What Exactly Does A Search Firm Really Do For You?

08/11/2010

Hiring managers are often disappointed with search firms.

Not coincidentally, search firms are often disappointed with hiring managers.

The root cause of this mutual disappointment is often a simple matter of unmet expectations.  And it starts with a (big) unexamined assumption about what the search firm is expected to do for you once you engage them.  So what, exactly, are your expectations when you hire a search firm?

If you are like 9 out of 10 hiring managers, you will say you expect them to “find the best candidates for the job” – end of story.

If they do that, you are happy, right?

Except quite often you are not happy when all they do is find the best candidates.  Like when the “best candidate” turns down a second interview with you, or takes another job, or when all the best people have salary expectations 30% more than you budgeted.   Yeah, if only hiring were so simple (Step 1:  Find good people  Step 2:  Hire them).

So, while “finding the best candidates” is undeniably important, it’s really just a fraction of the value a good search firm should bring to the table.  The reality is that finding great people and getting them to take an interview is, at best, a fourth of what you should be expecting from your search firm.    If you want to break the cycle of disappointment and make better hires, you need to expect more.

So here is what to look for in a search firm (or internal recruiter) beyond raw recruiting ability:

  • Market Knowledge:  A great recruiter should be able to share job market information – so your expectations are in line with market realities.   (HINT: You may not like it, but if they always agree with you, or if you never learn anything in talking with them, that is a sure sign that you are not talking to the right recruiter.  A recruiter who “goes along” with a hiring manager’s unrealistic market expectations is doomed to waste precious time on a long, protracted search failure. )
  • Candidate Assessment: A great recruiter should not only help you clarify what you are looking for in a candidate, they should also help you understand how to assess each candidate, and work with you to develop a rigorous screening process to evaluate each person on their merits.  They should challenge your unconscious biases so you consider “out of the box” candidates, play devil’s advocate when you “fall in love” with one candidate at the expense of considering others, and help you carefully look at each candidate from all angles.  (They should not be “selling you” on any one candidate, but rather challenging your thinking.  They need to encourage you to look beyond the superficial, easy answers and dig into whether the person is truly a good fit for the organization. In short, you want someone who treats executive search like a process, not a “sale.” )
  • Decision Support:  A great recruiter should be brilliant at managing the hiring decision process, gathering the key players, forging a consensus and getting to the hire/don’t hire decision in an orderly, methodical fashion.   (They should not sit back and hope that you get around to making a decision in a reasonable timeframe.  They need to be a catalyst for action – to ensure that the hiring project runs on a predictable schedule and does not get sidelined by other matters.  If they don’t appear “pushy” from time to time, they are being too passive.)

A great recruiter should be a full business partner – contributing  business acumen and executive judgment on a par with the hiring manager.  If they cannot contribute at this level, find another recruiter.  Similarly, if you do not trust your recruiter to play at this level, find another recruiter.

Now here is the real question, once you find a great recruiter (or executive search firm) who provides all this value, are you actually willing to listen to them?


Rock Stars, Glory Seekers, and Unicorns

08/18/2009

Rockstar with entourageAre you frustrated in facing a really complex problem?  Have all your attempts to solve it failed?  That is precisely when you must resist the temptation to hire a “rock star” or savior – someone who can magically solve all your problems simultaneously.   I often see companies who want someone to come in, understand a complex situation, create a strategy to solve it, then execute the strategy singlehandedly, then when it succeeds, hire a team to build on that success.  One magical person who takes all the risk, possesses all the knowledge, has a wide range of incredibly diverse skills, and gets results without rocking the boat, causing trouble or needing much help from anyone else in the firm.  They want a unicorn – a mythical creature that lives only in their mind’s eye.

Brandon Watson wrote a wonderful post “Under No Circumstances Should You Believe That You Need to Hire “Rock Stars.”  His point?  “You don’t need to hire the best employees, just the right ones.”  Brandon puts it this way:

“Hiring rock stars …  is inviting trouble because they are likely to be glory seekers who are thinking about their own personal rewards, and less likely to be thinking about the team.”

(By the way, for more perspective on the hidden downside of hiring “rock stars” read BusinessWeek’s “Why Jerks are Bad Decision Makers” profiling ex-luminaries like Bernie Madoff, Lehman Brother’s Dick Fuld,  AIG’s Joe Cassano, and Bear Stearns’ Jimmy Cayne).

So, if you want to lower your risk and increase your ability to solve complex problems, instead of trying to hire a unicorn/rock star, instead build a team of top performers – make sure every single job in your company is filled with a top performer.   Do that, and no rock star (with their toadying entourage of mediocre performers) will ever be able to compete with you.  So this begs the question of what, exactly,  is a top performer?

“A top performer is someone who is capable of, and interested in, driving the business results you need – someone who will take responsibility for getting results within the norms of your company culture.”

So, now let’s come back to how, instead of hiring a rock star, you might go about solving your frustratingly complex problem, using your team of top performers.  Working together, one person might provide the context and institutional knowledge of the problem, another might develop the strategy, another might play the skeptic – challenging assumptions and flawed reasoning, another might focus on execution, and another might work on hiring the team and providing the project management oversight needed.   In short it probably takes the talents of several people … and that is a good thing.  Because the future is only going to move faster and be more complex than anything we have seen so far – and whatever problems you are facing now will look easy compared to the problems that are yet to come.  So you’re going to need that team, trained,  primed, experienced,  and ready to tackle your next challenge, and the one after that.


Failure Can be A Great Teacher … or Not

04/02/2009

success-teacher

While many of my clients are thriving in this downturn, I frequently meet with companies who are only about two or three hiring mistakes from the ash heap.   In a small company, 2 or 3 key hires can often mean the difference between a turnaround or a disaster.

So who do we look for in a high-stakes, bet-the-company, key hire?  We look for someone who thrives in a downturn.  Someone who is at their best when times are worst.  Someone who inspires others to do better, someone who can move forward when the path forward in unclear and the information is imperfect.  Someone willing to make big bets, rally the troops, and charge forward, admitting mistakes and adjusting course as new information emerges.  Someone willing to engage.  So what does their resume look like?  It does not necessarily look like a relentless march from success to success – some people “fail up” taking one easy assignment after another, never risking anything big, never failing outright.  I prefer people who have taken risks, and learned from their mistakes.

For leading in tough times, I think failure can be a better teacher than success.  In an article in Fortune,  search executive Les Berglass agrees, suggesting that you may not want to hire someone with an unblemished record of success at top firms.   In times like these, you want someone who struggled through turbulence and difficulty.  Here are a few choice quotes from the article:

By avoiding candidates at struggling companies, we eliminate those who possess the most valuable skill sets for today: The ability to navigate through corporate crises.

Anyone who has led a company through a difficult period walks away with management lessons that a “winning” leader has yet to learn.

Important as persistent sales and cost management may be to a business, the seed of growth is innovation. Inevitably, the term “innovation” inspires images of Apple, which, despite this horrid economy, continues to sell iPhones like it’s a boom time. Lest we forget that Apple’s genius CEO and founder, Steve Jobs, was thrown out in 1985 when the company hit a sales slump.

I wholehearted agree with Les about innovation, but sadly, I think most people do not learn that much from failure.  Very few people can fail without blaming others, or blaming circumstances.   And when you blame, you cannot learn.

In fact, a recent article in the New York Times “Try Try Again, or Maybe Not”  pointed this out in painful and painstaking detail.  A team at Harvard Business School  looked at several thousand venture-capital-backed companies from 1986 – 2003.

“The data are absolutely clear,” says professor Paul A. Gompers,  “Does failure breed new knowledge or experience that can be leveraged into performance the second time around?”  Umm, no.

“We found there is no benefit in terms of performance.”

Successful entrepreneurs were more likely to succeed in their second venture, while people who tried and failed were no more likely to succeed the second time around than they were in their first attempt.

It seems that among thousands of venture-backed CEOs, only success was a teacher.  Those are pretty long odds for those trying to make the case that failure is a better teacher.  My opinion is that it’s really more about the student than the teacher.

So rather than ask whether failure or success is a better teacher, instead ask this question about the student:  Does someone “own” their mistakes and talk about lessons learned?  Does your bet-the-company key hire have the confidence, tempered with humility, to  drive results in a turbulent, uncertain market, when the odds are against them?  Have they succeeded in a difficult market like the one we are all in right now?  Can they admit mistakes and failure and adjust course?   Because when you are hiring someone, and their only experience was succeeding – but in a different environment than the one you have – you are taking a bigger risk than if you hired a rookie.  With a rookie at least you are not going to have to fight  their false confidence.


The Leadership Acid Test

04/01/2009

leadership-acid-testBy now, every sentient CEO knows this is the time for bold action, for innovation, for challenging old assumptions and demonstrating leadership.  While many CEOs relish that challenge, few small businesses actually have the kind of management team that can really support innovation.

Innovation simply demands a very different kind of leadership than the “caretaker” leaders found in many smaller organizations. So how do you know if your team is up to the challenge?   Don’t listen to what they say – everybody is talking the innovation game now.   As my old boss, Steve Ettridge used to say… “turn off the sound and look at the picture.”

Here is my leadership acid test:  Is your management team taking bold, innovative action in the face of the economic downturn?  Are they measuring performance, holding each other accountable, and humbly adjusting course as they find (and tell you about) mistakes?

Or are they blaming circumstances, battling internally, and jockeying for position?  Look at your grapevine, are rumors increasing?   Are people knocking on your door to ask about their careers?  Do you feel like you are choking on increased gossip, fear, blame and paralysis?

Let’s be honest, nobody knows exactly what to do right now.  Nobody has perfect information.  But by now, most organizations are mobilized and taking action.   Some will succeed, many will fail.

I see organizations sorting themselves into two tribes.  The first tribe is the cohesive, well managed innovators.  They are cutting fat carefully, and directing time and money into the future initiatives with the most promise.

The second tribe is the circular firing squad.  Slashing the good right along with the bad, at war internally, and they will probably not survive the downturn to emerge as a viable entity.

Here are the signs of a cohesive, innovative leadership team:

  • Your team regularly challenges your thinking, makes you a bit uncomfortable, tests your assumptions and suggests new ways of looking at old problems. When you share a new idea, it is greeted with enthusiasm and “Hey, that could work if…”  instead of “That will never work, I don’t have time, or I don’t have a budget for that” or worse, people SAY they will take action, but do not.
  • Your management team has specific, measurable, metrics to monitor their results and each individual on their team knows exactly what is expected of them.  People “own” their mistakes and failures and team help each other but also hold each other accountable for results.  Information is shared, everyone knows what is going on – even bad news is shared openly.
  • You see an increased cohesion in the team – pulling together, and setting aside petty grievances, celebrating small victories.
  • You are frequently surprised to hear of their decisions and results – they did not talk about doing it, they just quietly set about doing it.

And here are the symptoms of a circular-firing-squad leadership team:

  • Your managers do not have firsthand knowledge of the issues your customers are experiencing.
  • Your managers come up with “ideas” but rarely prioritize and take committed action on the few things that really matter.  Everyone is an expert in what won’t work, but nobody sticks their neck out for an idea that might work.  Meetings are unproductive talk-fests.
  • Your managers are surprised by fairly predictable external events and worse, did not have a contingency plan for dealing with those surprises.  (Hope is not a strategy)   Communication is often poor and decisions made hastily.  Externally their actions look erratic, irrational and unfair.
  • Your managers do not have a firm grasp of the metrics that predict future performance.   They do not have “trigger points” identified to take action.  (“If sales fall below X we need to layoff 3 people”)
  • Problems land on your desk without any hard analysis or suggested action plans.  People whine about problems without taking ownership for getting results despite the obstacles.  You feel like you need to make too many decisions “below your pay grade.”
  • Most telling – you feel like you cannot trust their judgment.

If you have the circular-firing-sqaud team, you need to admit that you hired most of these people, and you let their performance deteriorate into what you have right now.  Now all you have is false promises, delay, failure, excuses, blame, and really poor information to make critical decisions.

Instead of having a team who can innovate their way out of the downturn, all you can do is pray for the end – you cannnot outperform the market – in fact you will probably be viewed as a meal ticket by your better organized competitors.


Why Innovation Matters

03/26/2009

innovation-lightbulbDo more with less – recessionary words to live by.  Of course, that’s nothing new for small and midsize organizations.  When times are good, costs tend to creep up a bit, in lean times you cut back a bit.   So what is the smart money doing right now?  The really smart organizations are cutting costs through innovation, and not simply cutting costs.  And while those phrases may sound similar, they are the difference between lightning and lightning bug.

I work with a lot of entrepreneurs, so you might notice that I reference innovation frequently in my posts.  So what are some innovative ways to cut costs?   For one, I’m seeing a renewed interest in outsourced services as companies work to turn fixed costs into variable costs.   Where it once made sense to hire an IT manager to support your growing staff, it might make more sense now to outsource IT support to an external vendor.  Where you once might hire an HR Manager, today you consider outsourcing HR instead.  Companies everywhere are reexamining old assumptions, revisiting old ways of doing things – open to new ideas.  They are innovating.

Business to Business (B2B) purchasers “want it fast, right, cheap and easy” (which is on the path toward the mantra of our age – “perfect, free and now”).  Innovation expert Stephen Shapiro calls this the Innovation Bell Curve.  Value Brands with good quality are displacing mid-market brands.

In recessions, lower cost competitors often earn greater profits.  Wal-mart grows, but luxury brands are hurting – even discounter Target is taking a hit as consumers pull back on unnecessary spending.    McDonalds is doing just fine as people trade down from more expensive restaurants.  Wal-mart and McDonalds are not slashing costs and staff to survive, they are already designed to make a profit at a lower price point.

To speak from my own experience, Staffing Advisors is an innovative low cost alternative to traditional search firms – the Southwest Airlines of Staffing – we are built to make a profit at about a third the cost of a traditional search firm.  Consequently we are very busy right now, as busy as we were last year.   Similar to Southwest, our competitive advantage is “fast, right, cheap and easy.”   Even in a downturn there is still an enormous need for third party recruiters  – staffing is a multibillion dollar industry.

By innovating – literally inventing a new way to deliver search services – we have been able to keep costs low, serving clients who want an alternative to using a full-fee agency (and today that’s almost everyone) but more importantly, we are also able to serve companies who would never consider using a full-fee search firm – a massive and untapped market for search services.    In fact, more than half of our clients have never used a full-fee search firm, even in good times.

Our more expensive competitors  – because they did not innovate  – cannot compete in our markets and cannot cut their prices to our levels and still survive – their process is simply not designed to work that way.

So yeah, innovation matters.  As Steve Shapiro says:

“Exercise grows muscle while burning fat.  Innovation is exercise for business.  It helps grow the organization while also enabling cost efficiencies.”

So tell me, what are you doing in your job and in your organization to innovate your way out of this recession?


Small and Midsize Employers Lead Innovation, and the Recovery

03/20/2009

The Way Forward sign in the skyThe secret of great entrepreneurs is “Smarts Guts and Luck” according to a recent article by venture capitalist Tony Tjan.  As he puts it, his “central philosophy” is that “human capital trumps everything else . . .  it is all about the people, and we would take a B business plan with an A team over an A plan with a B team any day.”

In a recent survey by Intuit, 9 of 10 small business owners see opportunities for their business despite the recession.   In the “Future of Small Business Report” the authors note that “With no large corporate fortress separating them from the marketplace . . . small businesses rely on an almost instinctive muscle memory approach toward innovation to survive and thrive.”  As business guru Peter Drucker puts it:

“Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service.”

The Boston Globe ran an article entitled “Innovation may fuel economic recovery.”   They quoted George Colony, the CEO of Forrester Research as saying “It’s obvious that the new economy – whatever we’re going to emerge into – is going to be built by the innovation that will emerge during this recession.”

In a recent survey, the Boston Consulting Group ranked the US second among large large countries for manufacturing innovation (and 8th overall).

Unfortunately I find that most small businesses are chronically underserved when it comes to recruiting people who can drive innovation and results.   For this reason, I’ve written extensively on the need for search firms to innovate.   In a post on “The Outlook for Recruiting” on  ERE, Raghave Singh reached a similar conclusion.

 “…much of the growth in jobs is expected to occur in small and medium-size businesses that have no need or cannot support full-time recruiters. An increase in needs for sourcing, as opposed to full-service recruiting, will occur as employers seek to minimize costs.”

While I agree with many of Mr. Singh’s points, I disagree that growing enterprises will have to settle for less than “full service” recruiting.  I’m convinced that search firms will either learn how to meet client needs at a price they can afford, or they will cease to exist.

One thing is certain about innovation –  after the recovery, the world will look different.   So what are you doing right now to make it different?


Rethinking Capitalism – Why Ideals are the New Business Models

03/19/2009

ideals-new-bus-modelsIn previous posts (Why Won’t Your People Step Up?) we’ve looked back at the failure of old-school management strategies to keep pace with the nature of work today.   We’ve also looked at what Jim Collins has to say about managing in a time of turbulence.  Now it’s time to look far forward, and for that we turn to Umar Haque, who provocatively suggests that Ideals are the New Business Models.

So what will replace the current management philosophies that mostly evolved during the industrial revolution?  What will put us back on the path to prosperity?  What organizing principle will usher in the next era of global growth?  What business models will create real, sustainable value in our interactive era?

What organizing principles are Google, Apple, Nintendo, Wikipedia, Threadless, Etsy, and Fair Trade using?  What are the new ways of organizing people and work?

Mr. Haque suggests that today’s radical innovators are not competing by industrial era rules.  Instead they are driven by ideals, and these ideals disrupt and reshape industries.  If you want a glimpse of the future, set aside some time to watch his presentation.   Most presentations bore me, but this one is worth it.   And while not perfect, his model suggests some principles we can all use to challenge our thinking.   He certainly offers some fresh insight into how we organize our work.  I applaud the effort. Umair Haque @ Daytona Sessions vol. 2 – Constructive Capitalism from Daytona Sessions on Vimeo.

No time to watch the video?  Then you can click the link below for a quick read about Omar’s four pillars for smart growth.

 


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