Honig International in the News

September 24, 2002 The Wall Street Journal
"Private Firms Draw Workers With Solidity, Simple Values"
By Kemba J. Dunham

THE JUNGLE ム Focus on Recruitment, Pay and Getting Ahead

Should you leave a public company for a job at a closely held firm? Cheryl Waldrup recently made that choice. In June, the 42-year-old vice president of business development was working for a subsidiary of a publicly traded educational-services concern in Baltimore. But she soon grew uneasy about what she was seeing in the market: incredible pressure from shareholders, intense scrutiny of corporate finances and continuous management changes.

Her mentor, a vice president at an employee-owned firm, suggested that Ms. Waldrup look at smaller, closely held businesses for her next career move. After a few months of searching, she accepted a job as vice president of sales at closely held Scientific Systems & Software International Corp., a Columbia, Md., information-technology company, in September. Ms. Waldrup says she still works hard within an aggressive environment, but she feels more comfortable working at a closely held firm. "Over the past two years, stock options became much less important and a sense of corporate well-being became paramount," she says. Now, she feels the owners share "my values, reward personal performance and have realistic expectations and appropriate time lines for growth."

Some career counselors and recruiters aren't surprised that individuals are thinking about making such a switch these days. Linda Dominguez, a career coach in Westlake Village, Calif., says the interest in closely held companies is coming from both currently employed executives who want to escape their public cultures and laid-off ones who are choosing private firms to avoid additional setbacks.

For individuals looking for a solid income, working at a closely held concern may be ideal. "At a public company, a good chunk of compensation is in the form of stock or stock options and that's not very interesting since many of these stock options currently have little value," says Barry Honig, president of Honig International, a Tenafly, N.J., executive-search and management-consulting firm. "The private companies tend to be more cash-oriented, and that's a plus for people who want to be paid in cash."

The financial drawback of working for a closely held firm, he adds, is that an employee doesn't have equity in the company. But a worker can inquire about a profit-sharing plan in which he or she could receive a certain percentage of the profits, Mr. Honig says.

For those looking to make the switch, trying to decipher the overall financial health of a closely held firm is a bigger challenge. "It's very easy to check the financial status of a publicly owned company, both before and during employment," says Barbara LaRock, a Reston, Va., career and life coach. "It can be done with a privately owned company, but it's not as easy."

Certain recruiters particularly caution against family-owned private businesses. "Family companies are always for sale and the old saying that 'Nothing is thicker than blood' always proves to be true," says John Plummer, a Rowayton, Conn., recruiter. "I cannot tell you how many times each year I meet executives who thought that they were in line for running a family company only to be surprised with the appointment of a child [of the current owner]."

And while some used to join closely held concerns in hopes of gaining riches after an initial public offering, "the bloom is off that rose," says Janet Jones-Parker, managing director of a Chapel Hill, N.C., search firm specializing in the executive-recruiting industry. Most who make the switch these days, she adds, are looking for "long-term viability and stability."

Overall, most agree there are advantages and disadvantages to both environments. "Each job opportunity, whether private or public, must be evaluated on its own merit," says Pat Lipton, a Lake Worth, Fla., career consultant. "When you work for someone else, you are not in control. In today's world, there is no such thing as security."