It's getting even harder to find good help at the top these days.
Lucent Technologies swung the axe on US Chairman and Chief Executive Rich McGinn last week, and the company's search for a new leader highlights a chronic problem for technology and Internet companies: the scarcity of experienced executives who can take the helm.
Executive search firms that specialise in placing CEOs at high-tech and Internet companies said it has always been tough to hire well-qualified CEOs, but they said it's become even more difficult in recent months.
"The shortage is severe to the point that there are many average people who end up in CEO roles, and they destroy companies," said Jeffrey Christian, chairman and CEO of executive recruiting firm Christian & Timbers.
Christian & Timbers estimated that its CEO placement assignments have more than doubled this year over 1999, and the pool of CEO-level candidates simply hasn't kept pace. The shortfall arises because hot new technology sectors drain talent from older sectors. That means many high-tech sectors "haven't had a chance to grow on their own and mature their own talent," Christian said. The result is fierce competition for what Christian estimates is the 2 percent of the executive population truly qualified to be CEOs.
Furthermore, executives are much more cautious about jumping to start-ups in the wake of widespread dot-com failures and investor demands for quicker profitability. At the same time, more funding is pouring into newly hatched companies in need of top-flight CEOs than ever before. Research firm VentureOne estimated that venture capital (VC) funding for the first half of 2000 was US$35.4 billion, compared with US$37.3 billion for all of 1999.
"Two years ago, people said, 'Oh, it's VC-backed, so it's safe,'" said Scott H. Dunklee, founder of The Lancer Group, an executive search firm in Menlo Park, Calif. "People have seen the bodies on the floor, and now they're less risk-oriented."
Bruce Johnston, president of the Idealab! Boston office, has been involved in several CEO searches for companies incubated by Idealab! While he said the notion of an Internet CEO shortage was "a little overblown," he agreed the pool of qualified people isn't growing fast enough. "I've been working with young companies for the last 12 years, and it's never been easy to recruit CEOs," Johnston said. "But, at the same time, it's never been harder."
