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, which 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 process.
When we initially talked to Sandy, and 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 is 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 her 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 more 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 from 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 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!