.   

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Texas CEOs see both the economy and hiring improving in the coming year.

Rafael Pastor, CEO, Vistage International

Rafael Pastor, CEO of Vistage International, recently shared the results of the Q4, 2011 Vistage CEO Confidence Index at the Texas CEO Magazine Speaker Series event in Austin.

Like their U.S. peers, CEOs in Texas believe the economy has and will continue to improve. And in three areas, Texas CEOs are even more optimistic than the rest of the country:

• Expect increase in revenues – 77%
• Expect increase in profits – 60%
• Plan to hire in the next 12 months – 65%

In each of these three areas, Texas business leaders are significantly ahead of the rest of the country.  “Our survey is probably the leading barometer in the U.S. of what CEOs of small and medium-sized businesses think about the economy,” said Pastor. The quarterly report is compiled by Richard Curtin, an economics professor at the University of Michigan. Curtain says since beginning the survey in 2003, it has become a leading indicator of both GDP growth and employment levels. Pastor believes the survey is one to two quarters ahead of the actual economic indicators issued by the government.

Other results from the total U.S. survey indicated:

• Largest quarterly gain (18%) in CEO Confidence since 2009
• 41% of CEOs recognized improved economic conditions over the previous 12 months, up from just 18% in the Q3, 2011 survey
• Only 12% of CEOs thought the economy had recently worsened versus 39% in Q3, 2011
• 40% of CEOs believe that overall economic conditions in the U.S. will improve during the next 12 months versus 20% in Q3, 2011

In his final comments, Pastor emphasized leadership and the four elements of character CEOs must have – confidence, curiosity, courage and collaboration.

“If you cannot project confidence to all of your constituents – your staff, your customers, your bankers, your vendors,” said Pastor, “how are they going to have any confidence in you and your business?” Pastor says CEOs have to confront issues like the economy and let their team know, “I believe in you, I believe in our product and I believe in our ability to innovate and get through this.”  Pastor also says confidence is a self-fulfilling prophesy.

Curiosity is vital, because leaders have to look around the corner in order to look ahead and see what’s coming. Looking straight ahead, says Pastor, simply isn’t enough.

He added that leaders must be have the courage to take risks to innovate and look inside and ask themselves, “What can I do differently?”

Finally, Pastor said it’s important to not only collaborate internally to get people inside a company to work together, but today it’s increasingly important to collaborate with external partners within the community because, “It’s likely the sum is greater than the parts.”

Ultimately Pastor said, “It’s all up to us. It’s our influence in our companies and our communities that makes the difference. It’s up to us.”

The Texas CEO Magazine Speaker Series is sponsored by:

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By Jamie Ferguson

One of the most commonly overlooked responsibilities by Boards of Directors is a strategically planned and executed succession plan. Surprisingly, as governance is one of the board’s most crucial responsibilities, 60 percent of large U.S. companies’ HR Directors said their firms have no CEO succession plans in place. The board has a responsibility to assure stakeholders that a solid strategy is in place to transition the company through changes in corporate leadership. Once both the CEO and board understand the importance of succession planning, the following key practices can be built into a plan.

Understand the Challenge

Directors must look into the future of their company and ask themselves not, “What do we need in a CEO”, but, “What will we need in a CEO?” Developing an in-depth forecast of what the future will hold for both the company and the industry over the next three to seven years will allow them to determine what skill sets and experiences the successor must possess to successfully lead the company through the imminent challenges ahead.

Analyze the Organization’s Human Capital 

According to a global study published in the Harvard Business Review, only 15 percent of companies in North America believe they have enough qualified successors for key positions. Due to this number, board members must begin to analyze their potential candidates several years before a likely retirement date for the CEO. This should begin with an in-depth review of the management team that reports directly to the Chief Executive. A thorough review will give insight into the bench strength of an organization as well as identify internal candidates who have the skills and experiences to address the company’s forecasted challenges in the CEO role.  These individuals can then be developed over the next several years. 

A second step in this exercise is to identify external candidates who can enter the company through alternate positions and be developed in preparation of CEO succession. This allows the board to bring a new dimension and set of skills and experience to an organization that it may lack, while entering another future executive into the pipeline. These external candidates can be identified with the aid of an executive search firm, as they will likely be in the high priority pool of their current companies. A word to the wise – while this method is favored by HR directors, it is not always the most successful choice. The guidelines the board sets for these individuals is not completely in line with estimating their level of leadership performance. Boards must focus their attention on evaluating these individuals’ leadership capabilities and decision making skills.

Many studies have been conducted to determine if the most successful leaders come from internal or external appointments. Across the spectrum, both insiders and outsiders have performed similarly – both falling into the top and bottom of performance charts. Much of the outcomes depend heavily on the state of the company at the time of the transition. An interesting yet successful trend is board members filling the CEO role. They have a blend of insider company knowledge including financials and expectations, and still have an outsider status as they aren’t part of day-to-day operations.

Whoever the candidates may be, boards must still put an active effort into development. This may include appointing potential leaders at roles with increasing responsibility, giving these individuals to manage across many sectors  and locations of the business, mentoring them and aiding them in building a track record of delivering while building long term results. This whole process deters companies from the “ready now” mentality that hinders their ability to place the absolute right candidate to transition the company into its future.

Measure Implementation and Outcome

Those organizations that do develop succession plan strategies too often let them slip through the cracks when it comes time to execute. Boards must invest in high quality HR leadership to see that their plans are carried through and goals are being set and met. Executives respond to measured successes. In working with senior management to set goals, the board will gain support for succession planning and establish ownership for leadership development programs. Establishing measurable goals will also allow the board to reward those who execute, keeping the problem of uneven execution in check. A potential measurable could include goals such as the ratio of internal hires vs. external hires for executive level roles or the number of promotions from a company’s high potential list. Whatever goals a board sets, it is important to keep it simple. Complex performance criteria could deter those managing the process from executing.

Effective Transition

A succession plan must be developed and executed at least six months before the CEO is ready to step down. This will allow a smooth and effective transition of the candidate’s responsibilities. The board and the entrant must agree on the first year plan, including key performance indicators and milestones and communicating these milestones to the entire leadership team. The CEO must then spend time building effective relationships. Communication is key in building trust in the new team and the team building trust in the Chief Executive’s leadership capabilities.

These practices can be applied to any organization’s succession plan strategy and should give directors the ammo to gain support from within their company’s senior management and HR departments to execute. The handover of one CEO to the next puts the company in a vulnerable state, so a well-crafted and smoothly executed plan is essential to the board delivering on their governance responsibility to stakeholders.

Jamie Ferguson, VP/Business Development, Maxwell Drummond is based in Houston. Jamie has extensive experience managing executive level searches for clients spanning the oil and gas value chain and has worked on assignments in over 20 countries on six continents. www.maxwelldrummond.com

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By Amy Hardin

No amount of sales management and training will make up for hiring a weak sales person – unfortunately, it happens too often. Interviewing sales professionals is especially challenging.  Really liking a candidate is not enough because most sales professionals are uniquely talented at building relationships. Here are five interview questions and topics that should be explored to differentiate the performers from the pretenders.

Question 1: “Tell me about a time when you built a territory from scratch for a company with little or no name recognition.”

This will tell a lot about the sales person’s resourcefulness, behavioral style, and ability to prospect. A strong sales professional can articulate exactly how they did it and has the numbers and timelines to back it up. Simply put, prospecting is easier when working for a company with high name recognition such as Dell or Microsoft. Often the name alone of a well-branded company is enough to induce a prospect to say yes to a meeting. The sales professional who has sold only for well known companies may not be able to make the leap and hunt effectively for a small-to-medium sized company. The sales person who can build enough rapport, generate interest, and employ multiple prospecting strategies without the benefit of a strong brand has the skill set, scrappiness and tenacity that are found in top sales professionals. These characteristics will transcend a lack of industry experience and will serve them well in almost any sales position.

Question 2: “Could you break down the percentages of your sales last year that were from existing accounts vs. new accounts?” 

Without doubt, the ability to hunt effectively and consistently is the number one requirement for most companies. It is also an elusive quality, and impressive revenue numbers on a resume should not be enough to convince anyone the candidate can do the job. Determining whether the numbers seen on a resume are from existing accounts or new accounts, will demonstrate how this candidate spends most of their time. Account management activities are quite different from hunting activities and big numbers don’t always translate into fierce hunting. When hiring, employers must be clear on whether account management or new account acquisition is the primary job objective and screen accordingly.

Question 3: “In your industry, how often is it necessary to negotiate pricing to win a deal?”

The wording of the question is critical. When asking this question, referencing the industry standard will likely get a more candid answer. If the question is asked, “How often do you have to negotiate pricing to win a deal?,” a sales pro is smart enough to give the answer everyone wants to hear, instead of one that reflects reality. When the answer is 20 percent or greater, either the professional regularly has to work with purchasing/procurement departments or simply does not know how to sell value. The latter is of great concern. Top sales professionals know how to create unique value during the sale that differentiates them and their companies from competitors. Less skilled sales people who can’t create unique value are defenseless against money objections and must rely on one thing to close deals – price. Another possibility is the sales person doesn’t know how to effectively discuss money with the prospect during the sales conversation. When money isn’t discussed until the proposal is presented, the buyer often asks for a discount, and the unskilled sales person caves in.

Question 4: “If you were to get this opportunity, what would be your activity plan to ramp up sales in the first 60-90 days?”

This question will reveal what prospecting strategies a sales person uses most often as well as how seasoned they are. The prospecting plan should have multiple activities with clear metrics.  It isn’t unusual for this question to be followed with a momentary, stunned silence. If the candidate is a brand new college grad, such a response is understandable, and you may be willing to mentor and develop the candidate if your company has a strong on-boarding process. Otherwise, pass on the candidate. Beyond the silence, candidates will often answer the question with, “I would call my existing relationships and attend networking and association events.” This answer should also give you concern. This is not enough activity to predict success. Excellent sales professionals can tell you in great detail what they’ve done in the past and articulate a decent plan of attack.

Question 5: “Tell me about the one that got away.”

This provides volumes of information about a candidate. Have the candidate tell you in rich detail about the opportunity that he worked on diligently, was certain would close, and then didn’t. Good candidates become very animated, usually telling the story with a mixture of humor, bewilderment and pain. They will describe in detail their sales process (which is good information in itself) and you get insights into their story telling ability, sense of humor, competitiveness and resilience.At the conclusion of the story, always ask, “In hindsight, is there anything you could have done differently?” Good candidates will have an answer with one or two possibilities because they have already mentally debriefed it. They will also take responsibility for any failings on their part. Poor candidates will say, “There is nothing I could have done differently.” Sometimes they will blame the prospect. This raises red flags about self-responsibility, willingness to admit mistakes, and ability to learn.

More Tips:

• Always follow up an initial question with two or three more. Asking for examples and descriptions of situations or reactions will pull out enough details to determine if there is reality behind the initial answer.
• Close the interview by thanking the candidate for his time and intentionally avoid providing clear next steps about the rest of the selection process. If the candidate does not close asking for next steps and a clear time frame, eliminate the candidate immediately. This tells everything about their ability to close effectively for business.
• Utilize an initial phone interview to determine if the candidate can build rapport over the phone. If the answer is no, there is no reason to go forward with a face-to-face interview.
• If considering making an offer, ask about the candidate’s total compensation needs. Historical information about the amount the candidate earned from base salary vs. commissions is important.
• Request a copy of the candidate’s last W-2. This is often quite revealing.

Amy Hardin is the Founder and CEO of SELLect Sales Development, an Austin based sales strategy, sales management and sales training firm; www.sellectsales.com or amy@sellectsales.com

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