High-performance functional executive teams help CEO's sleep easier at night. Knowing that you have a team of exceptional individuals who have come together for a common goal certainly allows for additional REM sleep for the CEO. Without a team working together or bogged down by a weak team member, the CEO had best order a truckload of melatonin. It is critical that your Functional VPs of sales, marketing, engineering, and FP&A are in lockstep with one another and with your directives.

Establish a Strong Process

In order to determine whether or not you have the right team assembled, you must conduct a straightforward, sometimes brutally honest talent review process and skill assessment. Approach this review process as you would any other critical business analysis exercise. This should be even more critical than your budget review process, since the talent in your organization (or lack thereof) will certainly effect the aforementioned. Ask some very tough questions. Do you have a link between your overall business objectives and your staffing requirements? Have you assessed your executive team on an individual basis, identifying their unique strengths, weaknesses, and areas of improvement? Have you identified the high-performers on your team? Likewise, do you know where the weak links are in your organization? If you have a weak leader on your team, you may in fact have an even greater problem within that person's organization. While you do not need an encyclopedia Britannica-like plan for each functional vice president, you do need to give them concrete MBO's. People need defined roles and responsibilities in order to be measured and held accountable.

After you have assessed each functional VP, it is time to go down into each functional area and assess their teams. This is critical and often missed. As CEO, it is your responsibility to know where the talent resides within each functional area. It is important to have a documented action plan for each organization. Who should be promoted, rewarded for performance, and who should be terminated for poor performance. Do this in three to six month cycles. Finally, unless you follow-up after each talent review period and either reward or terminate appropriately, the exercise will have been in vain.

Starting your search for a key executive team member

If you need to recruit new members to your team or replace any poor performers, the really tough work begins. CEOs, boards, and others involved in the hiring process must first agree on the right profile for the functional discipline. This is not always as easy an exercise as one may think. Opinions vary greatly depending upon one's vantage point. Was your board member a strong marketing or sales executive? Are you, as CEO, an engineer by training? All of these points must converge in order to flush out the right knowledge, skills, and abilities required for your critical hire. Once the profile has been developed and documented, only then should you initiate your search.

Recruiting key executives is not pure science. There are those in the search profession that would argue this point vehemently stating that "recruiting is, and should be an analytical exercise." Not really. Far too often, critical hires are made without determining whether or not there is a chemical "fit" with the CEO, a key board member, or functional peer. The Franklin T-Square is a good place to start your search process. Documenting the pros and cons of each candidate can facilitate a good discussion with your search team; but do not overlook your natural instincts, or in the vernacularáyour gut. Successful entrepreneurs are often guided by their gut. While this is not a scientific assertion, it is based on data collected by our firm over a fifteen-year period. The most successful placements we can point to were, and are, the ones where the CEO placed an inordinate amount of credence on a positive personal interaction and first impression of the candidate.

When you and your search team interview prospective candidates, it is a good idea to make mental notes on your initial impression. This impression will change positively or negatively during the interview. If it doesn't change, your interview technique needs tuning. Whether you subscribe to behavioral interview techniques or narrative interview techniques, either will get you to your end result of assessing a candidate's level of intelligence, competence, motivation and drive. However, do not expect these interviewing methodologies to give you "crystal ball-like" powers. As a successful entrepreneur you presumably have made previous risky decisions weighing facts and corroborating evidence; but surely your intuition played a significant role as well.

Talent Drives your Business

McKinsey conducted a massive research study in 1997 about the need for and difficulties involved in hiring top talent at all levels in the organization. Their net conclusion was that if you do not view hiring as one of the most critical drivers of your company's performance, imminent doom would await. They also determined that most boards were remiss in their involvement in hiring top-tier talent. They were clearly involved in hiring the CEO; but it stopped at that level. If boards are determining compensation for the top officers, they need to be directly involved in recruiting. We do a better job here in Silicon Valley than they do in Smokestack, PA; but remember that it is imperative that directors must have their hand on the talent pulse of the organization as well.

Outlook and Norwest recently completed a search for a VP of Sales for ReconNex, one of their new portfolio companies, in less than forty-five days. The CEO and Board Members were in constant contact with each other, the recruiter, and even with the candidates directly. What some may call "over communication," with all of these parties, it certainly cut out needless downtime during the search process. Recruiting the wrong candidate takes just as long as recruiting the right candidate. Communication and direct feedback between the CEO and the Board were paramount to this timely hire. The jury is still out on whether or not the right hire was made, only the next quarter close will tell!

When the dot-bomb bubble burst and the general economic condition worsened, many believed that recruiting high-performance teams would be a cakewalk given the assumed readily available talent pool. Not true. In fact, it became much harder to find top-tier talent and recruit them to needy start-ups. Many in this talent pool ran for cover in much larger (read safer) public companies. New venture investments, increased M&A activity, and a slowly-but-surely filling IPO calendar are re-igniting positive recruiting environments for start-ups. However, don't believe for a minute that the war for top-tier talent will ever be over in Silicon Valley.

Don't forget these bon mots

In order to hire high-performance functional teams, there are a few mantras to remember:

- Document your staffing plan as you would your MRD's, technology roadmaps, and sales & marketing strategies.

- Does your recruitment plan map with your product development lifecycle? A top to bottom skills analysis will tell you whether or not you will achieve this goal.

- Are your best people, board members, and investors active in recruitment? If not, you will fail. Talented people instantly recognize other talented people.

- Reward your best players. Dismiss your worst players quickly. There is a saying in engineering recruitment that "hiring B-grade engineers begets C-grade engineers." The very same holds true in executive ranks.

- As CEO, you set the tone around the importance of recruiting top-tier talent.

- Constantly be on the lookout for top talent. Maintain relationships with trusted recruiters, board members, industry pundits, and investors. All are valuable recruitment resources.

Mark Tapling, CEO at Everypath said recently while speaking at the Software 2004 Conference that the "people equation is paramount to a company's success." With the wrong formula it will be disastrous. He pointed out that CEO's "must be hard on the issues and not hard on the people." The CEO has to take responsibility for the performance (or lack thereof) of the executive team. S/he must make recruitment and retention of key talent one of the most strategic issues for the company.

In closing, please remember that hiring exceptionally talented people and blending them into a high-performance functional team will have an immediate positive effect on your company. Do not take your eye off the ball when it comes to recruitment and retention.

The McCallie Preparatory School in Chattanooga, Tennessee has a bold statement emblazoned outside the front gate, which reads, "The rising tide of talent is lifting all boats."