12 Reasons To Hire An Executive Search Firm

Between the effectiveness of today’s job boards and internal employee networks, there are many searches where organizations wonder if they should do the search themselves and save the expense of using an outside firm.  Some organizations will only do high level searches externally and do the rest internally.  However, this is short-sighted and doesn’t take into account the real considerations for when it is appropriate to outsource to an executive recruiting firm.

To answer this question, organizations need to consider both the strength of their organization and the specific role they are hiring.  There are 3 company related factors and 2 role related factors and if your organization is insufficient in any of these 5 factors, your performance is likely to be more effective using a credible search firm where, on average,  you will generate more and better candidates, be more effective in evaluating the candidates, and end up hiring a candidate who is a better fit for the role.  The company factors are (1) resource availability (2) search experience and (3) need for confidentiality.  The role related factors are (4) relative importance of the role vs. frequency of hiring and (5) scarcity of acceptable candidates.

1. Limited Internal Resources Available.  Conducting an effective search requires a significant amount of time from defining the role to sourcing, evaluating candidates, and facilitating the evaluation and hiring process.  There is a misunderstanding with many hiring managers who underestimate the actual time it takes to do a search and implicit requirements of their organization.  If your organization lacks dedicated resources for recruiting it often makes more sense to engage an executive recruiting firm. 

2. Limited Internal Search Experience.  Regardless of resource availability, organizations may not have sufficient experience in recruiting in general and specifically for the role that is being filled.  In this case, just like outsourcing any service, engaging a company that is focused entirely on executive search is more effective.  The fee paid to a reputable search firm will be offset by a more comprehensive search, more productively done and an eventual better fit for the role in a shorter time frame than if done internally.

3. Need for Confidentiality – There are several situations when a third party is required to a search:

  • When an underperforming employee is being replaced without their knowledge.
  • When an organization is making a strategic move and doesn’t want competition, suppliers, or partners to know about it. (e.g., entering a new territory, business, or vertically integrating)
  • When an organization is in the midst of a transaction (e.g., Merger, Acquisition, IPO, …) and it’s critical that the search / hire is not made public.
  • When an organization is making major changes and wants to manage the timing of the communication to the current employees.

In all of these situations it is a necessity for companies to engage a third-party executive search firm that is experienced in confidential searches.  The executive search firm can recruit under their names and mask the identity of the company until absolutely necessary.  There is really no other way to effectively do a confidential search.

4. Importance and Experience of “getting the hire right” The importance and ability of getting the hire right is dependent on two influencing factors.  (1) The role’s importance, which is determined by what impact will a marginally better hire make for the organization.  (2) The ability to get the position right is primarily determined by the experience the organization has had in hiring the same role.  If the position is highly important for the business AND if the organization has had limited experienced making the same hire, it makes more sense to hire an executive recruiting firm.  Conversely, If the role is not that important to the business and the organization has made the same hire many times, it is appropriate to have internal resources work on the hire.  The following matrix describes how the role can determine when and when not to use an executive recruiting firm.

5. Scarcity Of Available Candidates – Independent of the experience with hiring and the importance of the hire, when available candidates for the role are scarce it is a good opportunity to use an executive recruiter.  Conversely when there is a large supply of potential candidates it is more cost effective to do the search internally.  The supply of available candidates is partly driven by the “supply” / unemployment rate for the role and partly driven by the requirements the organization places on the role.  In many hiring situations, the company has unique requirements for the candidates that can make potential candidates scarce.  The following are examples of characteristics that make candidates scarce:

  • Specific competency / skill / experience requirements (e.g., led ERP implementation)
  • Relocation requirements (e.g., companies in remote or unfavorable locations)
  • Educational background
  • Age / “Runway” / Succession planning requirements
  • Compensation requirements
  • Industry and company size experience requirements
  • Cultural fit requirements
  • Candidates of certain areas of expertise being more risk averse / unwilling to change (e.g., R&D and engineering professionals)

The scarcer a position becomes through requirements or economic availability, the more likely it is that the right candidates will be passive (i.e., working and not looking for a new job).  In scarce situations like these, posting the job on job boards does not work well.  A labor intensive and proactive approach of reaching out through various methods is required to create a strong candidate pool and using an executive search firm can be very valuable in this instance.  There is a misconception in some organizations that the candidate supply of senior level positions is less than lower level positions because there are simply more people in lower level positions.   This is not really the case.  For example, recruiting mid-level engineers with a specific degree and credentialing, requiring relocation to an unfavorable location is a highly difficult search with a scarce candidate pool.  Whereas, recruiting a CFO that doesn’t require industry experience is often a plentiful situation. 

It’s often difficult for organizations without significant search experience for a particular position to assess scarcity of candidates.  In these situations, it helps to have a relationship with a trusted executive search firm that can honestly advise organizations on the scarcity of the role and whether it makes sense to outsource the recruiting.

If there are no significant issues in any of these 5 areas, it’s more cost effective to keep the search inhouse.   However, if any of these role or organizational issues exist, it will be money well spent to engage an executive search firm, as the cost a making a less than optimal hire can be highly significant. The remaining reasons for hiring executive recruiters revolve around their differentiated value proposition relative to doing a search internally.   There is a misconception in many organizations that you hire an executive recruiting firm only to leverage their network of candidates.  In reality the key reason to hire an executive recruiting firm is to help the organization execute on a “best practice” process to hire the best professional for the role.  The following features of executive recruiter’s value proposition in supporting a best practice approach are additional key reasons to hire an executive search firm as in many cases they will be better at these than the internal organization:

6. Defining the Role – Organizations typically have a very good sense when resources are needed from a “band-width” perspective and from a knowledge and expertise perspective.  However, mistakes are often made in defining the exact role that is needed.  This is particularly an issue when companies are hiring for a role that is new to the company.  A defined role must make sense for the company and also make sense for professionals as they advance in their career path.  Since Executive Recruiters work across many companies, hiring many similar roles they have knowledge of the kind of roles that make sense and are hirable.  They also have knowledge about compensation for similar roles that can be useful in defining salary ranges.  Most Executive Recruiting firms will work with your organization to develop the job description and define the role in more detail and in a way that is attractive to potential candidates.  Some executive search firms will provide ancillary organizational consulting to work with organizations to help them define what organizations need from a leadership and resource perspective.  However, most organizations do not rely on executive search firms to do this.  When hiring a role that is new to the organization, using an Executive Search firm that also places people for interim or fractional roles can be beneficial.  Starting by hiring an interim leader prior to defining the full-time role is often very effective and using an executive recruiting firm that does both hires and interim roles can help you through that process.  In this new position hire organizations have little context in terms of what they really need and the related competencies.  The fact that the organization has a knowledge / talent gap in the area they are trying to hire makes them somewhat unqualified to define the role.   It’s typical that the professionals that they interview for the role are much more qualified in defining what they really need.  However, if it’s a hiring interview these professionals are more interested in selling themselves than helping the client define the role and requirements leading to hires that don’t make sense and eventually need to be redone.   Using an interim professional first can mitigate this risk as they can be chartered to better define what role is needed in the long term.

7. Defining the Requirements of the Ideal Candidate – The job description is really just the starting point for defining the characteristics of the ideal candidate.  A reputable executive search firm provides significant value in providing a framework for defining the requirements of the ideal candidate.  This same framework can then be used by the organization to evaluate and compare candidates and eventually make the hire that is the best fit.   There are four general areas when defining requirements of candidates or fit:

  • Competency Fit – Do they have the ability or skill to do the role and experiences that demonstrate they can do the role.
  • Cultural Fit – Will they do the role in a way that is needed.  Cultural fit could mean finding candidates that fit with the current organization and the way they operate.  Cultural fit could also mean finding candidates who will lead a needed change and operate differently and more effectively than the current organization.
  • Intelligence – Intelligence can be measured and can make a significant difference is dynamic situations.   Intelligence involves both intellectual and social intelligence.
  • Organization / Job Specific Considerations – Compensation, career runway for succession planning, relationships, willingness to relocate,

Reputable Executive Search firms will have a framework for helping clients define the exact fit for the role encompassing all of these 4 areas.  A rigorous process to define requirements beyond a job description enables more efficient sourcing and creates a framework for objectively evaluating candidates.

8. Selling the Company / Position – Some organizations are not very effective at describing the employment opportunity with their company in the optimal manner.  If this messaging is not effectively done, it severely limits success in the sourcing process.  Executive Recruiting firms are constantly interacting and “selling” to candidates and have a good understanding of what professionals are looking for from a company.  Organizations can sometimes forget that the best candidates have choices and without the proper messaging to attract these top candidates, organizations are left with less optimal candidates to choose from.  Also, employees of the organization are generally not as credible to sell the organization and the individuals in the organization as a third-party.  It’s often more believable to candidates to have an Executive Recruiter share with them what a wonderful company and role it is than if the hiring manager did the same.   It’s human nature.    Executive Search firms can provide significant value here throughout the search as they develop trust with the candidates.

9. Comprehensive Sourcing – Most organizations understand that sourcing candidates is the key value proposition of Executive Recruiters.   However, they typically assess this value proposition by looking at the quality and timing of the final candidates presented without regard to comprehensiveness and effort the firm exerted to source candidates.  When companies keep searches internal, they often generate some good candidates and when looking at the sourcing value proposition vs. an executive search firm may not recognize the true value.  It is quite often that the best candidates are in existing roles and only a percentage of these strong candidates will be willing to make a job change at any particular time.  To get the attention of these passive candidates requires a significant effort from effectively identifying and targeting the candidates to a massive outreach to potentially qualified professionals to effective selling of the opportunity to them.   An effective search should involve proactive outreach to 100 to 500 targeted candidates depending on the search.   This should result in 20-50 candidates that have interest.   The effort required to do this right is substantial and most companies doing searches internally do not make this level of effort, instead focusing on producing the first 3 or 4 good candidates, typically from job postings.  Executing on a comprehensive sourcing process is a key component of an Executive Search Firms value.   These Recruiting firms have the experience and are staffed and have the necessary outreach tools to execute on this process very productively.

10. Candidate Evaluation & Selection – A previously mentioned, there are four general areas for defining requirements of candidates or fit.  These are also the key evaluation areas:

  • Competency Fit – Do they have the ability or skill to do the role and experiences that demonstrate they can do the role.
  • Cultural Fit – Will they do the role in a way that is needed.  Cultural fit could mean finding candidates that fit with the current organization and the way they operate.  Cultural fit could also mean finding candidates who will lead a needed change and operate differently and more effectively than the current organization.
  • Intelligence – Intelligence can be measured and can make a significant difference is dynamic situations.   Intelligence involves both intellectual and social intelligence.
  • Organization / Job Specific Considerations – Compensation, career runway for succession planning, relationships, willingness to relocate, …

A reputable executive search firm should have a framework and associated tools for evaluating candidates and this is a key part of their value proposition that they can offer to their clients.   There are many organizations that lack an approach for evaluating candidates and as a result, go by the “gut” of the decision makers.   While this can work if you have decision makers that are skilled in evaluating people, it often can lead to ineffective hiring decisions.  Additionally, when there are multiple decision makers in the hiring process, the lack of an objective framework for evaluation will lead to disagreement and potentially less optimal hiring decisions. Evaluating the cultural fit of candidates for the role and the organization is a critical part of an executive search firm’s value proposition.  One of the most common reasons for hires not being successful is cultural fit.  This fact demonstrates that organizations have in evaluating cultural fit in the interview process.  Executive Recruiting firms that provide an approach to evaluate culture fit can add significant value in the evaluation process.

11. Negotiation / Closing the Deal – Having an agent to support negotiating the compensation and benefits with a prospect can be very valuable.  While the Executive Recruiting firm represents and is paid by the client, they typically develop strong relationships with the candidates as they have supported the candidate through the hiring process.  The Executive Search firm should know what the individual is making in their current role and what it will take to get them to accept the change and this information when reported to the client is critical in constructing the right offer.   The Executive Recruiter also should know any internal constraints the client has in terms of their salary and benefit structure.  When the candidate is considering countering proposals, they will often ask advice from the Executive Recruiter and they can help them understand what areas of their counter can work for the organization and which cannot and steer the negotiation to conclusion quickly.   Without an intermediary like this in the process things can break down and either side can be offended leading to losing the hire or the candidate starting the role with some angst.

12. Executive Integration – The hire that is made may have the right competencies and cultural fit and be quite capable in the job.   However, in many cases the professional is not skilled or does not take the time upfront to build the right relationships, understand various nuances of the organization and effectively integrate themselves into the organization in a timely manner.  Operating as an outsider can put early stress on the situation and can lead to conflict or the hire not working.  Some Executive Search firms offer Executive Integration services to companies as part of the search fee to avoid this from happening.  This can be a significant aspect of the Executive Recruiters value proposition.   Executive integration services provide a coach to the hired professional that helps them build a plan for effectively building relationships and integrating themselves into the organization.

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