I have spent virtually my entire career in executive search and have witnessed, first-hand, how the market has developed over the past 25 years or so. It always used to be a profession that people, like me, ‘fell’ into quite by accident. Today, executive search is a flourishing and dynamic sector that attracts some of the best and brightest young talent who seek to join a profession they see as having a profound and positive impact on the clients they serve. This is one of the aspects of this profession that I find the most inspiring, another is that fact that executive search is genuinely meritocratic – the best, brightest and hardest working people, generally do very well in this business.
Despite this, it is still an industry where the barriers to entry are low and therefore standards vary widely. It seems a lot of people have a ‘Bad Headhunter’ story. Too many in fact. It was with this in mind that I thought I would write a short piece, knowing what I have learned over my career, on how I would approach hiring an executive search firm if I were a client. [In fact – full disclosure here – I do use executive search firms regularly to hire for Calibre One. Believe it or not, there are executive search professionals who specialize in hiring for executive search firms. We have a very close relationship with two in particular that we use regularly and have done for the last 10+ years]
What is executive search?
Firstly, I should define executive search, which differs significantly from lower-level recruiting. Executive search firms help their clients hire senior level executives ($200,000+ base salaries, with no upper limit) This is achieved through a process of searching the market(s) thoroughly with a view to compiling a shortlist of candidates (usually 4-6) that not only fit the client’s brief in terms of experience and competency but also represent the very best candidates available to the client, at that point in time. Often a shortlist is the output of a process that has evaluated several hundred candidates with the very best of these invited to meet the client for interview. The successful candidate is then pursued, offered the role, a deal is brokered and they then go through the process of transitioning to their new employer. This process is managed end-to-end by the executive search professional.
The complexity of this process should not be underestimated. The aim is to take a passive candidate who, in all likelihood, is very happy in their role and performing well, into accepting another opportunity only a matter of weeks later. There are many aspects to this process, requiring a very high level of sophistication in one’s approach. We are dealing with people, and their dependents. The variables that need managing are therefore virtually infinite.
Types of executive search firm
The Big 5
Like other professional services industries, executive search has a ‘Big 5’ – global companies that sit astride the market like Colossi. These are affectionately known as the SHREK firms (Spencer Stuart, Heidrick & Struggles, Russell Reynolds, Egon Zehnder and Korn Ferry) They are characterized by hundreds of people, great networks, strong brands, massive international office networks that extend to the four corners of the earth and a very high-volume of work, predominantly from large global enterprise clients.
At the opposite end of the scale there are the boutiques. Firms that are often owner managed with small teams and, as the name suggests, these firms have a more specialist, bespoke and artisanal approach to executive search. They also tend to love their clients – a natural by-product of having fewer clients than the bigger firms and therefore having a tendency to love each client a little more. Obviously, this is a very attractive feature. Calibre One is a boutique – although quite a large one in relative terms.
How do you choose a firm?
The short answer to this central question, in my view, is that you shouldn’t choose the firm so much as the individual. There are some great search professionals in the SHREK firms, as there are also in boutiques. I must confess though that, like any profession, it is a bit of a mixed bag. In my view, one of the challenges faced by clients is that it is often the best sales people that are the worst at managing a process. I remember the CEO of one large search firm (who will remain nameless) describing his highest billing consultant: “He bills well, but he couldn’t deliver a letter.”
It is a fact that it is more difficult to hide in a boutique. Most boutiques work with a small number of clients and are dependent upon doing great work that leads to repeat business. Larger firms have a marketing organization and a senior partner group that creates new opportunities. It stands to reason that, with new projects continually coming your way, the projects that are proving difficult start to get less attention, when they should be getting more.
However, the bigger firms come with a cachet to the brand. There is also a perception that busy executives are quicker to return a call to one of the SHREK firms (that is not true, by the way) and their databases of candidates are literally vast. They also have a myriad of offices and legions of partners.
Deciding what is best presents a major challenge so here are some of the more important positives and negatives to both boutiques and the SHREKs, as I see them:
Some questions to ask your prospective search partners
- Describe your processThe ‘Little Black Book’ is dead. Beware of Headhunters that will not describe their process in detail. Their answer should give you confidence that they will find you even the hard-to-find candidates that are not currently in the obvious target companies.
- How many searches are you running?It is my firm belief that a search professional cannot manage any more than half a dozen projects concurrently, without the quality of their work suffering. If they don’t have the capacity, then you should avoid working with them.
- What will be your actual involvement in this project?Some firms will put the Partner in front of a client in the sales process, only for them to then hand the project off to a much more junior consultant to deliver, never to be seen again. This is known as the ‘Pitch and Switch’ and, understandably, it irks clients.
- What are your off-limits issues that will affect this search?All reputable firms will not approach employees of clients of the firm. This becomes an issue for the SHREK firms where a very significant proportion of the market may not be accessible to you. It is also a problem for very focused specialist boutique firms.
- How do you ensure a diverse shortlist?Its surprising how many search firms have not really thought through their approach to diversity and are consequently not well placed to satisfy this basic requirement.
- Tell me about a search project you managed that didn’t go as plannedWe all like telling prospective clients about the projects that went swimmingly well. Hearing about the ones that don’t is far more instructive.
- How do you search internationally for candidates?Many companies have difficulty with this. Many boutiques rarely manage searches that require an international dimension. The SHREK firms have challenges in working in blended teams across such large organizations. Intuitively one might think “50 global offices = good international search capability.” Often, it means anything but.
- How do you reference candidates?Funnily enough it’s the references that candidates do not volunteer that are the most valuable.
Executive Search Fees
To most people, the level of fee is very low on the list of considerations when comparing firms. The level of fees charged by boutiques is more often than not in line with the SHREK firms but boutiques tend to be more flexible with the structure of their fees and often charge based on milestones achieved in the process, rather than just the time elapsed. If you are paying way below the level of fees quoted by the SHREK firms, to a boutique, then there is probably a good reason for that. “Buy cheap, buy twice” as my Mum always says.
All of the areas covered here will likely contribute to your decision over which Headhunter to work with. At the end of the day, it is a personal decision and every client will have a slightly different view of what good looks like. My view is that the most important and impactful attribute of the modern Headhunter is the ability to advocate for their client. Interviewing and assessment skills are important but they need to be able to sell the opportunity to candidates who are passive at best, resistant to a move at worst. Great Headhunters are able to bring the very best people to the table who might otherwise pass on the opportunity.