It’s hard to recruit the right talent in the chemical industry because it’s a very complicated and specialized industry. It’s looking for a specific set of skills, especially with the rise of technological innovation. Join Victoria Meyer as she talks to Ron Malachuk about talent acquisition and how to retain them. Ron is a Partner in the Chicago office of JM Search and a core member of the firm’s Chemicals and Materials practice. Learn what skills are needed to be a CEO or part of the board. Discover the importance of networking, especially in the chemical industry. Tune in and start mapping out your career today.
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Talent Recruitment And Retention With Ron Malachuk
Ron, thanks for joining. This is the fourth in a series of Ask the Expert of the show with the idea that people have a chance to ask questions, not just me asking questions, although I’ll start out that way. We started chatting about inflation. I have a few questions and then people get a chance to ask questions of their own. What do you see happening? We saw the news about inflation hitting 9.1%, which is astonishing, and then again, not. All of us as individual consumers recognize the effect of inflation on our personal lives, but what do you see the effect of inflation on the job market and executive recruiting?
Much of that is still to be determined, but in terms of what we’re seeing right now, particularly with our clients that are more North American-centric, their businesses and hiring remain as robust as it’s been. Global chemical material companies have more exposure to Europe and the European markets that have been more negatively impacted by the war in Ukraine. We’ve seen a bit of a slowdown there, particularly trying to compete globally from a cost and raw material side. In terms of where we see private equity to some degree, the public companies, and businesses, particularly in the high touch, growth, and margin sectors of chemicals remain as active as they’ve been.
The media would have us believe that the sky is falling although we know the business is still going well.
We view that through the lens as well as the type of conversations and then ultimate search assignments we have with our clients. We continue to see roles that have more of a commercial innovation and product development focus, which takes us down that track where there’s still more growth. Some of that growth may be a bit more organic than where it was more acquisition-driven in years past.
When we start to see the shift into more supply chain, finance, or operational excellence roles, that’s when we and the clients are focused a bit more on the cost side of the house. That tends to drive our thinking, “Maybe they’re now recognizing this. Their projected forecast has that type of scenario more fully-baked.”
You see the difference as it relates to the economy in terms of whether people are searching for growth roles versus cost control and operational roles. What are some of the biggest misconceptions people have? This is always one of these things that are interesting. What are some of the biggest misconceptions that you find that people have as they’re engaging with the recruiter or in the job market?
One of the biggest misconceptions is that oftentimes it is around networking. From our perspective, we have clients and roles that we’re looking to fill and in nowaday’s market, we have to fill them faster than ever because candidates simply have more opportunities in front of them than they’ve likely ever had or certainly in the most recent past.Despite inflation, businesses in the high growth and high margin chemicals sectors remain as active as they've been. Click To Tweet
For us, when we’re calling candidates, especially candidates that we don’t know or haven’t engaged with us before we want to get to know them, we also want to understand what their career trajectory looks like. How would their ideal career road mapping take shape and how could we possibly assist? The second biggest misconception is that when it relates back to networking, ensure that you keep that network alive and well.
In particular, in and around private equity because private equity firms both from the investment side as well as from the operating partner side have a healthy Rolodex and network of executives that they know. Oftentimes, these roles are filled either before they ever go to search or go to search, but there’s a strong feeling about whom the candidate’s going to be. The more people you can have speaking on your behalf, whether you know it or not, the better opportunities will be presented to you.
Can we dive in on this networking piece? As people always say, “Keep your network alive. Make sure you’re networking,” what does that look like? What are your recommendations on this? Is there a frequency? How does that play out? That’s an area that a lot of people struggle with. How does that manifest in real life?
On one hand, going back to that career roadmap piece, if an executive is very strongly in their feelings, “I want to be a CEO. I want to be a CFO,” whatever the case might be, the first piece then is to identify either those executives with whom you’ve worked, admire, respect, and have followed a similar roadmap as you. Keep close to them. Figure out how they got there, what roles they took, what stretch assignments they took, and what lessons they learned along the way. All of this is simply going to add more data to your decision-making arsenal.
Beyond that, if there are functions and segments of the value chain that are of higher interest than others, then identify who the market leaders are in those respective functions or industries. To the best that you can through the relationships or through the network that you have, get introduced to those individuals. What you’ll find is when you do the homework upfront and much like an interview, you come armed with very well thought outs and poignant questions.
You then are going to have a far more engaged conversation, and then ultimately, you’re going to have a relationship that you can carry forward. Outside of that, it’s also reciprocal. When people reach out to you and ask you questions or when people may have a career road mapping decision and they’re seeking an additional point of counsel, be that resource to them as well, because it most certainly is a two-way street.
That’s helpful. Sameer or Kendall, do you guys have any questions that you want to jump in with?
The last one you asked, I was curious. I have one maybe that follows a little on that. How would you coach somebody who’s looking to reach out to headhunters and utilize headhunters as part of their job search? If I’m doing a job search, where does a recruiter fit in that? What would be the other facets of that? How would you coach somebody to approach you?
The easiest and most efficient way is to connect with people who have used recruiters or have used recruiters that they admire and respect. Much like our own work in executive recruiting, your callback rate or hit rate is much higher when somebody facilitates that introduction or somebody has introduced you to the executive team. Conversely, when somebody that I’ve placed or that JMSearch placed, or people that we know and respect in the market contact us and say, “Ron, here is somebody that I’d love to introduce you to. Here’s somebody you need to know,” that goes a long way to making sure they get in our diary.
We talked about this previously. In some ways, it is like building a financial model. We’re garbage in, garbage out. The more time you spend upfront in diagramming where I’d like to go or take my career, the experiences that have been the most challenging but have offered the most utility. The more you bring that level of work to a meeting with a recruiter, simply the more beneficial it’s going to be. It’s clear then that you have given quite a bit of thought and resource allocations. “This is where I’d like to go and here’s why. Here are the skills and competencies that I bring.”
To a point, it’s having enough EQ to say, “I haven’t operated in this segment. I haven’t had an ex-pat assignment. Once, I got one of those. How would that elevate my candidacy? How would that best position me?” We can be candid and say, “If we were looking for a $500 million portfolio company CEO specialty in a chemical segment, this is what the top flight candidates would look like. These are the experiences and the competencies.” You’re helping this person. How do I compare or contrast to what that ideal target profile is?
That’s interesting, especially if somebody’s been inside a company for a long time and hasn’t made many moves, you don’t know how you compare. You may not know how to position yourself in the external market because positioning yourself in the external talent market can be different than positioning yourself in the internal talent market.
If you’ve been with one company for an extended period of time and during that time you’ve had multiple roles, different functions, and different lines of business, you probably haven’t taken, in most cases, the time to reflect on, “What have I done? What was the situation I walked into? What did I do to help position, drive, or grow the business? What sustainable actions have we put in place? Irrespective of capital structure, what were the results?”
“Where do we go from A to B and how do we make sure that we continue to measure and monitor those?” We oftentimes find having the conversation with a recruiter and telling the story. Like most of us, the more we tell the narrative, the more we sharpen the narrative, and the 100th time we tell it is going to be far more succinct and compelling than the 10th time.If you want to be a CEO or a CFO, find executives you admire, keep close to them, and follow them. Click To Tweet
I was at Shell for several years and the reality is we had large scopes of business and yet not. It’s rare for somebody inside of Shell to have true P&L experience because it’s fragmented. I don’t think that’s a unique thing. This happens in other companies, too. My question comes around to how important is it to already have had the experience when you’re going through a recruitment situation.
I’ve always had a bias that it feels like people are already looking for you already to have done it because it’s an easy win. Yet, we know that there are circumstances where that’s not going to happen. There’s so much variety in the business world. There’s no way that you’ve hit some of these circumstances.
The candidates that jump to the top of the list particularly, early in a search are the candidates with a track record of doing what the client is seeking. To your point, oftentimes those folks either don’t exist in a high enough supply, or those folks are already engaged in an opportunity and want to see that through before they move on to their next challenge.
Where we try to dive in a little bit deeper, and again, this is through the lens of chemicals and materials, can we get to candidates that have the relevant products, chemistry, and market knowledge, or candidates that to your point, maybe haven’t had the full P&L from the top to bottom line? If our client is seeking more of a commercially oriented executive, then this is somebody with a track record of sales, marketing, and commercial excellence who has realigned a product portfolio and repositioned an existing portfolio.
Oftentimes in these types of roles, if the strategy is sound and the company is looking to head down a similar track, then we tend to find more of those roles will be internal promotes than they are external. The strategy is more or less fully-baked. There might be some incremental tweaks here or there, but you’re not looking for anything too revolutionary or evolutionary. In situations where the client is either bringing a new product to market or has made a significant asset acquisition, and it positions the business into markets and categories where it may not be as an expert, bringing somebody in that brings that relevant product and category experience will certainly be a standout from a resume perspective.
The speed of innovation is accelerating faster than ever. It’s the commercialization rates. We have this conversation and I have this conversation regularly with the chief technology and head of R&D officers. It’s that continued balance between now and next. The fact is that customer and consumer trends are changing faster than ever. There is certainly far more of a needed emphasis on AI, connected devices, and machine learning. There’s as much of an emphasis as ever in and around sustainability, circularity, closed-loop recycling, or however one thinks of it.
That puts far more of an emphasis on the product development innovation side where we can’t manipulate molecules because it’s fascinating chemistry. How does this truly compete and win? How does this position, the company, and the product to the addressable market? To somebody who maybe hasn’t been a chief technology officer before, as an example, that has a track record of doing this and has proven the ability to build those internal stakeholder relationships, where you can work with the business units, marketing, and engineering. You’re not operating the stage gate process in a vacuum. It truly is tethered to the strategic business growth plan.
That’s interesting and this ties well to why you’re still seeing a lot of growth and placement in these innovative and growth-oriented roles.
The smaller to what I would classify as middle market cap companies have a strong interest in the candidates that come from those Fortune 500, what we would call blue chip best-in-class companies. Not just because of the technical foundational training that you receive, which is quite strong, but it’s more of those softer skills or people elements.
If you grow up in a functionally global-driven matrix, then you’ve learned hopefully the art of influencing or stakeholder engagement and recognizing that at various points in the life cycle, you are going to need individuals that don’t report to you or aren’t a part of your function, but without their support and without their effort, it’s going to make your project difficult to get from start to finish.
Do you do a lot of work in finance placement?
We do. Our firm does a fair amount of work in and around CFOs and financial officer practices. In general, the CFO’s role in many respects has become that of a strategic business partner to the CEO. Some of the functional components tied into a COO have found their way in some respects into the chair of the CFO. With that, the finance officer is more than balancing the budget, the books, etc. It is now a strategic thought partner to the CEO and to the business.
I’ve seen this elsewhere. There’s been a trend over the past decade or maybe more of offshoring a lot of the early career finance roles, the things that are viewed as more repeatable, less strategic, lower value, and yet what has historically been proving grounds, development space, and opportunity for a young graduate, early career individual to get some experience and dive in deep. At the time, I’ve seen this with some of my former colleagues, that concern of, “How do you get positioned for the bigger finance roles that are more strategic if you haven’t cut your teeth on some of the fundamentals?” Are you seeing this? Is this a concern? Has it been alleviated?
It is a concern and it has been a concern as the big companies get bigger and you lose what we would classify or call the training wheels P&L, where you can take a high performer and high potential, drop this person into a $50 million to $100 million dollar business. In the broader enterprise scope, it’s more or less a rounding error, but you’re giving this executive an opportunity to show that you can make that transition. The most difficult transition an executive makes is going from the individual contributor or subject matter expert to now having to lead and ultimately get results through your team.The speed of innovation is accelerating. Customer and consumer trends are changing faster than ever. Click To Tweet
When you have those types of roles where folks can get real-world experience, they’re probably reporting to a business unit president or a senior vice president. There’s at least a mentor or guide that can keep the train on the tracks if needed, but it provides the company an in-house talent breeding ground, where you get to see the top 50 high potentials. We’ve windowed that down to five, but these are five that have proven they can run a $100 million business. We think they can scale to $500 million to $1 billion, or whatever the case might be.
As the companies have gotten larger, those types of P&L opportunities are not in great supply as they used to be. We are seeing companies that are developing immersion programs. In the case of say chemicals, materials, and agribusiness, where you’re trying to find executives and talent that might be stronger on the AI, IoT, and machine-learning side of the house, but maybe didn’t grow up in a chemicals plant or didn’t have aspirations of being a chemicals executive. The immersion program is designed to take somebody with that functional and hard skillset that you need and teach them enough about the business so that as they rotate, they understand the value drivers and levers, and now they’re becoming part of that next generation of talents.
We talked about this before. I’m not going to belabor the points, but the world of private equity has become a strong landing ground for these top-flight executives who maybe aren’t waiting for the next platform level or C-Suite level role to open. They have the skills and experiences to prove that they’re ready now. If you have an opportunity early in your career to become a CEO of even a $100 million business, and if that becomes a successful exit, now your career optionality has evolved almost exponentially. You’ve proven you understand the economics and the cadence of private equity, but you understand the economics of monetizing assets.
You talk about these young executives or anybody maybe under the age of 40 is young. What about duration? I’ve talked to Pat Ropella who is in a similar field as you. He talked about the perception of job hopping, which maybe is allowed early in your career, but is less allowed as you get older. How long do you need to be in a role to prove yourself, different from private equity, or any of these roles?
There’s not a firm hard and fast number, but I would say from my own experience that you’d like to see an individual in a role for at least three years so you have enough time to understand what this individual walked into. Maybe it was a turnaround, continued growth, or something different, but you have an opportunity to examine what this individual walked into and the changes that he or she brought about.
More importantly, why the strategic refresh, why these changes were made, what market data, and what customer data was used in that decision-making model. You have a year, which again, may or may not be enough time to truly judge how successful these initiatives were, but at least you have an opportunity to gauge to a degree how successful it was or wasn’t at least on the onset.
If this person is going to stay in their company and then they move into a different business or function, then you still have a line of sight because although you’re not directly running the business, you still get to see your handy work. You get to see how sustained those results may or may not be. We tend to see that it’s that 3 to maybe 4 years, particularly in a P&L role where the individual is responsible for the full top and bottom line.
I’m going to pivot a little bit on board placements. One of the things they say is, “Have your board resume.” What distinguishes a board placement or a board-ready person or role versus an executive-ready role? How do you differentiate?
If one is looking to get into that first board opportunity, being a sitting CEO is the quickest and most efficient path to getting there. Short of that, it’s then building the skill sets that are relevant and important for a board director, which are the financial skills, the strategic skills, the relational skills, and then particularly here in your role.
For instance, if somebody’s looking for that first board role and it’s with an incredible technology innovation-driven chemicals company and that is going to be the driver of how this company continues to win and grab market share. If it was somebody who had that relevant skill set in terms of innovation, the commercialization, and is able to relate their role to what’s the company looking for, an outside board director seats, that is a more efficient way to position yourself, short of being either a current or a retired CEO and build upon that.
It’s also bringing functional knowledge that either the board doesn’t have enough of or it’s simply looking to enhance. In the case of a chemicals and materials company that is looking to elevate its digital, AI, or machine-learning performance, that is an organization that might be looking for somebody with a specific toolkit or who is successful as an executive been able to take a more traditional product-based business or taking the hardware side and been able to leverage or implement the software, which maybe or maybe not made a better product, but it was more around the ancillary applications and service. In ways in which you could simply get more sticky with your customer base and then grab a larger share of your wallet.
It’s not so much to provide content knowledge. It’s to provide that guidance and ascertain whether the company’s doing what it needs to be doing. Kendall, bring it on.
I have two parts and they’re a little related. Ron, I get asked a lot by directors or junior executives who haven’t used recruiters in the past. The guys who are breaking into the level where a lot of the searches are routine. You had said many times that you start a search and there’s already a shortlist. This goes to what activities this person should be doing and maintaining the network. How often would you say that the shortlisted candidate or somebody who’s known to the hiring panel, or the executive team wins the job? That’s question number one.
What percentage of the time is the candidate identified early? That goes back to what I mentioned. If it’s simply a backfill for an executive where the board feels, the strategy is sound, the execution is on par with what’s expected, then that tends to be either an internal candidate or a candidate that has a similar type of background and career trajectory as the incumbents. You’re not necessarily looking for anything that’s going to be too transformative or somebody who’s going to come in and may not have the requisite skill sets of what the individual retiring or leaving has because the company feels that we’re in a pretty good place.To become a board director, you need financial, strategic, and relational skills. Click To Tweet
When it gets to a role where it may not necessarily be a full strategic refresh, it’s clear that the business is heading in a direction that is either foreign to where they’ve been, or it might be through an acquisition that was made, that tends to be more of want a full market scan and maybe prioritizing certain segments of the value chain. Whether it be the raw material manufacturers to the processors or formulators, maybe the folks that are one step away from the end user.
That’s where spending time with the board and the leadership team, we can start to drive in a little bit more, not necessarily where this person sits, but why the board is interested in somebody with that skill set. Where that comes into the networking piece, the more time you spend with an executive recruiter, and I’m not saying you’ve got to spend this time with 20, 10, or maybe even 5.
If there are recruiters that come highly recommended through your individual network that either you’ve used and they placed you when you were a candidate or you have been able to use as a hiring manager yourself, that gives you a pretty good lens of how this individual assesses and calibrates candidates, how this individual is able to reach into the market.
In some ways where you can be a bit more provocative and introduce 1 candidate or 2 that maybe don’t look right down the center of the plates, but this candidate has the skills, the experiences, and more importantly, especially in the case of where you’re looking for some fresh thinking. This is somebody who’s not tethered to the way things have always been done. This is somebody taking an analytical and almost surgical view of the business and can quickly distill, “These are the two to three levers that I see. Here’s how we maximize those levers.”
Do you find that candidates are often known to somebody on the hiring team or 1 degree or 0 degrees of separation on your executive team?
Candidly, the bigger the world gets, the smaller the network is, so yes. In the larger public companies, if you’re talking about a high-level prominent C-Suite position, then there’s a high probability whether a board member or a member of the C-Suite or maybe even somebody in your commercial organization who has seen this person as a customer, supplier, or whatever it might be, they’ll have a line of sight. It may not be a deep line of sight, but there’s at least enough there to warrant the conversation.
In the world of private equity, that is far more common, whether it be on the investment side or whether that be on the operating partner side. Simply because when candidates get to New York or London, whatever the case might be, they’re oftentimes spending some considerable energy meeting with investment banks, private equity firms, and sponsor-backed vehicles. With that, those relationships and networks carry quite strongly.
In my second part of that, you talked about situations where you can’t feel perfect matches and so you got candidates on the roster who have gaps. A common misconception in the industry is, “I got to have all the experiences that they’re looking for or I can’t be in play.” When you have candidates with gaps that make it, in some cases, it’s because the client is willing to take a little bit more of a flyer because of the nature of the role. Across the board when you have candidates with gaps that make it, what are some differentiating characteristics of what those candidates presented that the other candidates with gaps did not present?
It gets to the conversations we have when folks want to become first-time CEO. Irrespective of the CEO, at one point, he or she was a first-time CEO. Whether it was their company at the time or they were externally recruited, they were a first-time CEO. What we tend to see is that it’s the candidates that bring that emotional intelligence or EQ, a strong strategic mindset that they’re able to quickly get to what those value levers are and how to maximize them.
The advantage here is whether you’re the CEO of an enterprise or you’re the business unit president of a complex global portfolio, you’re making many of the same decisions and going through the same criteria. You’re just doing it in a part of the business versus the entire enterprise. Many of the skills and execution techniques will remain the same. Where we like to distill a little bit further is we like to see that intellectual curiosity, learning agility, and that adaptability.
Victoria, this gets back to your previous question. We like to see candidates who have been with a company for several years. They’ve had 3, 4, or 5 significant jobs. Some have been promotions and some may have been lateral. We want to see that diversity in the business cycle experience where maybe you walked into a business that was in full-growth mode and EBITDA was blowing past the budget and how did the executives stepping in there have an opportunity to continue that going while making sure that the supporting functions were there to keep the business humming along and maybe getting moved into a turnaround situation.
What you’re showing is, “I’ve been able to step away from what I was doing incredibly well and successfully moved into a different business, product, and go-to-market channel strategy and over time, became equally successful.” That is not necessarily passed as prologue, but it’s showing throughout your career that you’ve taken calculated risks. Oftentimes, that person that was maybe promoted is a half step away from being ready for a job, but either had a sponsor, a mentor, or somebody in the organization that simply identified, this is an individual that is worth the investments. They are going to be a very positive human capital ROI.
Even if they haven’t had the full experience to get it up at that strategic level, frame the issues, and the levers that you would pull, and then your adaptability, agility, and intellectual curiosity both by their behavior and by their history as well.
That will shine through. We’ve talked about this. You’re often unable to show with those moves how you link talent acquisition, talent development, and retaining to value creation. One of the easiest ways to identify that is through followership. Kendall, you moved to a different company, and when I ask you about your leadership team and you explained to me how many folks came from your prior company or folks that joined you and wanted to be a part of your leadership team. To us, it’s not the only data point, but it is an incredibly strong data point because especially what we would classify as the A players, the best of the best.
In 2022, prior to 2022, and post-2022, that aggregated group will have more optionality in front of them than most. When that group or when the individuals within that group decide to follow a boss or a team, there’s a reason for that. That’s what gets us energized because we want to understand what that is and, in some ways, how this person’s been able to navigate. Again, the world of chemicals is incredibly complex and knowledge-intensive. When you find somebody who can distill that and break it down to where the broader organization understands what’s expected and why, those are the people that are far more successful than not.
It’s super insightful. Thank you.
This has been great. Thanks, Ron, for joining us. Thanks for participating, Kendall and Ron. We will see you around the bend.
Thank you so much.
About Ron Malachuk
Ron Malachuk is a Partner in the Chicago office of JM Search and a core member of the firm’s Chemicals and Materials practice. His expertise is in providing talent-advisory consulting services across multiple sectors, including agribusiness, chemicals, engineering and construction, metals and materials, packaging and plastics. He has also authored several white papers on the emerging technology, innovation and digital trends disrupting the process industries.
Over his career as an executive search and talent consultant, Ron has conducted Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and Senior Advisor searches and leadership projects. His clients include global industrial conglomerates, the Fortune 500, middle market manufacturing organizations, and portfolio companies of leveraged buyout and venture capital firms.
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