How to Avoid Using Executive Search Firms
I head a retained search firm, and so it may seem a bit counterintuitive to serve up advice to companies on how to avoid using retained search firms.
But here’s the thing: retained search is not right for every search every time. And even when you have an important, senior executive opening that needs filling that is perfect for retained executive search, retained search may not be the right answer for you at this time.
Retained Search is an Investment
Retained executive search services are an investment. That’s a linguistic frame we use to break it to our clients that the service is pretty expensive. Retained search fees often exceed $100 thousand dollars at the leading global firms.
As someone who heads the boutique executive search firm The Good Search, I can affirm that we retained search partners work hard for the money. So it’s not that you don’t get your money’s worth.
Rather, you first need to review your budget to determine whether it is something you can afford at this time. Many early-stage companies simply cannot.
The Startup Approach to Avoiding Search Firms
Most early-stage venture capital-backed startups avoid using retained search firms, at least in the beginning. That’s because, in the startup world, cash is king. They’d much rather avoid retaining a search firm whenever possible to keep from running out of runway.
Their use of retained search firms really doesn’t kick into full force until the startup hits the inflection point of the hockey stick curve, as hiring accelerates. Angel Investor and Entrepreneur Bobby Martin goes into the stages of the startup curve in his book The Hockey Stick Principles.
Tap Your Referral Network
The first thing early-stage startups do when they have important executive openings to fill is tap their referral network. Early-stage startups are frequently populated by people the founder got to know in college. Yes, for tech startups, it helps if those relationships trace back to Berkeley, Stanford, MIT, or Carnegie Mellon. Those alumni networks run deep.
But referral networks aren’t limited to recent college graduates. You can build out your network and, in turn, access promising talent by attending business conferences and events. Alternatively, if you are a former employee of a major corporation, they often have corporate alumni networks with websites that give you access to that talent pool.
Leverage Niche Job Boards
Venture Loop caters to venture capital backed startups. They work closely with top tier venture capital firms including Sequoia Capital, Kleiner Perkins, and Benchmark Capital. The job boards offer yet another avenue to finding the talent you need.
AngelList is another job board worth checking out. And there are more niche job boards out there that can help you find the people you need. All you need to do is “google” it.
Never Stop Recruiting
You cannot afford not to recruit all the time. Even when you hit a lull in hiring, it is a good time to squirrel away a list of top-performers that you’d like on your team when hiring picks up.
From what I have witnessed, the best leaders prioritize recruiting because the alternative is usually underwhelming hires. In addition, “never stop recruiting” is a great strategy for avoiding having to turn to search firms for help.
Get Recruiting Research Support
Instead of going out to search, there are recruiting research firms that live to support corporate recruiting teams. Our recruiting research division, Intellerati, is one such practice. They can identify and profile ideal candidates for you. They can qualify them for you and then hand off interested, qualified candidates to your team to move them through the interview process.
Frequently, internal executive search teams do not have the time to do focused recruiting in the form of candidate identification and development. They usually are managing dozens of requisitions along with multiple team meetings and conference calls — that’s on top of scheduling interviews for candidates and managing the process through offer and hire.
Recruiting research partners can give your internal teams a boost, helping you to avoid retained search firms.
Get help from VC Firm’s Talent Partner
Venture capital firms often have a talent partner who is focused on helping portfolio companies find the talent they need. They’re a great gateway to investment-worthy talent.
In fact, venture capital firms frequently have entrepreneurs-in-residence who may be available to plug into an opening at promising young company. Usually, those entrepreneurs are seasoned leaders with a few startups under their belts. Some may even be in the position to invest in the startup.
Simply put, VCs are among the most well-networked people in business today. They not only are a great source for referrals, but for backgrounding the individuals you’re thinking about hiring to avoid problematic hires.
Consider Interim or Temporary Executives
Early-stage startups may not be ready for retained search because, at least in the beginning, the jobs are not large enough in scope.
For instance, emergent companies usually do no need a full-time Chief Financial Officer or Chief Marketing Officer. Not to worry. There are a lot of executives who enjoy doing work across a handful of startups at the same time.
When You Are Ready for an Executive Search Firm
Find a Search Firm Willing to Have Skin in the Game
Of course, retained search firms are ready to help when the timing and opportunity are right. In fact, there are retained search firms that enjoy partnering with venture capital firms and private equity firms, providing search services across their portfolio companies. We are one such executive search firm. But we’re not the only one.
VCs and board members enjoy doing business with firms like ours that are, at times, willing to take part of our fee in equity. In doing so we assume some of the risk as we demonstrate our level of commitment to the portfolio company we are serving.
Using a search firm willing to invest in your company by taking an equity stake is one way to forge a deeper relationship. They’ll be much more invested in ensuring that your company succeeds.