BSG From the Boardroom

A curated selection of executive opportunities, industry highlights, and unique insights in executive search.

    How are Retained Executive Search Firms Assessed?

    How are retained executive search firms assessed?  And how should they be measured?

    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.

    Assessing Value in Executive Search Firms

    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.
    7 High-Risk Search Strategies to Avoid Guide Download
    -by Clark Waterfall on Dec 1, 2008 12:47:23 PM


    7 High-Risk Search Strategies to Avoid Guide Download

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