Confessions of a Recovering Executive Recruiter
It never felt right. After a rewarding career that allowed me to see inside a wide variety of companies and experience a range of strategic directions, and the people who were charged to deliver them, I learned like so many of us that the common denominator to success is people. I wanted to apply all I had learned in my prior career to help companies succeed by improving on their critical people equation, so I transitioned to a contingency recruiting firm, which appeared to express a similar desire. However, from day one there was an abnormal emphasis on “transactional sales,” and not truly mastering the craft of human resource strategies and management. Internally, we hired for sales behaviors, and not for any particular expertise in human resource advisory or even an understanding of people. All of the supposed expert recruiting trainers and training materials all focused heavily on “sales.” Go ahead and look up executive recruiting training manuals or videos. Look at how much time is devoted to volume-based sales training. Do you find any training on retention planning? Or how to identify the specific behaviors that lead to success? Or how to help a client company identify a build out of a succession plan as part of the hiring initiative? They are all about the techniques involved in driving high volume transactional sales phone calls. So, I dug in and gave the “accepted” approach the benefit of a doubt knowing that I would never waver from a commitment to properly collaborate with a client in their best interest. Long story short, for many years I continued to enjoy my clients and candidates. I found myself more and more learning the recruiting side of human resources by doing the opposite of what had been preached for way too long in the recruiting world. My professional growth focused on independently learning more and more about the details of human resource initiatives and strategies. How to conduct an accurate behavioral assessment, how to build productive teams that match a company’s vision for growth, how to develop onboarding strategies that are critical to increasing retention, and as the Baby Boomer generation continues to grow older— the nuances of successful succession planning. Every industry must evolve, and today it is happening at an increasing rate due to technology and the changing values of generations. We need to ask ourselves in every business and industry: “What should we be doing differently to be more effective?” This may mean that we break away from doing what we have always done. Tough to do in a niche, such as Executive Recruiting, which still relies on training and sales methods developed over 30 years ago. As I recover from my contingency recruiting experience, there have been many takeaways, but there is one absolute flaw that must change, and it can be summed up in one word: transactional. Contingency-based recruiting is mired in a transactional method of doing business. A “throw as much against the wall and see what sticks” strategy. Make hundreds of calls a day, get as many job orders (positions companies agree to let you recruit for) as you can, and once you have all those job orders— get as many candidates as possible to get “send outs” (candidates your client has agreed to interview). Recruiting industry metrics continue to focus on this volume approach. However, the paradigm needs to shift to a focus on quality conversations leading to long term relationships with clients and candidates, and not on how many calls you made. In the Contingency Recruiting world all your time is spent working for free unless one of the many resumes you threw against that job wall sticks. Then, and only then, will the client pay you even though they are likely pushing their internal team to find a candidate to hire, so they don’t have the recruiting expense, and have also engaged several other competing recruiting firms (for free once again) on the exact same position they engaged you on. Thus, creating a horse race that emphasizes speed and quantity over quality. Does this sound like a recipe for success? Do you think this process places the executive recruiter as a trusted advisor to either client companies and candidates? Do you think recruiters are thoroughly learning what they really need to know about your company to best represent your brand and find the right cultural fit? Does the recruiter know anything about how human resource strategies are changing? Do you think a recruiter is identifying what really motivates a candidate and what is best for their career development? Most importantly: Do you think this methodology leads to quality results? “Get as many job orders from as many clients possible!” We heard it over and over. Internal contests are developed in Contingency Recruiting firms to focus on getting as many job orders as possible. I watched many recruiters take on jobs from clients they would never have done otherwise and were never going to put effort into hiring. Let’s guess how well an executive recruiter understands your company culture, strategies, strengths, weaknesses much less the role itself when they are making hundreds of calls a day? A competent contingency recruiter will focus on the process your company has in place for hiring during this conversation but misses what is even more important— a pure understanding of the position and how that position positively affects where your company is going. “Get as many send outs as possible!” These contingency firms also have internal contests that focus on the most “send outs” during a period. Makes sense statistically in that the more candidates you get your client to interview, the more you increase your chances of getting that person hired. But who benefits other than the recruiter? Let’s say I was able to get a client to interview (7) candidates. How much time has the transactional recruiter even spent with these candidates? 60-minutes max, and many are submitted after a 30-minute conversation. Or worse –
Organizational Success? It’s the People
Jeff Bezos, the wildly successful Founder and CEO of Amazon.com, recently shared his “three-step formula for success” with INC magazine. According to Mr. Bezos, “Success is going to require talented experts, a beginner’s mind, and a long-term orientation.” His first and most important tenet: “Surround yourself with the right people. If you’re going to accomplish great things, you need a team of great people.” Unfortunately, the reality today in most organizations and leadership mindsets is far different from Mr. Bezos’s, and likely the reason he keeps on winning. We have sat with leaders of companies of all sizes, industries, and demographics to listen to their hiring and human resource needs. An integral first step of this process is to gain a 360-degree understanding of their business and culture. These leaders share and show their innovative products, mind-blowing services, new equipment, new software initiatives, new buildings, forward-thinking R&D, and more with great pride and passion. However, what we find time-and-again is the most important part of a company’s success – its people – are not shown off with this same excitement or even worse – grumbled about. Their 80/20 Rule: 80% of their energy and investment in “things” and only 20% in the right people and talent that are critical to driving their success. We hear you Jeff, but look at my shiny new toy! The conversation then turns to the reason we are meeting: hiring a strong performer. Yet the leader or hiring manager is hesitant to do so. They want to pay below market and demand unrealistic productivity results in too short of a time span. They then complain about being burned in the past with new hires and want others to do this for FREE as “contingency” headhunters. Wow! This is a major disconnect. You just showed off your shiny new and expensive “toys.” You beam with pride at your new building and all of the high-level consultants you paid to help you with these capital expenditures or process decisions, and all the potential results these fancy “things” can potentially do for the company. Yet, you now want to hire a critical role that turns that investment into profit as inexpensively as possible? We are not talking about just paying below industry compensation. We are referring just as much to the process of hiring that person, the continued professional investment in that person you are prepared to make, or even taking time to properly transition a new professional into the organization. The “people” part can get messy We get it. People are the most mercurial part of a company, and our personal lives, for that matter. They have a mind of their own. I can control my machine or software, but I can’t control the day-to-day decisions of my employees. I can’t just build them or set my “specs” into them and walk away (robots and AI aren’t there yet). Now I have to manage (note the keyword should be “lead”) their motivations, behaviors and actions constantly. People are a lot of work. We’re not sure how to put the question to leaders or hiring managers more bluntly than this: Why do you try to get the best professionals to fit your company and culture on the cheap, but you will pay through the nose for a capital expenditure? Why are you taking time out of your busy schedule to talk with us, but you want us to “consult” and run the process for free until you “might” hire someone we present? You pay your software or your capital expenditure/process consultant hourly rates of $150-$500. You are paying your lawyer $600-700 an hour for legal advice. You may be paying your own executive coach $750+ an hour. Yet you are not going to invest in the process of hiring the best cohesive professional(s) to help your company win? Again – we get it. The “people” part of a company is a challenge, and it can be messy. But all the more reason to properly invest in them from the very beginning of the hiring process. What to do? Now that we have identified some of the problems with this approach— here are some proven solutions we see working today… Invest in qualified professionals who partner with you to lead your hiring processes. You get what you pay for. What quality level of hiring advisory do you think you are going to receive back by throwing contingency recruiting firms at an important hire, while all the while doing all you can to hire someone using your overworked internal team to identify that hire properly? Hire a professional executive recruiting advisor NOT a “headhunter” or contingency recruiter. Know who and what your company is and stands for. You cannot begin to fit a person into a company unless you are fully self-aware the of positives AND negatives of your company and culture. Identify more than a job description for the role. A job description is important, but it only provides the semantics and bare minimums. Take the extra time with your Retained Executive Recruiting Advisor to clearly identify at least (3) metrics or Key Performance Indicators (KPIs) of what that person must achieve in their first year of employment. Be sure to make them reasonable. A qualified advisor will know how to help you do this. Be transparent in the process. No company is perfect, and no person is either. Be proud of your strengths and communicate how you achieved them. However, do not BOAST or oversell them to candidates. Be equally proud of your shortcomings and share them with humility when interviewing a candidate. After all, if you were perfect, you wouldn’t need them to address these challenges. Don’t blindside them when they are on board by NOT telling them where the skeletons are during the process. Have a real Transition Plan. Don’t refer to onboarding or transition as “babysitting.” Or say, “That’s why I am paying that person— they can figure it out.” An Onboard or Transition
Retained Executive Search in a Contingency World
Sandy has a problem. As head of a mid-sized consumer products manufacturer, her National Sales Manager just gave her two weeks’ notice. Her current plan to fill the position is to do what she has always done before – hire a couple of “contingency” recruiters, who will compete against each other, to quickly find her a replacement because there are major retailer line reviews coming up. This situation is not new to Sandy or hundreds of other companies. However, upon further review, Sandy has had 5 people in that same position in the last 8 years. Furthermore, the constant turnover in this position has had a major impact on sales and expenses. “Breakeven” was actually celebrated two years ago, and her sales are down 8% this year-to-date in what should be a robust sales environment for her product line. In addition, Sandy wants to go younger, thinking she can mold a “millennial” or college graduate into the type of National Sales Manager she believes will stay and grow into the position, as well as save salary expense in the process. When we initially talked to Sandy, she elected to go the contingency route once again because it has always worked for her in the past. Really? Instant gratification, the “quick fix,” or “putting a warm body into the seat,” is a strategy that rarely works, but is at the heart of the contingency executive search model. The speed and cost are often attractive to the client and the recruiter! The search firm finds someone they think will work, arranges interviews, and when that person is hired, they achieve a nice pay day and then move on. In talking with Sandy, it became clear that there were several underlying issues where just plugging a body in would not work and lead to even more turnover in an important position that demanded stability… The staggering turnover in this position over the last 8 years points to the fact that little thought has gone into developing retention strategies and effective onboarding. In talking with some of her former managers, when they joined the organization, they immediately sought ways to leave it. There is a lot more at work here. A traditional interview process (lack of behavioral interviewing) that actually directed a well-rehearsed candidate to say what Sandy and her human resources team wanted to hear, rather than identifying the best candidate. A confusing compensation plan. Sandy has been focusing her energies on saving time and money rather than putting the right person in the position, which has saved her neither time nor money. She has “accepted the fact” that there have been major costs and missed opportunities due to turnover, but she chooses to continue the same strategy. We live in a world where instant gratification and the need for speed often overwhelm the need for quality and taking the time to get it right. This is much like the difference between contingency executive search and retained executive search. A retained executive search firm is engaged in all aspects of the search process, starting with defining a customized search strategy, all the way through to candidate onboarding. Retained executive search firms often continue consultation and follow-up months after the hire, since their success is based on the impact and long-term commitment of the executive hired. These firms conduct the search exclusively—no other recruitment agencies will take part—so that it will be very client-focused with intense investment of resources to find the right candidate. Retained search firms work very closely with each client, and will take their time and use an agreed-upon methodology to find the best person for the job. The process is rigorous, with a shortlist of 4 to 6 quality prospects developed after an exhaustive sourcing process, beginning with upwards of 300 initial targets. While retained search may be perceived as expensive, it provides a better ROI, and over time, it is no more expensive than contingency, and especially the opportunity costs involved in having a bad hire. The key is that retained search firms are looking for the most qualified candidate. On average, a retained placement ends up being a better fit in their position and ultimately stays in the role longer than with any other type of recruiting scenario. Companies will most often request a retained search when they are looking to fill an executive level position, and sometimes when all other less expensive—and ineffective—contingency search options have been exhausted. The moral of the story and the happy ending… Anything worthwhile usually takes time and effort, and this is especially the case when finding the right hire. Think of the wasted time, expense, and opportunities that Sandy has had over the last 8 years. After a lot of analysis and discussion, Sandy agreed that it may be time for her to “retain” a different hiring strategy. We agree!
