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Joel Koblentz of Morgan Howard is a friend of the firm and insighful in key trends in acquiring and retaining top leadership talent. Thought this may be of interest to you. Best, David

From: Joel Koblentz
Sent: Monday, April 30, 2007 1:10 PM
Subject: Spring 2007 Client Letter

Dear Clients and Friends of Morgan Howard:
As we enter the second quarter of 2007, several trends that we highlighted in our prior letters remain evident and even more prevalent and a new trend is emerging which we believe will significantly impact attracting and retaining leadership capital.

• The accelerated velocity of executive “musical chairs” driven by a short-term orientation continues as boards demand heightened performance from their managements and as private equity lures away talented executives. As we have experienced in our engagements, operating and financial executives remain in high demand. There is a distinct shift toward executives who can raise the revenue line and those who can direct strategy toward higher valuation. With these market conditions, compensation for these executives is now moving upwards.

• Members of corporate boards are turning over at an unforeseen pace. We have advised our clients to search for a diverse set of competencies to govern their enterprises. As potential board candidates, current Chief Executives are seen as less attractive as they do not have the time, inclination, nor in some cases, the permission of their own boards to serve.

• Among our multinational clients, there is an unprecedented demand for globally-oriented leaders for assignments in Asia, especially in China and India, who are ethnically Asian. Frankly, there is a true shortage of qualified candidates in country for these high impact roles, and companies are actively pursuing the high-performing returnee. Individuals today who possess the experience, relevant market knowledge and leadership competencies are on high cost expatriate packages. And while their respective companies recognize the value of “true impact executives” and also know the time and cost that it will entail to replace such an executive if he/she departs, they are in a conundrum as they seek solutions which will allow them to phase out the expatriates with locals. As a result, to attract the returnees and locals alike, many companies are ratcheting up short-term compensation, promising more corporate visibility and career upside. Given our work, we can state that there are few “bargains” in attracting local or returnee “A” players to multinational companies in Asia today.

When we, at Morgan Howard, are engaged by clients with such requirements, we advise that thoughtful planning about the role under consideration is the key to attracting these rare, highly talented executives in markets where such talent is in short supply. Our experience suggests that being clear and concise with flexibility on compensation and location allows us to bring forward only the best qualified individuals for our clients’ consideration.

• A new trend in leadership is emerging. As rapid change continues, driven by market considerations and supported by technology, we have noticed that corporate culture appears to matter less than even two years ago. Our empirical observation is based on increasingly short-term orientation of business, the norm of turnover of top leadership, and a higher bar being set for short-term performance which, if unmet, leads to negative equity market reaction, pressure on the boards (as cited above) and a continuing cycle of meeting timely quantity revenue and net income targets.

Impact level searches for clients now tend to place competency and a track record of achieving rapid results over general experience, strategy development or specific functional expertise. The operative words are, “can this individual take us to the ‘promised land’ with real haste, with efficiency and without corporate accoutrements?”

The “of-the-moment” orientation now appears to be inculcated into the thinking of virtually every board and corporate leader. Every acquisition, product or service introduction or innovation must be quickly accretive. The company executive who holds the key to its history or corporate culture is now much less valued. And, this trend of “betting the company” for heightened valuation is rapidly becoming de rigueur. The truest benchmark for most of our clients is performance….quarterly results.

Recruiting senior executives in this era requires the type of efficient and effective talent evaluation and search process that we at Morgan Howard have utilized for many years. With corporate cultures in flux, we focus on candidates’ competencies and results.