Winning By Stealth
Russell Reynolds CEO Clarke Murphy talks about the biggest changes in executive search in recent decades -- and draws parallels between ocean racing, his passion, and headhunting.
The Business Times article, “Winning By Stealth,” interviewed Russell Reynolds Associates CEO Clarke Murphy about his journey in executive search and the biggest changes in the industry over the past few decades. The article is excerpted below.
There are about 10 sleek boats bunched together near the mouth of the harbour in Malta when one of them suddenly rolls off precariously to one side, breaks free of the gaggle and makes an unexpected lunge forward in what a voice over commentator in the YouTube video calls “the most daring of starts”. But trouble soon strikes. Not long after its bold push, one of its sails rips. It starts to fall behind its peers, hardly an auspicious start to a prestigious ocean race that involves sailing nonstop around Sicily in grueling conditions that involve a lot of Mediterranean seawater and very little sleep.
Its chances look slim. But later on, something surprising happens again. In the dead of night – the very last leg of the contest – the vessel ekes out a second wind. It stealthily picks up speed, overtakes a rival under cover of darkness and surges towards the finish line. Though it has lost two key sails in the course of the race it still, somehow, manages to come in fourth.
That was in 2016, and the race outcome may not be much of a wonder to those who have met its skipper. Clarke Murphy – who devoted two years to racing sailboats around the world after graduating from university and has crossed the Atlantic six times and counting – is a top headhunter who runs executive search firm Russell Reynolds. The company recruits for C-suite and board-level positions in financial services, consumer, technology, healthcare and industrials. Though its tony world of corner offices and glass-paned boardrooms is probably as far removed as possible from the salty spray of open water, he says there are overlaps between the two.
“Very much like our business you have a team of people, who by their very nature if you want to go out and be cold and wet for a number of days and go fast you’d have to be characters to begin with, but equally everybody’s got a role to play . . . you depend upon each other in the dark at 3 in the morning in the cold in the storm to do things.”
Mr Murphy, 54, who says he has been sailing with friends “for about 15, 20 years”, says these overlaps relate to how the company got through the global financial crisis of 2008 and 2009. “It’s keeping an optimism that volatility brings opportunities . . . And if you build strong relationships in good times they will always take care of you in tough times. But it’s hard to see that when you’re in the middle of it all,” he says.
“At night time is when you win races because people are tired. They’re not as energetic. They think, oh well it doesn’t really matter. You win more races at night when no one can see what you’re doing if you stay diligent than you do in the daytime. If you pick up four miles one night, five miles the next night, 20 miles the next night, no one understands how you pulled ahead so much. So it’s taking advantage of unusual periods in business or in sailboat races that helps you win in the long race.”
For example, the crisis showed many financial institutions had been rewarding and developing people “in one business, in one silo” and these executives had “less exposure across the entire institution from a general management standpoint”. That was a chance for headhunters to help those institutions find “leaders that can span across general management and understand the organisation broadly”, he says.
“What we're saying today is, the most effective executives and the prediction of how successful they’ll be is how quickly they can span from one to the other, because the world is not linear. The world needs agility . . . dealing with ambiguity better”.
Some leaders may be independent thinkers or the “heroic” type, “very strong”, but “there are times in the bottoms of a crisis when you need to galvanise groups of people and if you only are the heroic profile you’re probably not gonna galvanise a group of people very well”, he muses. “We're helping them prepare for leadership issues internally or externally . . . as opposed to waiting for our phone to ring. It’s a big transition our firm’s gone through, about being less focused on the transaction and more on giving long-term advice over five or 10 years to clients when there may not be a transaction.”
Ocean sailing is now a Murphy family pursuit. He recently started taking his three daughters and son, aged 15 to 19, with him on contests. His son joined him on last year’s race in Sicily and his daughters have done a “700-mile race from Newport to Bermuda” with him. They live in New York.
“When you’re sailing in the ocean, you have no opportunity to think about anything else which I find is a great way to get away from the grind of working very hard all the time. You sleep four hours on, you sail for four hours, rest for four hours, sail for four hours. But it’s a great way to see the world, it’s a great way to get away from the world.” And sailing, perhaps, might have contributed to how Mr Murphy got his start in the headhunting business, albeit in a roundabout fashion.
Born in Washington DC in 1962 and raised in Virginia with four siblings, he did not have a passport till he was 18 and went to study in France. “It opened my eyes that there was a big world out there and I found the cross-border nature of things much more interesting”. He initially set his sights on a career in what he saw as an emerging industry then. “You’ll laugh now . . . at that point video conferencing had just been created and I thought that the way the world would come together in the 1980s, a long time ago, was through video conferencing and the uses of technology to bring people closer together. And I really wanted to pursue the industry and I had actually interviewed with a company in New York – which is how I got to New York – that was the leading video conferencing company.
“I was a little early. But it really sparked an interest in innovation early on. And then I realised that if you’re going to be in New York, being in the financial services industry was really the way to go.” He started work at a bank in New York, two years after he graduated from the University of Virginia with a bachelor’s degree in history. After over three years in banking, he met the founder of Russell Reynolds when they were introduced by a mutual friend.
“I was recruited by Russ Reynolds, to work directly for him . . . as his chief of staff. He had been a banker himself and preferred that his chief of staffs all be ex-bankers because they understood that individual transactions make for long-term relationships, just like in banking and in the search business,” he recalls. “We also had a shared passion for ocean sailing and ocean racing . . . we had something in common.”
Making the decision even easier was that “I’d always wanted to work internationally and the banking role was probably more domestic”. The firm was then expanding, opening offices in “China, Milan, Copenhagen”. Mr Murphy went with Mr Reynolds around the world for about three years before landing in Germany.
“While I worked for Russ, the Wall came down in Germany and East and West Germany were united. And there was a huge opportunity for Frankfurt to become a banking hub, because the ECB (European Central Bank) had moved to Frankfurt, Goldman Sachs had opened an office in Frankfurt and the belief was Frankfurt would be the centre of banking for all of Europe. So I went to work recruiting people out of London and New York to come to Frankfurt.”
That ended when German lender Deutsche Bank bought a British merchant bank and moved its global investment banking headquarters to London, he says. “Overnight Frankfurt was not going to be the hub, because if Deutsche Bank says, ‘We’re not going to base our investment bank here’, no one else is.”
Mr Murphy then went to London, newly married, and saw the city take off. “The global investment banks moved to London, the private equity firms started opening offices in London. It was Tony Blair’s era, it was a very exciting time to be in London.” He moved back to New York in 1999 to help the firm run its United States business. That coincided with the global expansion of private equity firms, many of which were headquartered in New York, “so I was running our PE business as well which again was a time of huge growth for PE firms”. “Their capital under management just expanded from tens of millions to billions, and so it was a very interesting period, and it was post the tech bubble bursting in 2000”.
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