Executive Search Firms: Choosing the Best Fit for You and Your Company
As you embark on the journey of finding the perfect candidates for your company, as a Recruitment firm owner with close to 20 years of experience, I want to share some advice with you.
I’ll offer my perspective on how I would approach hiring an executive search firm if I were a client.
Let’s start at the beginning: What is Executive Search?
First, I should define executive search, which differs significantly from lower-level recruiting. Executive search firms help their clients hire senior-level executives ($100,000+ 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 qualified candidates (generally 4-6) that not only fit the client’s specifications 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 an 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 quite happy in their role and performing well, into accepting another within 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, not a static product, and their career and personal life goals. The variables that need managing are therefore virtually infinite.
Now here’s where SHREK comes in. Shrek means “monster” in Yiddish. It is derived from “Schreck” in German and means “terror” or “fright”. (Also well known as the lovable and misunderstood ogre of movie and theatre fame).
But, for our purposes, SHREK is an acronym for the colossal Executive Search brands otherwise known as the “big five” in global executive search.
Executive-search firms—headhunters, in the vernacular—are part of the fabric of corporate life. Five, known acronymically as the “Shrek” firms, dominate the search landscape. According to the Economist in their February 2020 article Shrek 5: the headhunters, the big 5 hauled in an estimated $4.8bn in fees in 2018, 43% more than in 2014.
The SHREK firms (Spencer Stuart, Heidrick & Struggles, Russell Reynolds, Egon Zehnder, and Korn Ferry) are characterized by thousands of employees, 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.
On the other hand, there are counterparts in Executive search that are not part of the big five but pack a punch when it comes to value for the money and specialization in their field. I like to think of these as the Fiona’s of search, the relatively smaller firms, who have all the character of the giants, and while not hulking in size, will still impress with martial arts prowess. Seriously, who doesn’t love the scene where Fiona is blissfully charming the forest wildlife with her sweet singing voice it quickly becomes a moment of “AAAH” as her singing turns into Led Zeppelin’s iconic Immigrant Song. Spurred on by the heavy guitars and piercing vocals, the woodland creatures attack and incapacitate the guards. But I digress, back to the topic at hand, executive search.
Types of executive search Firms
The Big 5 (SHREK)
Like other professional services industries, executive search has a ‘Big 5’ – global companies that sit astride the market like Giants.
You see, there are many large firms out there that may catch your eye, but they may not necessarily be the best fit for you.
At the opposite end of the scale, there are boutiques. Firms that are often owner-managed with small teams and, as the name suggests, these firms have a more specialized, customized, and personal approach to executive search. They also tend to adore 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. They usually specialize in searches from 100K up and are just as comfortable performing an Operating Manager level search or a C-level search along with everything in between the two. Our firm is a boutique and we have embraced the less-than-giant, but still kick a#$, Fiona-ness of it.
How do you choose a recruitment partner?
The short answer to this central question, in my opinion, 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 salespeople that are the worst at managing the search process. And some that are best at the search process are not the best salespeople.
It is a fact that it is more difficult to hide in a smaller firm. 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 team 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 need to be receiving more.
Finally, according to the Harvard Business Review repeat customers are important to any business that relies on satisfaction to generate repeat sales and positive word-of-mouth. For products as diverse as wine, books, and PDAs, customers won’t purchase again or evangelize about products if they don’t use them in the first place. Smaller executive search firms are more hungry and willing to go the extra mile to ensure customers come back.
However, the bigger firms come with 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 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:
Here are some reasons why a smaller firm can serve you better:
First of all, you may have a dream wish list of candidates, but these larger firms may not be able to recruit from all the companies you desire due to contractual restrictions. So, your dream wish list may be off-limits.
While companies like to insist that a search firm not recruit from them because they are a client, they hate it when that search firm can’t recruit from a competitor because that competitor was once a client. In other words, the more “off-limit clients” a search firm has, the less that search firm is able to recruit from all of the client’s preferred target companies. Off-limit client lists make it harder for the search firm to complete a search because they have fewer companies from which they can recruit. that leaves clients wondering, “Will off-limits restrictions keep my search firm from recruiting from the companies I want to target the most?”
The Larger the Firm, the Greater the Off Limit Client List.
The larger the executive search firm, the longer the list from which a search firm cannot recruit. Because the largest search firms are the leading global retained search firms and have more partners and conduct more searches, it is estimated that the number of off-limits clients easily exceeds ten thousand companies.
The more they control the executive search in an industry, sector, or function, the harder client off-limit restriction makes it to be successful in delivering an effective search.
Small search firms have shorter off-limits lists, meaning they get to recruit from more of your favorite targets.
Secondly, these larger firms may have an impressive list of recently executed searches, but oftentimes, those searches were done by different partners and teams. So, you may be sold by aggregate results rather than relevant performance. Make sure to verify that the searches presented were executed or led by the team you plan to hire.
Thirdly, you may hire based on perceived experience, but will you get the expertise?
When it comes to executive outreach, recruiting, and screening & assessment, it’s important to know what level of seniority will be tackling these tasks. Larger firms often have a tiered organizational chart approach to search execution, which means that partners “find” or “land” the engagement, while junior-level team members actually mind or manage the project and do the actual search process, they are the ones that pick up the phone, screen the executive pipeline, and assess potential fit for the role. This may be quite a junior team in some cases depending on the relative “importance” of the client. So, it’s important to make sure you know who will be working on your search and what role the firm partner will be playing in the execution. For instance, if the firm partner is too busy to take an introductory call you may not be getting the five-star service on your search that you’re paying for.
In our relatively small firm, the partners are involved in every search. With “skin in the game” there is an absolute certainty your search will be treated as an utmost priority. The big firms simply cannot, due to economies of scale, and tiered organizational structure guarantee a partner’s personal involvement and stake in the success of your individual search.
You may also find serious constraints with “you get what you pay for” challenges. The economics of the engagement with larger firms is often driven by payment terms, which may put your search at risk if the firm is pressured to move on to other client engagements after delivering their best effort within the first 60 days of the search. So, it’s important to ask how many candidates interviewed by the company were introduced after the first 60 days from when the search kicked off.
And finally, when it comes to choosing a search partner, it may be best to try to choose an advisor that is owner managed to ensure the highest quality of service. If you’re a rounding error in the firm’s book, you’ll likely be treated as a number rather than a VIP client.
Thank you for listening, and I hope this information has been helpful to you. Consider hiring this Fiona to find the best executive talent for your company! Reach out to me on Linkedin I’d be happy to set up an introductory call.