When to Use an Executive Search Firm
Generally, employers use an executive search firm when a search is important enough to warrant the investment. I use the word “investment” for a reason. A retained executive search will likely cost you a minimum of $50,000 and averages $100,000 or more — typically one-third of a candidate’s first-year total cash compensation. Typically, these are senior-executive roles with salaries averaging $300-thousand or more.
First, it needs to be worth the investment
If an executive search has to be worth the investment, how do you do the math? The importance of a senior executive role can be measured financially. How much money might this executive make for your company? If you don’t find the right person, how much money might this person lose? If the cost of not filling the role with the right candidate is significantly higher than the cost of the search, then you may be ready to consider investing in the services of a retained executive search firm.
Retained search firm is not right for every search every time. There are some roles that are not worth making that kind of investment. I often brainstorm with senior executives about ways they can build their teams without incurring the expense of an executive search firm. You can get a lot of lift with employee referrals, job postings, and LinkedIn. But you have to have the time and bandwidth to do the recruiting yourself. Recruiting top performing executives is labor-intensive, complex, and requires a rare set of skills and expertise. That is why retained search firms exist. In fact, they are in such demand that, despite the economic downturn, their average fee for an engagement has increased.
Companies and hiring executives retain executive search firms for any one of the following reasons:
1. Good just is not good enough. You require a senior executive candidate who is truly great.
If hiring top performing talent available is important to your company, a search firm can help you do the rigorous work required for game changing hires.
2. The search is incredibly important at the senior executive level.
Searches for C-level positions that report into the Chief Executive Officer usually are too important not to go out to a retained search firm. Executives at that level can make or break a company. A retained search firm can mitigate the risk.
3. You are seeking a candidate with a rare mix of skills.
If you have an important search in which you are seeking the proverbial needle in the haystack, a search firm can help you get it done. Better executive search firms will deliver a slate of candidates with the right mix of knowledge, skills, and abilities along with the requisite cultural fit.
4. You have a search for a senior executive position that you just created.
When an executive search falls outside your area of expertise, an executive search firm can plug the knowledge gap with their domain know-how.
5. You have to replace an under-performing executive while he is still in the role.
For companies that need to line up a replacement while the senior executive is still in the role, search firms offer a much-needed veil of secrecy.
6. You have to recruit for target company with which your company has good relationships.
If you need to recruit top executive talent from partner firms with which your company does business, the confidentiality that search firms offer helps avoid ruffling feathers.
7. Your senior leadership team lacks diversity.
Because women, Black and Latino candidates are not well-represented at the senior executive levels, search firms can help level the playing field by conducting original research to ensure equal opportunity for all candidates.
8. Your lack internal bench strength and have few successors to your senior executives.
If you sense a key executive might be on the verge of leaving or that you could benefit from top-grading, a succession bench help you tee up executive hires in advance of need.
9. You do not have the time or resources to take on an executive search.
If you already have too much to do and too little time, taking on an important executive search can quickly become its own full time job. That is what search firms do.
10. You have tapped out your personal and company networks for candidate referrals.
If you have exhausted your network of connections for possible referrals, it is time to access another network. Executive search consultants are among the most well-networked people in the business.
11. You have an important executive search that is taking too long.
Whenever a search takes to long, it is time to call in reinforcements to speed time-to-hire for challenging searches and those with compressed timelines.
12. You want to give your company a strategic advantage through better hires.
Retained search firms are in the business of delivering top performers — the 20% that are so effective they are responsible 80% of the results. Any time you have a senior executive search, it is an opportunity to trade up to a top performer and to drive results.
The Good Search is a retained executive search firm in the Greater New York City area that specializes in media and technology. We are here to answer any questions you may have when you are ready to move forward with a search engagement.
Top Executive Search Firms List: How to Build Your Own
A short list of the top executive search firms is readily available in the minds of most CEOs, Chief People Officers, Heads of Talent Acquisition. But what’s a company to do if the search firms on that short list start to come up short? What is a C-Level executive with an important opening to do if her current retained search firms are not delivering the value she needs? What if the search firms a board member knows are great at some searches, but not all?
Well, you used to be able to pull up The Directory of Executive of Professional and Executive recruiters published by Kennedy Information. That directory detailed the kind of search firm (retained or contingency) and the firms’ specialties, Yet it is no longer being published.
The reason we thought we’d put together a list of the top executive search firms because the lists on the Internet are pretty haphazard. In fact, at least one of the sites appeared to be bogus. TopExecutiveSearchFirms.com was created by a search firm that then inserted itself into the fake list of Top Executive Search Firms that the website made up. We’d been tracking this website for some time until ultimately we decided to contact the firm’s CEO and ask for a quote for a blog post on the phony site. Shortly thereafter, the site was taken down. (You can still find it in the Internet Archive.) This is just one pretty stark reminder that you cannot trust everything you read, especially stuff you come across on the Internet these days, alt-facts and one. One must always consider the source, and if that source is murky, be especially cautious.
In other words, as a best practice, it is always good to assemble your own list of Top Executive Search firms. To assist in that effort, we have a few suggestions.
Why Do Executive Recruiters Fail?
There is, in executive search, such as thing as too much candidate data. Few recruiters understand how to wrangle it. They lack the necessary deep data expertise to gather, parse, and analyse data to make executive search smarter. In fact, many executive recruiters still turn to “name generation” — research aimed generating more candidate names. Information overload is the problem and not the solution.
Recruiters didn’t need much research expertise a decade ago. But these days, they need to up their data science skill-set. The amount of information has multiplied exponentially. Executive recruiters are overwhelmed by resumes, social media profiles, email, tweets and texts. They lack the ability to match force with a tsunami of career data. They cannot separate the signal from the noise. They miss perfect candidates because too many lesser executives get in the way. As a result, executive recruiters fail.
Googling a prospective candidate’s name, rank, and serial number is easy.
You know what’s harder? Deep web data.
The amount of digital data is increasing at a stunning rate. IDC, a global market intelligence firm, estimates a 40 percent to 50 percent growth rate in digital data. In only five years, the firm anticipates there will be 40 zettabytes of data out there. Does your search firm even know what a zettabyte is? It should.
A zettabyte is a measure of storage capacity and is 2 to the 70th power bytes, also expressed as 1021 or 1 sextillion bytes. One zettabyte is approximately equal to a thousand exabytes or a billion terabytes.
Michael Walker, the Managing Partner of Rose Business Technologies, describes what we’re witnessing as the Rise of Data Anarchy.
Data Expertise Makes Executive Recruiters Smarter
Imagine making hires harnessing the prediction power of a Nate Silver. Imagine actually knowing who top candidates are and how they have outperformed all the others. It’s the executive version of Moneyball that discovered competitive advantage hidden deep inside baseball statistics — beyond the obvious batting averages, home runs, runs batted in (RBIs), and wins. Only these players are in suits.
Executive recruiter sourcing “best practices” are outdated. Search firms must invest in research data expertise. They must invest in brilliant information scientists and data investigators. Those who refuse to make that investment are, informationally, searching with their eyes closed. The key to finding a top-notch executive search firm is to look for a firm with serious data research credentials. (We’re glad you found us.) These days, more than ever before, knowledge is power.
How to Recruit the Right Executive
I have recruited top executives and technologists for the past decade and a half. Over that same period of time, I have also made hires to my own team. I can tell you with absolute certainty that one of the most devastating mistakes a business can make is picking the wrong person for the job. Every hiring executive I know — myself included — has made bad hires. In fact, according to a recent Corporate Executive Board survey of hiring executives, every fifth hire is a mistake. A whopping 20% of candidates should not have been hired in the first place.
Executive Search Challenges
Executive Search isn’t rocket science. So why are executive search challenges are common? Executive searches often take too long. In fact, 40% of retained executive searches fail to complete. And executive search challenges don’t stop when an executive opening is filled. Far too often, the “transplant doesn’t take”. The executive hired turns out to be someone the employer would rather not keep. A survey by the Corporate Executive Board found that one out of every five hires is a “bad hire”, one that in hindsight the hiring executive regrets making.
Still, how hard could executive search really be? At last check, executive search consulting isn’t even offered as a specific major. Cornell University School of Industrial and Labor Relations does offer an advanced program in partnership with the Association of Executive Search Consultants (AESC). But that’s as good as it gets.
With no license requirements and few barriers to entry, virtually anyone can hang out a shingle and does. Amateur recruiters and inexpert search partners may be at the root of ongoing executive search challenges. Come to think of it, it is even harder to go into real estate than it is to go into executive recruiting — the career of last resort for some who can’t figure out what else to do.
How to Hire Top Digital Executives
A growing number of media companies have come to the realization that it has never been more important to hire top digital executives. These days, a company’s ability to compete — and even to survive — depends on it. However, the increasing demand for top digital executives is making it harder to recruit them. As a result, companies are turning to traditional retained search firms for help. However, that executive recruiting strategy introduces a significant risk of failure.
Reduce the Risk of Failed Executive Searches
To recruit top digital executives, one must first reduce the risk of failure. On average, 40% of retained executive searches fail to complete. In other words, there’s a good chance — nearly one in two — you will end up without the digital executive you need. That’s a risk companies can ill afford. With retained search engagements costing upwards of $100 thousand, failed searches exact a tremendous financial cost and do even more damage in lost time to market. Delays in recruiting top digital executives can leave a company in perpetual catch-up mode. Companies lose momentum at the very time emergent competitors are growing faster than anyone thought possible. Reduce the risk of failed search by cultivate alternatives to traditional executive search firms.
Seek Innovative Boutique Search firms
Boutique search firms offer advantages over the likes of Spencer Stuart, Heidrick & Struggles, Russell Reynolds, Korn/Ferry and CTPartners. For one thing, boutique firms rarely have issues with client blockage — off-limits agreements that prevent a firm from recruiting from your favorite target companies because they were the firm’s clients. For another, most boutique firms offer concierge quality client care . That is how smaller firms compete with the majors. More important, boutique search firms are freer to innovate smarter-faster-better ways to recruit. Smarter-faster-better is how you recruit top digital executives. To maximize the competitive advantage, look for firms that offer next-generation executive search capabilities.
Next-Gen Search Firm Capabilities
Smarter Executive Search
Seek search partners who develop methods that make recruiting more intelligent. After working as an award-winning investigative journalist, I founded The Good Search when I discovered how lightweight and outdated traditional recruiting research methods were. Research is how search firms identify and develop the candidates that they deliver to their clients. Build a better engine, and you’ve created the ultimate recruiting machine. The Good Search harnesses the power of information to make search smarter. With the amount of data in world doubling every couple of years, recruiting has shifted from a problem of too few candidates to that of too many. Too many unqualified and average candidates get the way of the top performers. As a result, traditional search firms are missing rockstar candidates who are “standing in plain sight” because too many candidates get in the way.
Digital Data Expertise
You need a search firm with serious data expertise — one that is capable of separating the signal from the noise. In my former career as a journalist, I developed a digital speciality in data-driven investigations. There’s a treasure trove of candidate data available outside the resume databases and LinkedIn. That data treasure trove is the key to identifying, calibrating, and recruiting best-of-the-best digital executives. Ultimately, you need more than a social network, a stack of resumes, or a list of candidates names. Your deserve to know who is good. Our data driven approach and expertise, our digital acumen, and investigative abilities make search smarter and give us greater reach. That is how The Good Search consistently deliver top talent clients never knew existed — candidates that traditional firms miss. Ask firms about their use of data to check their digital data expertise.
Look for a search firm that does more than gather information. Today’s search firms must stop to connect the dots and develop actionable intelligence for faster/better hires. The Good Search makes it a practice to capture intelligence and to share the knowledge with our clients. In fact, we hand over all our candidate research, something traditional retained firms never do. Of course, while The Good Search evangelizes methods that are more evolved, we are by no means the only firm with the courage to innovate. But whatever search firm you choose, make sure you select a partner that offers you a competitive advantage through smarter search. Its is the key to hiring rockstar digital executives. The only sensible way to match force with the digital talent shortage is to outsmart it. With smarter search, you really can “Keep Calm and Search On”. In fact, we created the executive search meme to serve as a reminder. In the war for talent, smarter, cooler heads prevail.
In my next post, I will share insights digital transformation culled from a leaked New York Times internal report. The document contains fascinating insights on the digital leadership required to to address perpetual digital disruption.
Recognizing Great Talent
Learning how to recognize great talent is the key to making amazing hires in executive search. While it is pretty easy to tell who’s good while seated court-side in Madison Square Garden watching the New York Knicks play, it is not so easy for Chief Executive Officers seated in the C-suite. At senior-executive level, candidates start to resemble one another. They often share similar academic credentials and similar career trajectories. They all meet the basic qualifications or they would not have made it this far. However, to hire senior executive talent that is truly game-changing, you must somehow discern the difference between two seemingly identical candidates. To make the right hire, you must develop the ability to figure out which candidate will outperform the rest. You must increase your powers of observation to discern great leadership talent.
A Musical Analogy
Early in my marriage, I discovered my husband Crispin Cioe seated on the floor of the living room, completely engrossed in sorting saxophone reeds into separate piles. He’d hold up a reed against the light to examine the grain, wet it in his mouth, position the reed atop his mouthpiece, aligning the tip of the reed with tip of the mouthpiece just so. Next, he’d encircle the reed and mouthpiece with the ligature, and tighten its screws. With the reed locked in place, he’d raise the mouthpiece and blow. After sounding the note, Crispin then would unscrew the ligature, remove the reed, and place it on one of three piles.
The executive search process varies little from retained executive search firm to retained search firm. In fact, the basic steps of the retained search process are described by the Association of Executive Search Consultants (AESC), an organization that represents retained search firms. Every time they conduct a senior-level executive search, executive recruiters seated at the largest search firms in the world — Spencer Stuart, Russell Reynolds, Heidrick & Struggles, or Korn Ferry — as well as at the leading boutique executive search firms follow the same basic retained search process.
Of course, since retained search process and pricing looks are pretty much the same at every traditional search firm, it can be challenging for executive search buyers to figure out which firm to select. We will have more on discerning the differences in another post. However, before we get into the nuances, you first must learn the basic steps of the retained search process.
Engaging the Retained Firm
Retained executives search firms work by retainer and exclusive contract. The standard retained search contract stipulates that the firm serves as the exclusive representative of the search for external and internal candidates. It also defines engagement timing, off-limits agreements, and other issues relevant to the particular assignment.
Holding Launch Meetings
The retained search firm meets with the hiring executive and relevant stakeholders to discuss the requirements of the role. The meetings often include key board members, members of the senior executive team, peers and subordinates. These meetings enable the search firm to gather important information about the requirements of the role. More important, the search partner witnesses first hand the management style and corporate culture, which are essential to understanding what makes someone successful at the company.
Creating Position and Candidate Specification
The retained search firm drafts a description of the position, detailing its reporting relationships, responsibilities, and objectives. The candidate specification details core competencies, preferred experience, and soft skills — the personal qualities that sought in the ideal candidate. The document serves as a touchstone, defining all the requirements of the role, preventing searches from veering off course. Once the client approves the document, it is used as a marketing tool with candidates.
Setting Research Strategy
The search team develops a strategy targeting companies most likely to yield a successful candidates, including the initial list of target companies agreed to in the launch meeting. The strategy considers the level and scope of comparable roles as well as other key data points: office location, corporate culture, and each company’s ranking. Companies that are off-limits are also delineated — companies out of which the firm will not recruit due to sensitive client relationships or because the firm has client blockage.
Conducting Original Research
Using the strategy as a blueprint, the search team conducts original research to identify and profile idea candidates, mapping the reporting relationships and often building out org charts of target teams. Traditional search firm usually do the most of the research online. The search firm will also query its own candidate database, proprietary information services, and social networks such as LinkedIn to yield prospective candidates.
Search firms sound their network of sources for candidate referrals and calibrations. Sources include journalists, professional associations, and other relevant groups. Prospects that meet the requirements of the role are added to the initial list of prospects.
The search team contacts prospective candidates to determine whether they meet the primary requirements of the role and gathers details on the candidates motivations — what it would take for that candidate to make a move to a new company. The search team reviews the list of qualified, interested prospects to determine whether more research is necessary or whether it is time to schedule in-depth interviews.
Interviewing and Pre-referencing Top Prospects
The search consultant interviews and evaluates top prospective candidates in a deep-dive interview that steps through the career history. The executive search partner evaluates the candidate against the candidate specification through in-depth, in-person or video-conference interviews. Taking great care not to jeopardize candidate confidentiality, search firms pre-reference candidates whenever possible to verify past performance and essential soft skills. Those who are not a fit are closed out.
Writing Candidate Profile
For those candidates the search firm presents to the client, they prepare a written Candidate Profile, a report that details the candidate’s education, career history, honors and awards as well as an analysis and appraisal of the candidate strengths and weaknesses and appropriateness for the position. The report also highlights any key motivators, issues, and deal-making details essential to closing the candidate.
Presenting Candidates and Tracking Progress
The search firm presents candidates at regular progress meetings. Working closely with the client, the list is refined to a slate of 3 to 6 strong contenders for the client to meet. Client-candidate meetings are then scheduled.
Scheduling Client Interviews
Client interviews of the candidates scheduled to winnow selection down the two or three finalists. Those that are eliminated are closed out.
The search team checks the candidates references, contacting the contacts provided by the candidate as well as other sources available to the firm. The team makes every effort to ensure discretion and confidentiality. Verification of employment and academic credentials is often performed by third party services. It is the consultant’s responsibility to ensure that such checks have been conducted.
Extending the Offer
When a final candidate is selected, the search consultant works closely with the client and candidate to position the offer with the candidate, and to negotiating a package that is agreeable to both parties.
Closing the Candidate and Search
The search team closes” the candidate when the executive accepts the offer, agreeing to join the company. The search firm then closes out the engagement by thanking those involved for a successful outcome.
Given the many steps involved in the retained search process, the recruitment of CEOs, CFOs, CMOs, CTOs, and CIOs requires an investment of time to do it well. However, the AESC states categorically that senior-level executive search is “a time consuming if it is to be done professionally. ” That is a point with which we respectfully disagree.
What executive search buyers object to is when retained searches take too long for no apparent reason. As a NYC area retained search firm that specializes in senior level executive search for some of the most powerful and successful companies in media and technology, we understand that their businesses move at the speed of light. We get deadlines. The executive recruiting process does not need to move at a snail’s pace. Over the years, we have experimented with different ways to close searches more rapidly for searches in video games, digital media, software, and advertising. With few exceptions, making search smarter yields faster, better hires.
Questions Not To Ask Executive Search Firms
If you are shopping for an executive search firm to conduct an important senior-level executive search, don’t be fooled by the lists of search firm screening questions available for download on the Internet. Those lists are not entirely objective. Retained search firms have cleverly marketed lists of screening questions, that when answered, will lead you directly to their doorstep. Even human resources associations and other seemingly independent organizations often get spoon fed the same questions by a friendly search partner or firm. In other words, we suggest those cooked lists contain questions that are not in your best interest.
Of course, you might wonder, who are we to talk? That is a perfectly reasonable question. The Good Search is a retained search firm, after all. However, we do not benefit from criticizing the concocted lists of screening questions — not when they promote the kinds of services we offer. However, The Good Search believes it is good business to help executive search buyers become more informed consumers. I founded this practice because I believe there is a better way to recruit top talent. Executive search has to get smarter.
Still, when you get right down to it, it doesn’t matter who we are or what we believe. We simply suggest that you be on the lookout for bias in search firm questions and think about more relevant screening questions to ask. Draw up your own list of questions. To that end, I’d like to share my thoughts on a few of the common screening questions. Sometimes the obvious answer isn’t always the best.
Questions Not to Ask Executive Search Firms
- How many searches have you conducted for this kind of role in the few years?
The implied preferred answer is that the more executive searches a firm has done for a similar role the better. Yet, that’s not necessarily the case. In retained executive search, the more identical searches a firm conducts, the more likely it is that they’ve done business with the companies you’d want to recruit out of for your engagement. Because they’ve done business with those target companies, they are likely off-limits to that firm. In other words, retained search firms can’t recruit out of target companies that happen to be their clients. When they can’t go there then you can’t go there. Too many identical searches are not a good thing. In fact, search firms that rattle off a long list of similar engagements should be screened out, not in.
- Will the executive search firm consultant I meet with actually be the one doing the work?
The implied preferred answer is “absolutely”, leaving the buyer with the impression that the partner is elbows deep in the engagement each and every day. However, every major retained search firm works on searches in conveyer belt fashion. First come the researchers who identify candidates, then come junior associates who qualify the candidates; and after that come the consultants and partners who do more in-depth interviews, assessments, and manage the engagement through its successful completion. Smaller firms and boutiques may cut out a layer or two, but teamwork in executive search is pretty standard practice. In our view, what is more important is whether those working on the engagement offer serious research expertise, business acumen, and added reach — the ability to tap candidates out of the grasp of other search firms.
- What is your time-to-complete?
The most frequently measured metric cited by executive search clients is how long it takes to complete an engagement. But here, one must ask why that is. Often, a search firm has little control over how long it takes a company to schedule interviews and, ultimately, to make up its mind. A more telling metric is how long it takes a search firm to present the candidate who ultimately is hired. Without a doubt, finding, recruiting, and getting a top executive onboard in a timely fashion is tremendously important. Vacant executive positions exact a real cost in lost revenues, lost opportunities, overworked team members, poor morale, and increasing customer dissatisfaction. However, time-to-hire dominates because it is an easy metric to capture. Value is much harder to measure because it is qualitative. Yet value remains the most important metric of all.
Your First Chief Data Officer
If knowledge is power, hiring your company’s first Chief Data Officer (CDO) may be the shortest path to a competitive advantage. According to a recent article in Harvard Business Review, you hire a Chief Data Officer in order to compete with data.
That first Chief Data Officer will likely need data scientists, and eventually a data lab, and a data factory — respectively one place to do longer term, innovative, out-of-the box thinking, and the other place to do more process-focused data analytics aimed at more immediate results.
Hiring your first Chief Data Officer also involves significant change management. Your leadership, divisions, departments, and teams will need to be prepared to share their information. The walls of organizational silos must come down. In addition, when the Chief Data Officer serves up actionable intelligence, leadership must be prepared, after all, to act. That action can bring about seismic shifts as your company morphs into an entity that is more competitive.
The place to begin is by how you think about data: where it exists and how it might be used. Ask yourself what entities capture data specific to your business. In my former career as an investigative journalist, I learned that virtually every time a person interacts with the government, a record is created: that’s data. Today, virtually every time we interact with an electronic device, a record is created — every time we turn on our cell phone, send an email, visit a website, or scan in our credit card at the corner store. In addition to the data that your company captures, there are other data that are available for acquisition. Think about all the insights the data might hold. (More on this later.)
According to David Simchi-Levi, professor of engineering systems at MIT and head of the Accenture and MIT Alliance in Business Analytics, big data analytics addresses four kinds of questions:
- Descriptive: Tell me what happened.
- Diagnostic: Don’t just tell me what happened, tell me why it happened.
- Predictive: Tell me what will happen.
- Prescriptive: Tell me how I can I make it happen.
But there is one last question that CEOs must ask themselves as they consider the implications of the tsunami of data that is now available.
Tell me what happens if one my top competitors hires a Chief Data Officer first?
Since knowledge is power, the answer is obvious. Your competitor will have gained a significant competitive advantage. That is why a growing number of CEOs are deciding the time for their first Chief Data Officer has come.