You might find one at private-equity companies. At a time when the economic demands of large public companies keep CMO fates linked closely to quarterly earnings reports, privately backed organizations might just offer smoother sailing -- at least in the short term. Though fast-paced and demanding, such environments often can be more amenable to giving CMOs a little more time to prove results.
"Because there is less pressure to hit quarterly numbers, and the focus is on creating value in a three- to five-year timeframe, it is actually a more conducive environment for marketers, but you've got to demonstrate the value and demonstrate it fairly quickly," said Spencer Stuart consultant Simon Foster.
Many would jump ship
If given the opportunity, many CMOs and senior-level marketing executives would eagerly take up residence in private-equity-backed companies, according to a new survey from Spencer Stuart to be released tomorrow at the recruiter's annual CMO Summit in New York.
While nearly 74% of survey respondents said they didn't work for a private-equity-backed organization, 83% said they've considered a move to a private-equity environment, attracted by the possibility of greater financial reward (53%), entrepreneurial opportunity (43%) and the excitement of a higher-risk/higher-reward environment (40%).
"If you are truly a private company, your owners care more about sustainable cash flow and ultimately are looking for a two or three [times] return on their investment several years down the road -- but they are not going to have the same view to quarterly growth performance that a public company is concerned about," said Russ Klein, president-global marketing, strategy and innovation for Burger King, a company that went public a year ago but is still 60% owned by three private-equity firms.
Marketing has become more important as a growth driver to private-equity-backed companies across industries, Mr. Foster said. "There's now more money chasing fewer deals. What that means is private-equity firms are having to buy companies at greater valuations and therefore hold companies longer to create value." And to create that value, investors are turning to marketing. "In a public company, they are focused on quarterly earnings," he added. "In a private-equity environment, if the spending's working, it stays."
That may help explain why, out of the 21% of respondents to the Spencer Stuart survey working at private-equity-backed organizations, 91% said were likely or very likely to join another such company in the future.
David Lundstedt, president of the now-public Honeywell Consumer Products Group, has worked in both public and private environments -- and prefers private environments because of the relative freedom and control they afford marketers.
Mr. Lundstedt served as CEO of private-equity-backed Prestone Products Corp. (before Allied Signal bought it in 1998 and then merged with Honeywell). "What appealed to me was maximizing the business based on what we knew the business could do, as opposed to what someone on the outside thought the business could do, [meaning] the analysts," he said.
Based on his experience at Prestone, Mr. Lundstedt said he came to view marketing's importance in a private-equity environment as perhaps greater than in a public company. "It was [marketing's] job to help build that business, as opposed to wanting to do your job because of this next quarterly report that's going to come out."
Still, private-equity organizations are no cakewalk for CMOs. In fact, "private-equity influence probably brings more urgency and expects more accountability than most public boards," Mr. Klein said. "The days are numbered for the CMOs that aren't good, and maybe they're more numbered in a private-equity environment. A CMO who is unable to show measurable progress is going to be smoked out much sooner."
"Don't forget that all of those private-equity companies have an endgame too," Mr. Klein added.