Choosing an Executive Search Firm
Choosing a professional service firm – whether accountants, lawyers, management consultants or executive search consultants – with whom to work is a difficult decision and one fraught with risk. These firms are often retained when critical steps are needed and the client lacks the specialized knowledge and capability that they offer. But it’s difficult to judge the outcome of the consultant’s previous work, with external factors like quality of execution, management transition, the passage of time and the economy impacting heavily on results.
What’s more, professional services tend to be somewhat opaque, in that solutions are created in “black boxes” with little client understanding of process. As a result, clients rely on brand, reputation and the eloquence and demeanor of the consultant. And then there’s the issue of price, which is often seen as a proxy for quality, typically buoying the fees charged by name-brand firms.
As an executive search consultant, I regularly meet with organizations who are looking to hire a firm for an important assignment. Most ask the standard questions about overall experience, fees, etc. but few make inquiries that would provide valuable insight into a search firm’s ability to perform. These missed opportunities could prove critical.
Here are some questions that thoughtful companies should be asking:
What organizations are “off limits” to your firm? If a search firm cannot access candidates in organizations in which the skills, knowledge and competencies you need are likely to be found, their effectiveness will be reduced.
What is your experience as a search consultant? How many assignments have you completed, for what companies and what roles? Search firms often reference the overall firm’s experience. But, while a consultant has access to the firm’s knowledge, their personal experience is what is important if they’re leading the search.
What is your assessment process for candidates? Who interviews candidates? Do you use behavioural interviews? Inexperienced interviewers can exclude strong candidates. Assessment processes should include skill/knowledge as well as competency focused interviews. Behavioral interviews are generally recognized as the most effective interviewing technique to assess competencies and cultural fit but many don’t employ them as they should.
Who else from your firm will be directly involved in this assignment? What is their role? What is their experience and how many assignments have they completed, for what companies and roles? Many search firms utilize a leverage model in which junior researchers contact potential candidates and complete the initial screening. This often presents challenges in engaging senior candidates as the researcher does not fully understand the requirements for the role and is unable to answer questions and build rapport. In addition, junior researchers lack the judgment to make decisions so strong candidates are frequently eliminated while weak ones are included.
What information do you provide on the progress of the search and with what frequency? Regular and frequent (weekly) progress reviews detailing candidate information (name, organization, role, interest level) provides an important accounting of the search strategy, its progress, level of effort and any issues that may have arisen, keeping the search firm focused – and healthy communication with the client at an optimum level.
How does your fee structure align client/search consultant goals, create a true partnership and equitably share risk/reward? If the fee structure does not align with your mutual goals and is unable to create a true partnership that fairly balances risk/reward, a successful outcome will be challenging.
In the past three years, what is the median time to presentation of candidates? Executive searches are frequently triggered by a resignation, promotion or termination and, in some cases, a business opportunity. There is often an urgent need to fill a key role as an important team lacks leadership and/or revenue opportunities are missed.
In the past three years, what is the average number of candidates presented before an offer of employment is presented? In most cases, one or two candidates will not provide insight into the talent pool. However, too many candidates means the search consultant really doesn’t understand the requirements and culture of the organization and is consuming valuable client resources.
What percentage of candidates presented come from the firm’s database versus original research? Candidates from the firm’s database (the “usual suspects”) have typically been unsuccessful in other, albeit different, searches and are low cost for the search firm. Candidates from original research and new talent pools can offer benefits, but require an investment.
What percentage of clients’ “first choice” candidates have been hired? Clients want their first choice candidate to accept the offer but it doesn’t always happen, often as a result of misaligned expectations. Expectations of both clients and candidates should be effectively managed through the process so there are no last-minute surprises.
What percentage of your assignments in the past three years has resulted in hires? Research indicates that approximately 40% of retained search assignments do not result in a hire. The typical retained search fee model is not based on success and there is a risk that there could be no return on investment. Unless a client cancels a search, they should expect a 100% completion rate.
It would behoove anyone looking to hire a search firm to do their due diligence. After all, going through a new hire is challenging enough as it is. Asking – and securing – satisfactory answers to the preceding questions will help you retain a search firm likely to meet your unique requirements, giving you the edge you need to move forward.