The lack of executive movement, in part, due to a lower level of deal flow has meant that there is an abundance of brilliant 'step up' executives in the waiting.
I read somewhere recently that C Suite -1 individuals are outperforming C Suites in many areas, and I can understand why. For those wondering, C Suite -1 refers to those reporting to the C Suite and often one layer from board.
With the need to drive returns at low risk for LPs, traditional PE investors have often steered clear of hiring candidates that don't tick the mandatory boxes, such as pre-existing C Suite experience. This is particularly prevalent in businesses backed by the larger sponsors. Progressing from being an amazing number two to the C Suite leader of your vertical can often be one of the trickiest moves in your career.
It can take some time and be a frustrating journey of interviewing and receiving the same undeniable feedback of “We have a candidate who a very similar background to you but they already been a CFO/COO/CEO”.
Often, to reach the C Suite position, you need to take a calculated risk as the ideal role in your preferred sector with the dream investor will almost certainly have a selection of top candidates with proven C Suite level candidates on their long list.
You can certainly wait for an offer to materialise and back yourself against experienced C Suite operators but it's also worth strategically considering your personal route to C Suite. Your route to C Suite should be well thought out, rather than improvised. Your career choices, projects and strategic moves should continually keep adding to your personal career scorecard. Think of it like a development of your personal skill-portfolio that will enable you to reach the ultimate end career goal.
Routes to be aware of:
It may sound obvious, but it's a risk to move to a business with a poor financial profile, a management team you're unsure of or to a business with an underdeveloped strategy. It’s advisable to steer clear of the aforementioned businesses if you are taking your first C Suite role. Your first C Suite role not succeeding can damage your long-term aspirations. Yes, you could be one of the individuals that leads and inspires that business through a turnaround but is it worth the risk prior to completing your first successful C Suite position? These scenarios can often have strong financial benefits if successful, so certainly look at them after your first successful C Suite role.
Routes that tend to pay off:
Become a C-Suite Executive within a stereo-typically less glamourous or desired sector. For instance, if you're in a SaaS business now as a number two and you ultimately want to work in SaaS as a C-Suite, try looking at broader Professional and IT services businesses for that first C Suite position. Gain the exposure in the C Suite role and make a true impact, then you'll be top of the list for a SaaS CFO next time.
Work for an investor a ‘tier down’ from investors you may have worked under as a number two. You may end up selling to your dream end-sponsor and building a great personal profile.
Joining a business where your personal equity story/potential isn't the best. Don't focus on the short-term cash. Getting a deal done for a good sponsor will pay dividends in the long run.
What's the benefit of hiring an individual who will be stepping up into a C Suite position?
Motivation: We hear the term 'Fire in the belly' a lot. This new role means so much to this step-up candidate and it's critical they succeed. Financial motivation. Grittier traits.
Hands on mentality and less ego.
It may be easier to hire from a director competitor, where you couldn’t steal their current C Suite.
There’s an abundance of talent ready to step up due to lack of deal flow
They’ve been a C Suite -1 in a turbulent time and will have developed some invaluable skills.
They’ve often got brilliant sponsor exposure. Monthly reporting through to sometimes even daily interaction with Private Equity Operating Partners.
Just a few notes and I'm sure there's some great points to be added by readers.
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