Each quarter we survey growth stage CEOs who are running innovation driven companies.  This quarter,  we had more than 60 CEOs responding.  CEOs were running companies in broadly defined technology (software, hardware, semiconductor, telecom), Internet (e-commerce, media, social, entertainment), medical devices, biotech, and cleantech / renewable energy sectors.

A note on methodology.  We send these surveys only to those who fit the category (in this case, sitting CEOs or board member/founders of technology/science-driven growth-stage companies).    All responses were anonymous due to the web-based survey technology employed. The majority of respondents were in the United States, with the highest concentration on the East and West coasts (New York, Boston, and San Francisco/Silicon Valley areas).

For prior survey results from Q2 2010, titled “Impact of Economy and Renewed Growth”, go to http://www.bostonsearchgroup.com/blog/ceo-survey-results-q2-2010-%e2%80%93-impact-of-economy-renewed-growth/ .

ECONOMIC CLIMATE

The first set of questions was around the economic conditions in which each CEO felt s/he was operating.    One question we continue to ask and re-ask over the last six quarters or so targets the turbulence in the macro- economic climate.  It is interesting to compare CEO responses to the same question, “Do you anticipate a double dip in the near term future?”

* In Q3 2009, more than half  (54%) of CEOs polled were expecting a double dip, and planning accordingly

* In our Q2 2010 survey,  again 50% felt a second economic correction was likely, the biggest percentage of those CEOs believing it would be in either Q3 2010 or sometime in 2011.  The other half  of CEOs felt the specter of recession was behind them

* Currently in Q4 CEOs were consistent with prior quarters with a bit more than 50% indicating they didn’t feel a double dip was likely, and the other half of the CEOs saying either a 50/50 probability or greater (16% feeling more likely than not)

So less than 1 in 5 CEOs feel another economic dip is likely.  No CEOs selected the ” greater than 75%” probability.

It’s interesting to do a meta graph of the changing CEO sentiment on this question.  Surprisingly, the graph would be sloping downward, but not as much as many would hope.  The high point was certainly back in Q3 2009, but even throughout 2010, as many CEOs were fearful of a negative correction as those who felt it was behind us.  No doubt this “lack of confidence” index doesn’t inspire the CEO with a swashbuckling, damn-the-torpedoes-full-speed-ahead attitude toward growing their companies.  Rather, it makes CEOs think in short-term windows, perhaps 3 months at a time, with little appetite to make medium or long-term bets.

Those CEOs who felt another downturn was likey referenced several factors that might tip the scales negative–  gridlock in Congress due to midterm elections and likelihood that Democrats lose congressional majority, a belief that a bad Q4 holiday retail shopping was likely, and the persistent overhang of ongoing commercial and residential loan defaults.

As for when another economic dip might occur if it were to occur, the vast majority of CEOs pointed to Q1, 2011, with Q4 of this year and Q2 2011 tying for second at 18% each.

STRATEGY

Almost 50% of CEOs polled said that they had either made a shift in strategy in 2010, or were planning to in the near future.  Granted, growth-stage companies are prone to shifting strategy until they land upon the best formula for significant and sustainable growth.  However ~50% is a big number, and clearly a chunk of those companies have been driven to rethink their strategies because of the challenging economic climate, the concern over the future, and the possibility that 2010 might represent “the new normal” where with no economic “rising tide” no help generated to float all company boats as in periods of economic expansion in the past (1997-2000, 2005-2008, etc).

CASH FLOW

The majority of CEO survey respondents (49%) indicated that they were still planning on burning cash over the next 2 quarters.  24% indicated they would be profitable.  CEO comments regarding this question indicated an overwhelming drive toward cash flow break even.  That was the big push and focus for their companies in 2010, and if they hadn’t achieved it yet, they were gunning to by end of the first quarter of 2011.  CEOs also commented that they were trying to run their companies at break even, with any extra EBIT being reinvested back into the company for additional growth.

COST REDUCTION PLANS

When asked what were the top 3 areas CEOs were targeting for cost reduction, the following table summarizes their responses, representing a combination of spend reduction and staff reduction in non-core areas.  There was a preference by CEOs to favor non-staff cuts over cutting headcount if at all possible, but many acknowledged that in order to make meaningful cuts, staff had  to be considered in the equation.

CEO responses when asked about increasesin spend were logical.  The top three in order were sales, marketing, and R&D.  Many of the comments about this question noted the fact that outside of directly growing revenues, additional spend was hard to build in when many CEOs are driving toward a minimum cash-neutral mandate and economic uncertainties are driving CEOs to think conservatively rather than expansively.

[Click on "more" below for remaining 8 slides and narrative from Q4 2010 CEO survey]

RAISING CAPITAL

The largest segment of CEO survey respondents (40%) listed themselves as having raised capital in the last 12 months, and also planning on raising additional equity in the coming 12.  For those who indicated “other,” most of these CEOs had raised capital quite a while ago (2 or more years ago), were at cash flow positive, and some who were looking at liquidity event in the next few quarters, subject to market conditions.

OUTSOURCING & OFFSHORING

A quarter of CEOs surveyed responded that they were unlikely to ever use/need outsourcing or offshore resources to grow their businesses.

However, almost 70% of CEOs were using some combination of outsourced resources, whether domestic or offshore, full-time or project-based.  Those CEOs using domestic resources were the largest segment at 22%, while those with full-time offshore resources tallied at about 14%.  Nearly one in four CEOs had used contract (non-full-time) outsourced resources in the last 12 months.  A number of CEOs highlighted the fact that although they were users of offshore staff in some capacity, it was difficult to “get right,” and often the experience was less than positive early on in the relationship and took a great deal of work before CEOs could declare it truly accretive.

In answer to where global outsourced/offshore resources were being most utilized, manufacturing, product development, and customer service were the three biggest areas.  One in 5 CEOS (20%)  had already established an international sales presence located abroad.

GROWTH-COMPANY CLIMATE

Do CEOs feel it will be harder to grow companies in the future than in the recent past?  This is a question that many entrepreneurs who look to undertake a new venture (and venture capitalists looking to invest in them) are often quick to ask.

CEO responses were much more evenly distributed than one might think– slightly greater than a third of CEOs indicate “about the same” difficulty, a bit less than a third feel “somewhat more difficult,” and 27% indicating that they thought it would likely be “easier in the next 5 vs. the last 5 years.”  Many of the comments of CEOs responding “easier” pointed to the fact that advances in technology have allowed entrepreneurs to stand up companies for less cash and a lot faster than in years past.   Those CEOs who said it would be harder all pointed to the capital markets, and the medium-term challenges in both raising capital, and achieving liquidity.

DEBT LENDER APPETITE

CEOs were closely split on the question of whether debt has been harder, easier, or about the same to procure in the last few quarters.  37% indicated about the same,  33% responded that it feels worse, and 27% conceded that it appeared easier to get debt now than in the trailing 6 months or so.  However, CEOs commented that even if debt lending had stayed the same or improved slightly in the last six months, over the last year or two lenders have tightened up a great deal, and the lending climate today compared to 2008 is substantially worse.

FEDERAL POLICY IMPACTS

More than three-quarters of CEOs surveyed indicated that there was no impact on their companies due to  changes in federal policy, be it pending capital gains changes, mandatory healthcare, or potential tax increases.  Of those CEOs who did register an impact, the majority (10%) indicated that they would be offsetting any negative impact via headcount reduction.

CEO comments focused on the negative impact of rising healthcare costs as the biggest contributor to any decisions they were considering that were directly attributable to federal policy changes.

EQUITY INVESTOR APPETITE

CEO respondents reported that they saw equity investors as having become more bearish in their investing, with almost 37% holding that opinion.  In contrast, more than 25% of CEOs felt investors appear more willing to put money to work in the next two quarters than in recent past.  CEOs commented that investors don’t want to put money into B rounds, and the investing profile “is a barbell– 259,000 angels poured $17.6 billion into more than 57,000 startups last year, and there are a number of very well funded late-stage private equity firms looking to put $20-$40 million to work per opportunity. But almost nothing in between.”  Other comments indicated that even though investors may be more interested in putting their money to work, those same investors are squeezing valuations harder than ever and their expectations for return are increasingly difficult to meet as an operating CEO.

PRIMARY SURVEY INDUSTRY SECTORS

Of the 50+ CEOs who responded, 25% were running software companies, 16% cleantech, 15$ biotech, 10% interactive media/Internet, and 4% medical devices.  Much of the other 32% of CEO respondents were in the services sector across various industry sectors.

Location of the Companies Surveyed

The majority of responding CEOs were from the New England region (66%), 10% of CEOs’ companies were located in the Rocky Mountain region, with smaller numbers in Northern California (2%), Canada (4%) and the UK( 2%).

Survey of 50 of the Fortune 500 companies reveals how long executive searches take, the average number of candidates interviewed,  how many of them actually get completed, and what percentage of those candidates are female or minority.

As executive search consultants, we often get asked a series of questions by our client companies surrounding the executive search process.  Many of these questions are driven at gathering market intelligence around our executive recruiting.   The aim?  To create some third-party benchmarks to help companies understand whether a search has gone about average, better than average, or (gulp) “below the mean.”  Keep in mind, these could be internally run searches done in the “DIY” fashion.  Or searches executed by in-house recruiting departments or human resources staff.

Historically, there has been precious little data generated by third-party sources with enough statistical heft to garner much credibility.

One of the sources that at least aims to collect good data is created by David Lord, who heads the Executive Search Information Services organization.  David is a veteran observer and analyst of the executive recruiting industry, and has run a roundtable of senior talent executives from Fortune 500 companies for the last 20 years or so.  For further information, see www.davidlord.com.  Some of the data that ESIS collects is via an annual survey of those senior human resources executives who participate in these roundtables.

For our clients, we often reference ESIS data when made available.  At our request, below is a data table we created from some of the information ESIS kindly provided that shows some longitudinal data over the last 4  years, 2006, 2008, and 2009.

Trends worthy of note?

Search completion times have come down by almost a month from near 5 months down to 3.5 months.  Good news for all, the company, the candidates, and the search firm.   It will be interesting to see if this flattens out, or jumps back up for 2010 due to tightening talent pool on the supply side as the economy began to pick back up this year.

Number of candidates interviewed per hire dropped from 6.5 to ~5.  This could be an indication of a company’s increasing confidence in what they’re looking for, or an indication of sense of urgency around key hiring to help companies as they struggled through a very tough 2009.

Female and minority hiring at the executive level has improved, but not as much as many would have thought. Women executives were hired 29% of the time in 2009 versus 23% in 2006.  Compared to the workforce percentages of women to men, this is still inversely proportioned.  Minorities have seen a nominal increase of 1% more hired over  the last 5 years, which–when considering rounding errors– is effectively no increase at all.

Search completion rates have remained flat, with 4 out 5 searches engaged getting completed. Over the last 5 years,  search completion rates have hovered around 80%.  This is reported by corporations only, so subject to different numbers search firms might proffer.

Retained executive search statistics, 2006-2009

For deeper data, please contact ESIS.

Additional footnotes worthy of note:

1) For some reason, executive search firms specializing in the financial services sectors and related areas often calculate their “days to complete” numbers counting only business days, excluding weekends and bank holidays.  This can often make comparing normative data a bit more troublesome

2) Days to completion numbers are calculated using the date of accepted offer of employment, not candidate start date/first day of work.  This is done because resignation periods vary widely and would undermine data integrity.

During a moment in recruiting history when most executive search professionals are suffering, our practice in for-profit education has been thriving. Part of the reason is what I call ” board fatigue”–PE or VC partners and other board members who’ve grown impatient with the CEO of a portfolio company. In some cases their dissatisfaction is known to the CEO; in others, for various reasons (such as accreditation issues in the postsecondary education market), the board has chosen to conceal its desire for change, even from the sitting CEO.

The call to me typically begins, “We’re thinking of replacing a CEO. But we need this to be done in confidence. Can you do it and still be effective?” The answer, of course, is, “Yes, but first give me one good reason why you don’t sit down with your CEO and discuss why the change is needed.”

Answers vary, but the most common is, “We don’t want to lose momentum or cause uncertainly within the company,” i.e., “We’re afraid that news the CEO is being replaced might affect morale and revenues.”

This may be true, of course, but before embarking on a sub rosa search for a replacement, consider these issues–

•    Are you sure the situation cannot be resolved without the CEO being deposed? Have you tried everything to turn him/her around? Is the problem focused on a few concerns–work ethic, slow decision making, failure to address a single overriding market challenge, etc.–or is it overall leadership?

•    Are there intermediate steps you might take to at least put the CEO on notice? “Probation”? Come to Jesus? Sabbatical? Revisiting compensation?

•    Could the problem be resolved by bringing in the right support, e.g., a COO or new CFO?

•   Could the CEO be moved into a different to position, allowing you to bring someone in above him/her? Would your CEO accept demotion to President and COO, for example? Could the CEO be moved into a Chairman role?

•    How can you present the decision to replace in such a way that the CEO sees the wisdom in your decision? Obviously the CEO has a financial stake in the company’s success. Might it be that he or she will be relieved? See this as a win-win?

•    How valuable could the CEO be in the process to find the replacement? Do you want him/her to play an active role, and would s/he be effective in this role, if properly motivated?

•    What are the risks if word gets back that a search is being conducted for a new CEO?

•    What are the risks that a disgruntled CEO could sabotage the search process? Agree to participate in interviewing, then blow candidates out of the water?

•    What effect will conducting the search in confidence have on the overall quantity and quality of candidates? On your ability to secure the best among these?

•    How and when do you expect to inform the CEO what’s going on?

•    What role will the departed CEO have in the transition process once the new CEO is named?

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If your decision remains to conduct the search sub rosa, your first line of attack should be internal. Do you or others on the board already know the right replacement? Could that replacement be the COO or someone else within the company? Someone from another portfolio company? Someone you interviewed for another position, or in a previous CEO search? Someone from a major competitor whom you have reason to believe could be lured away? The fewer the people who know of the replacement process, the better.

If you engage a search firm, make sure you are comfortable that they are comfortable–and have experience with this type of search. Have them share their stories of similar assignments: the scenarios, the specific challenges, the process, the outcomes. Unless they are truly confident they can succeed with “one hand tied behind their backs,” they won’t. Also make sure they use a Confidentiality Agreement with all prospective candidates, and that, in addition, they enforce confidentiality with candidates throughout the process through constant reminders. Some candidates love to brag–or just back-door reference you and the company.

And keep asking yourself, is now the time to sit down with your CEO?

So how hard is it for an executive search firm to conduct a quiet search? Not so, if they’ve done it before. Being presented an opportunity in the abstract–without knowing the “who”–can be enticing to a candidate. The idea of replacing a sitting CEO can also be enticing. The key to how enticing can depend on how much latitude the recruiter has in profiling your company. If it’s “an industry leader in LED technology,” then the appeal may be high…but the exposure equally high. If it’s “a profitable, private equity-backed company with EBITDAs > 20% and a market cap of $1B,” then the appeal may be equally high but without the downside of exposure. A good recruiter knows how to set the hook without naming the fly.

Where it can and does affect the recruiter’s performance is in sourcing others for leads. You no doubt know from your own experience that recruiters are on a constant hunt for referrals. Now think about the reasons you do and don’t respond. If I called or emailed you that I was looking for Eric Schmidt’s replacement at Google, you might just take time to reply. If instead my message was, “Doing this search. Can’t tell you much other than it’s a CEO position in the K-12 curricular market,” you might well not. More than half of the executive placements we make come from such referrals. Starve the lead process, and you starve the search.

Willingness to relocate the candidate can also be a factor. The wider the geography of the search–the more candidates from outside your region–the less likely is it that word will circulate back to your CEO or to others in the company, and the more latitude your recruiter has.

Give serious thought to how and where you intend to interview prospects, and to how many you expect to interview. It may be relatively easy to bring candidates into your office, and to the offices of others on the search committee. At some point, however, they may want to “smell the paint”–meet others in the company, see the offices, gauge the culture (and the commute). This may be the point of no return. Is now the time to reveal?

In the best of all possible worlds, your CEO will be your biggest and most powerful advocate for change. He or she may be the critical factor in a candidate’s decision to accept an offer. The deposed but relatively content CEO can also be instrumental in the transition process. Be thinking about what you can do to secure the CEO’s cooperation. Extra equity? The right spin on how the replacement is announced? Promise to plug into the right future portfolio company?

Confidentiality can be a problem. But it does not have to be–if you think through the alternatives, work hard to get the CEO’s buy-in, and work with a search firm that has the right expertise.

Executive Recruiters Boston Search Group and IdealWave Solutions Merge to Form BSG Team Ventures

Bringing Unparalleled Mobility and Social Media Expertise IdealWave Deepens Firm’s Commitment to Building Trusted Advisor Relationships with Clients

Boston – August 1, 2009 - BSG Team Ventures, formerly Boston Search Group, an international retained executive firm serving emerging and high-growth companies, today announced a merger with IdealWave Solutions, a nationally recognized executive recruitment leader in the mobility and convergence sector.  IdealWave couples deep expertise in the enterprise mobility and social media industries with a unique team-based approach that yields quick results with highly personalized service. The combined company, BSG Team Ventures, will be headquartered in Boston, with offices in Silicon Valley, New York and London.

As many other retained search firms are shrinking or closing down, BSG Team Ventures is taking advantage of the opportunity to grow stronger.  The merged entity will be uniquely positioned to identify and recruit top Board Director, C-level and VP-level talent for both emerging and established companies across its now seven practice specialties – mobility and convergence, cleantech, technology and media, medical devices, biotech, education, and not-for-profit.  While the executive search industry has been slow to harness advanced technology to optimize domain expertise, market involvement, and the candidate development process, BSG Team Ventures has turned to innovative social networking technologies to cultivate a large and growing community of mobile industry executives working for some of the most high-profile companies in the world.

“Combining forces to create BSG Team Ventures marks the beginning of an exciting adventure and a natural evolution for our business. With BSG we have found a partner whose commitment to innovation, client service, and results mirrors our own,” said Mathew Corbett, founder and managing director, IdealWave Solutions.  “I look forward to drawing on our combined 17 years experience in retained search and mobile industry expertise to grow the firm, provide increased capabilities to our clients, and expand into new markets.”

INmobile.org: Engaging the Global Mobile Community

The brainchild of Corbett, a longtime social media evangelist, INmobile.org is one of the largest industry-specific social networks on the Web, comprising more than 2,500 mobile industry executives who gather in one place to learn, share ideas, and network with peers.  Combining online networking with offline executive receptions at top mobile industry conferences, INmobile.org is both a key facilitator in helping BSG Team Ventures’ clients stay abreast of market and technology trends, and an invaluable tool in keeping BSG Team Ventures fully engaged with top leaders and decision makers globally.

The mobile industry is especially well poised for continued growth.  “Even more exciting than the internet phenomenon is this mobile phone phenomenon,” according to Dr. Eric Schmidt, CEO of Google, in a speech given to the Economic Club in 2008.

“Our merger with IdealWave comes at a pivotal time for our firm as we look to expand to new markets and set the highest bar for innovation in the executive search process,” said Clark Waterfall, founder and managing director, BSG Team Ventures.  “With decades of combined executive search and strategic organizational development experience, we’re confident that together with IdealWave we can continue to achieve the highest levels of client satisfaction in the industry.  We couldn’t be more thrilled with the addition of Matthew Corbett and Mark Newhall as partners to the firm.”

About BSG Team Ventures

BSG Team Ventures is an international leader in retained executive search and human capital consulting for emerging and high-growth companies. Its mission is to build deep, trusted-advisor relationships with its clients, and to do so with a keen appreciation for the unique requirements of entrepreneurial ventures.  Via its presence in Boston, New York, Silicon Valley and London, BSG Team Ventures has completed hundreds of leadership searches on behalf of its clients in its practice specialties that include technology, media, cleantech, biotech, medical devices, education and non-profit.

About IdealWave

IdealWave is the leading executive search partner for companies involved in or effected by mobility and convergence. Established in 2001 and headquartered in MA, IdealWave has worked with many of the most exciting companies innovating within mobility and convergence. The company was launched by Matthew Corbett and Mark Newhall.  For more information please visit www.idealwave.com.

Contacts:

BSG Team Ventures

Clark Waterfall: Managing Director cwaterfall@bsgtv.com

Matthew Corbett: Managing Director mcorbett@bsgtv.com

Address: 224 Clarendon Street, 4^th floor, Boston, MA 02116

www.bsgtv.com

The question we framed was phrased as follows:

“In evaluating the success of an executive hire after 12 months, what would be the top 3 criteria that you would use?”

The first choice from the poll results is somewhat self-evident– that the executive has exceeded performance expectations (goals, milestones, objectives, etc.) for the specific role from the CEO’s perspective.

However, the second most popular metric was “established internal and external reputation as functional expert.”   Essentially, this means that the executive has built his or her own political/social capital with internal peers and external influencers, customers, vendors, or other external relationships key to the success of the company.

The third most important metric was “culture fit.”   This was selected over the other 4 remaining metrics offered by a more than 2 -to-1 margin.

The question that pops up is how a CEO might best measure the  #2 and #3 metrics.  For both of these metrics perhaps a 360-degree review at the end of 12 months would be beneficial.  There are tools offered by the likes of the Hay Group and others that do an online version of this contextual employee review that can be quite useful to determine an objective read (see http://www.haygroup.com/tl/Questionnaires_Workbooks/Emotional_Competency_Inventory.aspx ).

Perhaps it would also be interesting if an executive search firm who brought a candidate to an organization also made this part of their fee structure.  And facilitated the process/offered the tools to make it happen.  Food for thought.  The goal of the executive recruiter would be to serve as that often mythical “trusted adviser” of executive talent, facilitating as much objectivity around executive team-building and talent assessment as possible.

Worthy of note is the fact that “integrity” ranked near the bottom of the list of success criteria.  No doubt CEOs assume perhaps that this is a given in any candidate.

This is a funny question. And one that can be asked at two inflection points in the search process–

• BEFORE picking a search firm

•    And AFTER a search has been executed/completed

Focusing on the “before” part for now, for most companies the 3 most popular decision factors used to help pick a winner in the “shoot-out” or “bake-off” process today are typically:

• “Relevant Rolodex” or domain expertise. Has a search firm done a similar search in a similar sector recently?

•    Familiarity. Has a search firm worked with a client before?  The implicit assumption is “devil you know is better than the one you don’t.”
•    Price.  Depending upon economic conditions, search firms are as often as not considered “about the same,” and only price is the perceived differentiator.

However, I think there should be a shift in search firm selection criteria.

Let me digress for a moment and talk about the traditional value proposition of retained executive search.  Historically, there have been 4 pieces of value that the search firm delivers on:

1)    Finding or “hunting” the candidate.  In the industry, we refer to it as “candidate identification.”
2)    Selling the client opportunity to the “hunted” candidate
3)    Assessing the candidate for hard skills and soft skills “fit” for the search
4)    Closing the final candidate once s/he has been selected by the client company-the end game, including compensation negotiation etc.

Now, back to how search firms are selected.  The above criteria emphasize and value things like candidate identification.   At one point, this was a very important selection criterion to make sure the right search firm was picked for a search.  At one point in the history of executive search, headhunters would spend decades amassing a proprietary Rolodex, mapping the industry and what talent was harbored where.  This was hard-to-come-by information, usually only amassed via “gumshoe” work, calling and talking to the industry on a constant basis.  However, in the last 10 years, and 5 in particular, there has been a huge shift at the executive levels.  There has evolved a set of technology tools that has allowed unprecedented transparency into who is where at any given point, tech tools like ZoomInfo and LinkedIn to name just a few.  So, with access to these tools and the modicum level of investigative interest and time, finding as a value proposition for executive search selection has become commoditized.  The “black book” that recruiters worked hard to build and protect has effectively been published on the Internet for each and every executive level in virtually every industry.

So if “finding” is no longer the lynchpin for search firm selection, what does that leave? There are still the other three values a search firm brings-ability to sell the opportunity, assess the candidate, and ultimately procure the candidate of choice the company selects via the final interview processes and endgame negotiating.

It would be really interesting to see a search firm selection process be shifted to an evaluation of two of these three areas, plus an addition of three new metrics:

• #1: How does a search firm “sell” the search to prospective candidates? What is the search firm’s “pitch,” how well does the executive recruiter present the opportunity, its nuances, and a compelling story. Good talent is usually not looking to move. And good talent is usually fairly happy where they are, and valued where they are. So, a good headhunter needs to present an even more compelling reason to persuade an executive to look at a new opportunity. A prospective client could ask the search firm for the marketing documents the executive recruiter has written and used from past searches and evaluate them as to their compelling nature. A client could even ask for samples of emails or voicemail “pitches” that have been used in the past, and what tools a search firm uses that uniquely differentiate a company’s executive need.
• #2: How does a search firm “assess” candidates? We feel that assessment is the new “black book” value proposition of executive search. Prospective client companies could ask search firms for how they assess candidates? What tools do they use, what key success factors does the search firm interview for in all executives, and what unique success characteristics would they interview for specific to a given position and company profile. What assessment information is passed along to the company? What does a candidate interview summary “write up” look like? And how much assessment is really delivered in the write-up, versus a simple repackaging of resume and background information? Also, how are references done, and samples of references completed to get a sense for what the search firm is looking for in its referencing process. A really interesting article written about how search firms work, and in particular, how search firms assess candidates, can be found in the PhD research of Monica Hamori, PhD candidate at Wharton. It’s a very interesting read — http://www.allbusiness.com/specialty-businesses/332669-1.html. Unfortunately, Ms. Hamori’s conclusion is that candidate assessment is done very differently from search firm to search firm. Most notably, she identified that candidate assessment is done differently from partner to partner inside large search firms, with no assessment standards or processes.

As for the three new search firm selection criteria, I’d suggest clients add these three to the two above:
•    #3: Pre-search “discovery” process.  What does the search firm do to uncover all there is to know about the company, the culture, the position, the internal and exogenous factors, and most importantly, the chemistry success equation with the hiring authority within the company to whom the position with report.

• #4: Post-search onboarding and “stick rate.” What does the search firm do to ensure success of the candidate in their new role? And what is a search firm’s “stick rate,” or success rate in placing executives in new companies who then stayed for some period of time rather than bouncing off, suffering organ rejection from the host organism company who hired them? This could even include a redistribution of the executive search fee structure. Wouldn’t it be far better alignment between client company and search firm if both were incented to nurture a new executive’s success in the role? Perhaps a deferment of part of the fee for service if onboarding coaching were employed, with a delayed “final payment” at the end of a year of service, on actual bonus paid “above targeted compensation,” rewarding the search firm for above expected performance achieved by that executive.
• #5: References. Client companies should do a better job referencing the search firm. So much can be learned from how a search firm performs references. Who they check references with, how references are performed, what questions are asked, are references aggregated or attributed to specific reference givers, or? How many references are performed? Are any references performed with those who were not provided by the candidate? Are background and credentials checks performed on the finalist candidate(s)?
  Somehow, if these 5 selection criteria were used to evaluate potential search firms, my hunch is, as often as not, a different firm would be selected. And a better ultimate executive candidate for the retained search in question.