Selecting A Search Firm: The Greatest Myths
Retained search firms frequently provide guidance to prospective clients on how to select a search firm. But a number of their assertions have gone unchallenged, much to the detriment of employers that have been hoodwinked into paying far too much for too little in return. Well over half of all retained searches fail to complete and it is estimated that 40-50% the executives who are recruited don't make it past their first year. Clearly, something needs to change. I suggest we begin by exposing some of the myths regarding what an employer should look for in selecting a firm.
Myth #1: Find a search firm that specializes.
On the face of it, specialization seems to make sense. Clearly, you want a firm that understands your business and its players. But there are many ways to come by that wisdom. Moreover, seeking industry specialization is like tying your feet together at the beginning of a foot race. Industry specialization cripples your search efforts because it sets up client blockage: any search firm that specializes in your industry will be unable to recruit from all of your ideal target companies because a number of those companies will be clients of the firm. Of course, the search firm will promise to tell you if there is a conflict, but why should you believe them? They have intentionally pursued a model that sets up a conflict of interest. In other words, it doesn't bother them enough to do something different and do the right thing.Why don't they make a commitment to serve just one major client per industry? Bain & Company did that to leave no doubt in their clients' minds that Bain was loyal. It is a commitment that we have decided to make. Rather than specialization, buyers of search should seek loyalty instead and choose a firm that takes pro-active steps to prevent conflicts-of-interest.
Myth #2 – Choose a retained firm that charges 30% of first year total compensation plus expenses.
Retained search firms, on average, charge 30% of annual first year total compensation of the candidate they place plus expenses. While it isn't technically price fixing, it is sure seems as if the search firms got together and colluded. In fact, if you actually stop to think about it, retained search firms have significant motivation to enforce their exorbitant fees. For executives whose total compensation exceeds $300-thousand, search fees top $100-thousand and beyond. Retained firms get paid that whopping sum whether the search lasts a week, a month, or a year. In other words, the fee is completely disconnected from the actual work that they do. Certainly, it is time for some other pricing options, such as a pay-as-you-go monthly retainer for as long as you need. No more, no less.
Myth #3 – Find a search partner that claims to have extensive network to tap for candidates.
A good search partners works their sources the way a reporter does. (As a former award-winning investigative reporter, I know a great deal about the care and feeding and sources.) But do not assume that a search partner will be able to recruit a candidate simply based on a preexisting golfing or country club relationship. Conversely. do not assume that a candidate will refuse to engage just because they're hearing from a recruiter for the first time. Either the timing and the opportunity are right or they're not. Executives do their due diligence. In light of the many ways we can reach out and touch a candidate, what seems to matter more is the ability to uncover all viable candidates. You usually don't do that from the 9th hole.
More on the myths in future posts.
Read the original here: The Investigative Recruiter