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Hiring a Chief Growth Officer (CGO)
When you’re a young, growing small firm, recruitment is important to get right.
Recruiting for a growth-type role can be argued as more critical to get right, given how much can go wrong - especially if this is your first rodeo.
We’ve been supporting 3 clients in as many weeks with their recruitment of a growth-type person to join their respective firms. There really is a lot to weigh and consider. We figured we may as well share some of those insights with you as it appears to be a hot topic just now.
In this article, we’ll cover 4 key perspectives:
CGO Job Description
CGO Salary Range
CGO’s first 100 days
Designing a Compensation Package for a CGO
The CGO Job Description:
What we’ve put forward a few times over, would be a typical job description of a CGO (mostly to show how it differs from its neighbour, the CMO) - we’ve been sharing this one with our founders looking to fill a CGO position.
A CGO is responsible for overseeing the expansion of the organisation - creating and increasing revenues through:
Optimising sales cycles
Creating new products and services
Winning new markets
Contributing to optimising company performance
The CGO Salary Range:
A CGO salary range to consider when designing your own compensation plan is a helpful guide as you work out your own fixed/variable compensation package.
Consider that a junior, less experienced CGO would likely be on a 100k package with the more senior and celebrated CGOs among us being on salaries that can be as high as 260k. Geography, industry, and size of the firm will apply when landing on the exact number, but this is a good resource to check out when resolving your own calculations!
Next, we’ve been looking at the First 100 Days of a CGO more closely!
Specifically, inviting the 3 or more CGO candidates to provide you with their take on what their first 100 days in office would look like. A great exercise to help you qualify candidates and get a sense of the priorities of your business based on their research to date.
A helpful guide for what should be in a solid 100-day plan follows for a CGO being retained to drive conversions: Your focus may be different, (eg. Lead Gen) in which case a variation of what follows would be more appropriate.
The first 100 days in any C-Suite role typically warrants a deep dive across:
Culture
Communications - internal/external
Capacity
Customers
…in order to quickly optimise current efforts and align clear objectives for growth while tending to the needful - in many cases, the needful is almost always pipeline, conversions, and onboarding of new clients.
First 100 days for COMPANY X - a macro overview
Vision, Alignment, Execution - we start with the end in mind - clarity and vivid detail of what day 101 looks like (the interim vision that acts as a milestone for the larger vision) in order to work backward into day 1 and align efforts inside a well-mapped plan, that allows execution to be championed through the 3 to 5 high valued tasks to be done daily to realise the 101-day vision.
If January 5, 2023, is day zero, then day 101 could be estimated as 28 April 23.
Suggested vision for 28 April 2023! - a micro look
Defining the shortest path to revenue XYZ through a clear vision, alignment across the firm, and a leadership team that champions execution. This is done by effectively moving through 1 to 2 distinct growth stages - stage X, then stage Y in preparation for stage Z growth.
Immediate priorities would likely include:
1. Sell & Serve
Action existing leads
…and use this effort to: document processes that serve the long term direction of the business, and create and automate systems for maximum impact.
Support the development and implementation of ongoing & new customer segments (and their respective sales funnels)
while laying the foundations required for a successful upgrade & innovation phase from May 2023 onwards.
2. Automate Growth x2 products by:
Visually mapped out client acquisition process.
Clearly made & refined Metrics/KPI scorecard - see sample table below.
Document all SOPs, Playbooks, and Algorithms, and Team Members involved with the growth engine to upgrade the OS.
Clearly defined and optimised communication architecture.
Qualify new products and prioritise those based on capacity and probability of conversion to support revenue targets.
3. Upgrade & Innovate - in preparation for the next phase of growth
Out of scope - but likely to include recruitment of the A team to support the execution required for an XYZ revenue target from April 23 onwards.
First 100 Days KPIs and Metrics:
Designing a Compensation Package for a CGO
We have included two different buckets of intel and insight here:
Bucket 1 includes the 4 points to consider when it comes to a C-level compensation package;
Bucket 2 includes a list of key questions to answer so you can work out the right mix of fixed/variable and the right size of that mix.
The 4 Points to consider:
Executive/C-Suite Base, Equity, Performance Compensation Strategy for long-term sustainable growth.
1.) The compensation plan is informed by two core areas:
Revenue
Profitability
2.) It is further designed to support a company’s long-term strategic vision:
For example - that might be:
Profitable Growth
Turnarounds
Transforming old into the new
Private Firms successfully competing with public companies
3.) Works through 3 to 4 dimensions
Fixed base versus variables contingent upon realising goals
Short-term (yearly) versus long-term (deferred and paid over 2 to 4 years)
Cash versus equity, stock, options
Individual versus group culture goals - Eg. Cultural might be ESG targets
4.) Answers big questions like
When do we expect to make adjustments to this comp plan, and when we do, how will we do that?
What lever will the firm have access to so that incentives being paid out can be adjusted to allow for things like - (.......?)
As for the Performance Portion of the Compensation:
The performance portion of the compensation plan is a strong factor in the comp plan itself and helps tease out the fixed base/variable ratio.
NB: 250 S&P companies have C-Suite compensation plans at a fixed/variable mix of 25% fixed, and 75% variable, on average.
A company that wants a high-performing team will typically want a team operating on a lower base, with a higher variable package to mitigate stagnant culture, underperforming staff, and missed targets.
When performance is a mix of short-term and long-term incentives, C-suite will tend to opt for a lower fixed base, with a higher variable element — Which is very good for smaller private firms.
Those elements that make up the variable portion of the Sales/Growth types of compensation (Performance-based) could include things like:
Examples:
1. Annual Sales Targets - paid in cash or in arrears
2. Gross Profit Margin Targets - paid in cash, deferred payments over 2 or 3 years: 20% in year 1, 30% in year 2, 50% in year 3 for example.
3. Economic Profit Targets - paid in equity (stock options, phantom, restricted stock - vested over a few years)
Key Questions to Answer:
50% Fixed Base, 50% Equity - what does the Equity portion mean: When is the equity issued, how is it valued over time, and is the exit strategy to IPO?
Is your preference for the variable portion of the salary to be commission only?
Average Length of Sales Cycle? CGO will be tasked with optimising this timeline for the fastest route to a sale.
Average Deal Size? CGO will be tasked with optimising the sale - upsell, cross-sell, profit margins, retention, and organic growth available.
Is Sales Workflow Automation Technology available? - Is there a budget to secure the right tech to reduce manual admin, optimise profitable conversions?
Sales Playbook - one will need to be built/designed as you go
Sales Flexibility Is there an option to increase our price point through value add?
Sales commission - does it kick in once the first $xx has been achieved?
Sales Commission as a percentage - what is the ballpark for that?
Sales Cap - there is an argument to be had for having a cap, and for not having a cap.
Sales Commission Tiers - would tiers make sense for your firm?