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Recruiting Top Talent to Small Cities

by Terry Gallagher, President, Battalia Winston

Private equity firms consider a number of factors when evaluating a company for acquisition, but many overlook a critical challenge: attracting executive-level talent to the company after acquisition.

If PE firms plan to use their portfolio companies as foundations for building bigger, more complex organizations (as is often the case), they’ll need a high-performing team of executives at the helm. Specifically, they’ll need executives with experience building the infrastructure necessary to scale the company’s growth and position the company for sale once it reaches its optimal value.

In many cases, building this type of A-team will require some replacements. During the “pruning period,” PE firms must evaluate the existing management team and determine whether or not they need to upgrade to a more qualified leadership team to achieve their growth goals.

But identifying and recruiting “upgraded” executives can be difficult, especially for companies that aren’t located in metropolitan areas. Recruiting talent to a small, lesser-known city can be difficult on its own, and an environment of uncertainty or instability after the acquisition exacerbates the issue.

I’ve worked with a number of organizations in this exact predicament: recently acquired companies in small towns like Ferndale, Washington or Palmyra, Pennsylvania that need to attract transformational leaders. It’s not impossible, but it does require a clear strategy.

PE firms planning on acquiring companies in smaller cities need to be prepared to handle recruiting challenges. Each company will, of course, have its own unique challenges, but there are several best practices I’ve developed that will set the stage for success:

  1. Determine Recruitment Challenges During Due DiligenceBegin by evaluating the company’s existing talent acquisition practices and talent pool. How were the existing executives recruited? Or did they come from within the company? What percentage of leaders and employees already lived in the city before they joined the company? Has the company had success recruiting from outside the town before? What is the average length of tenure – and is there any relationship between length of tenure and the employees’ point of origin (i.e. Can the company retain employees that it’s recruited from other cities?)? Does the company tend to retain executives (i.e. more experienced employees) but fail to retain newer or younger employees, or vice-versa?Exploring these questions will provide PE firms with a thorough understanding of potential recruiting challenges before they acquire the company, so that they can be fully prepared as soon as the deal is closed.
  2. Identify Talent Needs at the Executive LevelIf the acquisition will result in a merger of two companies, the PE firm will need to quickly evaluate the leadership of the merged companies, retaining the best employees and managing any downsizing in a manner that will minimize the impact on employee morale. More importantly, they’ll need to retain the talent that will not only run the company at the time of the merger, but that will be able to manage the business as it continues on its path of rapid growth. Experience working with mergers/acquisitions within the industry should be a high-priority need. Once gaps are identified, the PE firm will need to evaluate the best way to fill that position, keeping the recruitment challenges they’ve already uncovered in mind. Is an outside hire—potentially one from another city—the right choice, or is an inside hire a better option? Armed with an understanding of the company’s recruiting history, the PE firm should be able to make an educated decision here.
  3. Target the Right Candidates with the Right MessageRecruiting top talent to smaller cities is all about developing the right candidate profile and fully understanding the needs of the candidates in the pipeline. First, it’s important to understand that some candidates will simply not be interested in leaving a bustling metropolitan area for a small city; don’t waste too much time on those candidates. On the other hand, boomerangs—candidates who attended college or grew up in a small town and may want to return to one—are smart targets, as are candidates from mid-sized cities.It’s also important to fully understand any of the candidates’ personal circumstances and family needs that might affect their willingness to relocate—have their children gone off to college recently? Are they burned out from big city living? Do they want to be closer to family on the opposite coast? All of these factors can turn an unlikely candidate into a good fit.

    Once the right candidate profile is identified, the people in communication with the candidates—HR managers, recruiters, headhunters—must be educated on how to sell the value of the city. They should not only tout the value of the city (its attractions, history, high standard of living, etc.) but should also tailor their pitch to each candidate’s needs. For example, an empty-nester looking to leave Manhattan might be particularly interested in the light traffic and walkability of the town while a younger boomerang candidate might be interested in the lively town center or nightlife.

 

PE firms that are acquiring companies in small cities should be prepared for recruiting challenges. But despite the obstacles that come with attracting big-time execs to small-town life, a thoughtful strategy can lead to success.

Winter Storm Juno Proves the Value of Flexible Working Arrangements

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Though New York didn’t get nearly as much snow as we predicted with winter storm Juno earlier this week, businesses across the city closed their doors and told their employees to work from home. A decade ago, this type of storm would have had a significant effect on the productivity of many companies, but with today’s technology-enabled workplace, most companies likely felt very little impact.

It’s times like this when the true value of workplace flexibility becomes clear. According to the Families and Work Institute, 38 percent of employers allow people to work from home on a regular basis, up 23 percent from six years ago.

Work-life balance and the need for flexibility used to be something that we exclusively associated with working mothers, but this is no longer the case. Flexibility during times of unforeseen circumstances—bad weather, last minute family commitments, unpredictable public transit—or even realities of everyday life—broken down cars, sick children—just makes business sense.

First, flextime (and flexible working arrangements) leads to better retention of talent. According to the Society of Human Resource Management, 89 percent of companies reported that offering employees flexible work schedules improved employee retention. A flexible schedule is an intangible benefit that has concrete value, and one that employees are often reluctant to give up.

Flexible working arrangements can also improve employee performance and increase productivity. In their global study of the value of flexible schedules in the workplace, Regus found that 72 percent of businesses saw increased productivity after implementing flexible working policies, and both small and large businesses agree that they generate more revenue as a result of flexible working arrangements.

But employers’ definition of flexibility should be, well, flexible. What works for one company’s employees may not work for another. Employers might adjust schedules for your slower season—the holidays, summer, etc. Or they might allow employees with school-aged children to align their schedules with the school day. To maintain and facilitate collaboration and teamwork, employers may choose to allow all employees to work from home as they choose, but require all employees to be present in the office on one designated “all hands” day each month. It’s important to tailor flexible working conditions for the needs of a company’s unique employee base.

While I hope the remainder of the winter season won’t test our limits, the bottom line is that workplace flexibility can no longer be considered a perk or a reward—a necessary evil—that employers dole out to appease their staff. Flexibility is a mission-critical component of the most successful company’s workplace cultures.

Pruning Private Equity Portfolios

Terry Gallagher, President of Battalia Winston, has contributed an article to Financier Worldwide’s Special Report on Private Equity. 

Drawing on his extensive experience helping Private Equity firms identify and recruit talented executives,  Terry discusses the tendency of PE firms to “prune” the  management teams of their portfolio companies (purchasing a company and then replacing  its leadership team) and provides his perspective on the type of leader firms should target in order to achieve high-growth and ensure a speedier ROI. 

Read the full article in Financier Worldwide.

Terry Gallagher Featured on SmartBlog on Leadership

Terry Gallagher, President at Battalia Winston, is featured on SmartBlog on Leadership, discussing the new evolving role of the HR executive in his article “Why CEOs Need a New Breed of HR Leader.”

As businesses become more attuned to the importance of internal culture to recruit and retain talent,  HR leaders must serve as the CEO’s business partner and align their talent-development strategy with overall business imperatives.

Read the complete article on SmartBlog on Leadership.