What High Performing Organizations Do Differently

Imagine a problem has just occurred that will cause your company to lose $15,000 per month in revenue, and might soon cause a string of similar problems. Which solution to the problem would you choose?

Solution A) This solution has no upfront costs, but it diverts your internal resources away from their current work, takes 4 months to implement (costing $60,000 in revenue) and is projected to lose an additional $24,000 during year one, with the likelihood of continuing losses of $36,000 per year thereafter. This solution has a 50% chance of failing completely and if it does fail, it might trigger a cascade of similar problems.

Solution B) This solution has an upfront cost of $15,000 (which was not in your budget). It requires no diversion of internal resources, and takes 2 months to implement (2 months faster than Solution A). By the end of year one, Solution B will recoup the $30,000 revenue lost during its two month implementation, and is likely to generate an additional $36,000 in annual revenue thereafter. Solution B has a performance guarantee, and significantly reduces your risk of this problem cascading into other areas.

If Solution B seems like the obvious choice, let’s review what happened the last time a vital person with hard-to-find skills resigned from your firm.  Did you consider using a search firm to fill the job?  If so, did the conversation sound like this? “I hoped our HR department might be able to find someone to fill this job. We thought if we could handle the search internally, we might save money on search fees. And if HR failed, we could always hire a search firm later.” Or, perhaps your internal deliberations sounded like this? “We did not budget for any search fees, so we had to do it on our own.” Both conversations probably sound familiar, and on the surface they might even sound reasonable. But when you look carefully, you realize that that both conversations make the same four assumptions. They assume:

1. There is no cost to leaving a position vacant. There is zero cost to the lost productivity of both the employee and the team.
2. There is no risk to leaving a position vacant. Under-staffing and over-working the current team will not result in any turnover risk. Zero.
3. Any hiring process that results in a hire is just as good as any other. A hiring decision will be just as good whether you have only one candidate to consider, or a full slate of 6 qualified people.
4. Any person hired in this job will deliver equivalent results. There is no difference in productivity or performance between an “A player” and a “C player.” Zero difference.

So if all four assumptions are laughably wrong, how did you ignore them in your decision making? Research shows exactly why it happens. Recruiting costs are very easy to calculate, but it is far harder to calculate the cost of not hiring, and harder still to calculate the cost of hiring badly. When faced with that kind of complexity, busy executives look at what they do understand (recruiting costs), and ignore what they don’t understand (the cost of hiring slowly and badly). The snap decision becomes: “We can’t afford to pay a search fee.”

High performing organizations are different. Because they have specific performance targets to meet for every position, the cost of not hiring (or hiring badly) is far more obvious. So they have an easier time balancing their recruiting costs against the return on investment of making a good hire quickly.

This is exactly what our Solution A and Solution B example did for you above. With good information, the trade-offs were easy to make. It was the gathering of the information that was complex. (Which is precisely why so many people will skip the next section of this post and just read the conclusion).

I Don’t Know How You Do it Alone

Seriously, how do you do all that recruiting by yourself?

I know, recruiting is typically a solo gig–rarely do you see two experienced recruiters working together on the same search. But I think working solo is a mistake for tough searches. It creates problems and causes delays that could be avoided.

Some of our clients have one person handling every aspect of HR, including recruiting. In larger firms, one recruiter is usually dedicated to handling the needs of a defined group of hiring managers as in “I’ll handle this department, you take that department.” So even when you are part of a larger team, you are still the only one tasked with each search. Really sophisticated recruiting functions might have dedicated candidate researchers (sourcers), but almost never do you see two skilled recruiters working in tandem. And I think that’s unfortunate. As one of my Project Managers observed “The only time we get into trouble is when we think we know what we are doing.”

In a tough search, you need someone to challenge your assumptions and highlight risk factors you might be ignoring. When you are tired, and think you are within sight of the finish line, someone needs to ask “What happens if your only top candidate takes a counter-offer from her current employer?”

Because we work with small organizations, our work is customized–we don’t know what recruiting resources will be needed until we’ve met with the hiring manager. We know from experience that the solution to every recruiting challenge is not to simply present more candidates. There are four common problem areas in recruiting, and three of the them are not about finding more candidates. But when you are busy, and working solo, it’s easier to just “do more of the same.”

We’re process geeks so we have lots of metrics to ensure we stay on track, but when problems arise, the solution is not always obvious. It takes a discussion to fix it. When we’re one week into the search and people are being unresponsive to our outreach, do we need to tweak the message, change who are are reaching out to, or simply double the number of people we contact? If job advertising is not attracting the right candidates, do we change the message, change the title, or simply post the ad somewhere else? To write compelling ad copy, we find it always takes at least 2 people and a third person to proofread it…and after all that, we still tweak most messages at least once during the course of the search.

What happens when the recruiting outreach message is working, and the target candidates are responding, but everyone is above the target salary range? Do we go back and have a discussion with the hiring manager? Or do we tweak the message, alter the title, and go find other people to recruit?  Or do we do all of the above?

Every solution takes serious thought, time, and resources. And if you are working solo on multiple searches, how do you find the time and energy to do all that work, right when it needs to be done? We find it challenging and we only work on a limited number of searches. Our team has been working together for years. We have specialists in defining jobs, writing ad copy, candidate sourcing, interviewing, and hiring decision support.  Our specialists are supported in a 1:1 ratio by a support team that handles ad posting, candidate scheduling, background checking and a variety of other tasks. We have advanced IT systems and 24/7 support. And even with a team of specialists working together, we are still challenged every single day.

So, like I said, I don’t know how you do it alone.

What Kind of Recruiting Problem Do You Have?

Not all recruiting problems are created equal. Sometimes you can just run ads and hire good people. Other times you might engage a search firm to call everyone in their database. Few hiring managers venture beyond those two stark choices: either tell HR to run an ad, or tell a headhunter to go sell your job to people in their Rolodex. But of course, these two fine solutions don’t resolve most recruiting problems. Which explains why very few hiring managers have a team full of top performers (even after they engage search firms). 

Perhaps if you could better clarify your exact recruiting problem, you could solve it more decisively. And, after gathering data from hundreds of our completed executive searches, that’s exactly what we did. Now, before we accept any new search, we carefully assess how much intensity it will require in 4 common problem areas: Definition, Sourcing, Selection, and Decision Support

Although each of these problem areas require very different skills and levels of intensive effort, I notice that nobody ever asks me about three of them.  Instead, new clients only ask me about our candidate sourcing (recruiting) capabilities. I’m while I am happy to answer that we have superb sourcing capabilities, I also know that sourcing is only part of the solution. So let’s get into all four of the most common kinds of recruiting problems, and what you can do about them.

Definition intensity:  The owner of a small company needed more sales. He could not figure out how to get them, despite having worked in his industry for many years. His solution? Hire some salespeople to beat the streets, and let them figure it out. (He spent an hour trying to convince me what a great opportunity it was for a salesperson to come work for him). Like a medieval alchemist, he was trying to turn his sales problem into a recruiting problem. Except recruiting can’t solve a problem you cannot define.  This is true for any newly created role, or for the leader of any new initiative, but it is epidemic in sales hiring (just read this).

The intensity of defining job requirements might be as quick and easy as “Find me another person with attributes like Sally” or might be as complex and intensive as asking ”Are we looking for someone to execute a strategy that already works, or are we looking for someone to discover a strategy that works?”  If you are hiring a search firm for their great Rolodex, but what you really have is a definition problem, all their sourcing cannot help you figure out who will be successful in the job.

Sourcing intensity:  One of the most grueling searches we ever conducted was for a nonprofit manager who decided that the only way she could meet her business objectives within her budget was to create a job that combined two fairly common skills that are almost never found together in nature. Kind of like looking for someone who is both a supermodel and a construction worker – theoretically possible, but highly unlikely. (Yes, I still kick myself for accepting this search). The problem was clearly defined, the skills desired were crystal clear, but the candidate sourcing intensity it required was off the charts. Not even 1% of the qualified people we contacted had any interest in the job as it was defined.  

Sourcing intensity comes in two forms: it is either hard to find people with the skills you desire, or else the people you seek are plentiful, but just not that receptive to your job. Just because you can define what you want, and find people who can do it, there is no guarantee anyone actually wants your job. When you don’t have a compelling story to tell, you will lay flame to a lot of sourcing time. Is your location terrible, pay low, or job unappealing in some way? Are you looking for a left-handed, bi-lingual, Russian nuclear physicist? Does your ideal candidate receive more than 2 calls a week from search firms? Then your level of sourcing intensity will be equal to 10 other searches. And remember, if you hire a search firm to flatter, cajole, and sweet talk these rare, elusive, or high-maintenance people into your firm – you better know what was promised to accomplish that … and you will need an equally intensive plan to retain them. 

Selection intensity: Once you have people interested in talking with you, how hard is it to decide who to spend your precious time with? In lower level positions, you need to know how to quickly winnow down hundreds of resumes without overlooking the “diamonds in the rough,” but in executive searches, you need a skilled interviewer to hone in on cultural fit, and to assess skills and strategic thinking. Very different skills.

To present a slate of 6 qualified candidates, sometimes we have to talk to 30 people.  Sometimes it’s just 12 people – but the conversations might last an hour and half each. We’ve found that the interviewing skill required and the interview time needed varies widely from search to search.

Here is a test of selection intensity: How keenly does your recruiter listen to you? Do they really understand what you are trying to achieve by making this hire? If your recruiter is better at talking than listening, or lacks business acumen, then this aspect of your search is probably being done only superficially. In fact, your search might be just a mindless hunt for the perfect resume. Without the proper selection intensity, you will almost certainly overlook great “out of the box” candidates and instead waste time talking with people who have a nice resume but are not a good fit. 

Decision Support intensity: Searches often fail right at the finish line. Once you have a good candidate sitting in front of you for the interview, how hard will it be to forge a consensus among all the decision makers? Do you have a dysfunctional board or executive team? Is everyone rowing in the same direction, or are there stark differences in approach between key executives? Do you have a hiring manager who is so risk averse that they find almost any excuse not to hire?

If you cannot make a hiring decision in a timely manner, all of your other efforts might be in vain. Good candidates are repelled by internal political battles, and they certainly don’t wait around for indecisive managers. They (correctly) ask “If being hired is this haphazard and slow, am I really a good fit? And “If I am a good fit but decision-making is this slow, how excruciating will it be to work for them?”

So once you have a better definition of your recruiting problem what do you do next?

• If your challenge is Definition, be sure you are working with someone who is thorough in understanding the job before they begin recruiting. You are at risk if all you had was a 15 minute phone call with the recruiter, or if they never “pushed back” or challenged your thinking.
• If your challenge is Sourcing, be sure you understand how compelling your job will be to candidates.  Most hiring managers overrate how attractive their job is relative to other opportunities in the market.
• If your challenge is Selection, be sure you have confidence in the person who is pre-screening candidates for you.  Challenge their thinking to be sure they are looking at candidates the same way you will.
• If your challenge is Decision Support, be sure you are working with someone who has a process to resolve those differences.  Winging it and hoping for the best is not a strategy.

With Unemployment so High, Why Pay a Search Fee?

Bread Line Sculpture at the FDR Memorial

People who are unfamilar with the DC job market often ask why anyone would pay a search fee to find someone when unemployment is so high.

It’s a reasonable question, and saying “Good people are still hard to find” seems somehow incomplete as an answer.  So if you need to answer the question more authoritatively, here are the facts. 

While the national unemployment rate remains stubbornly high, the effect of the economic downturn is being felt very unevenly.  Some cities have much lower unemployment than others, some industry sectors are faring better than others, and unemployment rates vary dramatically depending on your level of education. 

So, in our typical searches we are looking for a candidate who lives in the Washington area, currently works in professional services (associations, nonprofit leadership, government contractors, or similar kinds of work), and most of our searches require someone who has a college degree.

Looking first at cities –local unemployment rates vary from 4% to 28%.  The Baltimore/Washington area has remained one of the strongest big city job markets in the country throughout the recession.   Our regional unemployment rates are currently around 6% and northern Virginia is even lower, hovering around 4.5%.  (If you recall, 5% used to be considered by economists to be “full employment” – where everyone who wanted a job had one).  (Sources:  http://bls.gov/web/metro/laummtrk.htm  and  http://policy-cra.gmu.edu/data/UnemploymentRate.pdf

But when you are recruiting, the real question is who you are competing with for the same candidate – are you the only employer in town with a good job to offer, are does everyone else in town want to hire the same candidate? So a useful way to visualize the difference between cities is this “Job Market Competition” chart from Indeed – a job board aggregator.  They list the number of unemployed people in a city relative to the number of job postings, and again, you see Washington/Baltimore among the most competitive job markets in the country.  Where a city like Miami may have 5 unemployed people for every 1 job posting, Washington has never varied from a 1 to 1 ratio throughout the entire downturn.

Next, looking at industry sectors  – The Washington area Professional and Business Services sector is our fastest growing market, adding more jobs during the past year than any other segment of our local economy.  (Source:  http://policy-cra.gmu.edu/data/JobChangebySector_Metro.pdf).  People who work in the professional services sector are among the most employed people in the region, and their job opportunities are expanding. 

Finally, looking next at the candidate population – the national unemployment rate varies from 4.4% for people with a college degree to 14% for people who have not completed high school.  So again, our ideal candidate is statistically, least likely to be unemployed. (Source:  http://www.bls.gov/news.release/empsit.t04.htm. For an even more graphic illustration of the disparity between education levels see this New York Times interactive model: http://www.nytimes.com/interactive/2009/11/06/business/economy/unemployment-lines.html)

In summary, we are competing for candidates in the hottest major job market in the country, in the fastest growing sector of the local economy, for people who statistically have the lowest level of unemployment.

If you do not engage a search firm, and do not have a skilled recruiter on staff, your primary way to reach candidates is to run ads on job boards - competing with other organizations for the very few qualified local people who are actually checking the job boards.  This approach often drags on for months, with no certainty of reaching a successful conclusion.  

Instead, when you engage a search firm, hundreds of qualified, local candidates are contacted immediately.  Many of the people contacted would never have heard about the opportunity otherwise.  With a robust outreach strategy, you can usually have someone hired within one or two months, and the entire cost of the search can be paid for with the salary you saved by having the position vacant for a couple months.

That’s why we’ve never been busier, even though the national unemployment rate is still so high.

An Executive Search Firm Leaving Money on the Table? Huh?

Let’s play a word association game.  I’ll say a phrase and you think of the first thing that comes to mind … Ready? 

“Retained Executive Search Firm”

Hey, by any chance did the words  “bargain” or  “great value for the money” come to mind?  No?

The Economist recently published a jaunty little analysis comparing the societal benefit generated by IBM during their first 100 years of existence, vs. the benefits generated by that “flagship of American philanthropy” – the Carnegie Corporation.  And while it was an odd pairing,  it was a fascinating perspective on how corporations can potentially make a larger positive impact on society than even a major philanthropy.   (Key word: Potentially)

In gauging the impact of IBM, the article used a term I had not heard before - ”consumer surplus.” 

“… companies create what is known as “consumer surplus”—the difference between the market price and what a consumer would be willing to pay. This surplus benefits society, not shareholders.”

Southwest Airlines and Costco regularly create a consumer surplus.  Lots of organizations are organized to generate a consumer surplus.  You recognize it as a customer when you get that thrill of feeling smart – knowing you are getting more than what you paid for.    But to create it, a company has to “leave money on the table” and not harvest every last nickel from every last transaction.   Companies must design their process to leave money on the table … on purpose.

Creating consumer surplus is definitely not something that most retained executive search firms are good at.   (If you want to understand why executive search remains so stubbornly expensive, read my post in Fistful of Talent about the two biggest myths in executive search).

If You Cannot Learn from Others, You Cannot Lead

In some organizations, the higher you rise up the management ladder, the less people give voice to their disagreements with you.   And when you become insulated from that healthy disagreement you might tend to forget that other people do not see things exactly the same way you do.  

Which does not make them wrong.  

When you are the only “smart one” in the room, or when you think everyone else is lazy or stupid for not agreeing with you … you are not fit to lead.

Your success as an executive hinges on your ability to learn from others.  You simply must be able to see things from someone else’s viewpoint, to respect and learn from that viewpoint and to find common ground.   Yes, you can influence others to see things your way, but to do that, you must first be able to understand what may be valid (and valuable) about their perspective.

If you cannot learn from others, you are not fit to lead them.

Over hundreds of executive searches, the single best predictor of failure is a hiring manager who cannot trust and learn from the people around them.  If you can’t trust, you can’t learn from others, you cannot delegate, and you are trapped within your own limitations.  If the job market is different than your expectations, you’ll forever be looking for something that is not there.  If you don’t trust the candidate, every answer that varies from your mental picture is something to be investigated.  If you don’t trust the recruiter, you’ll have to review every resume, and manage the project yourself.

Search without trust is doomed to failure.

How Corporate Recruiting Budgets Are Wasted

A big chunk of corporate recruiting budgets are wasted … but not by HR.  It’s the hiring managers who lay flame to it with actions like starting the recruiting process without a clear job definition, stacks of resumes going un-reviewed, and indecision with scheduling interviews.  

But does HR get any credit for allowing hiring managers to be so reckless? Heck no.  The Corporate Executive Board is reporting that fully two thirds of hiring managers are dissatisfied with the influence recruiting has on their organizations.    

If you work as a recruiter in a large organization, you work at a massive disadvantage.  If your hiring managers are unresponsive, unrealistic, or indecisive, you still have a responsibility to fill their job openings.   Sure, over time, smart recruiters can build influence with hiring managers … but they rarely have the clout to say “Sorry Jim, your search is not workable until we resolve these issues.”

As the owner of a retained search firm, I have recruiting advantages that most corporate recruiters would kill for.  First I can improve a process, introduce a new productivity tool, or allocate more recruiting resources whenever I want to. But more importantly, I can choose what searches we accept.  Before a client engages us, and before we accept a search, we spend two hours with all the hiring stakeholders:

• We have time to discuss the year one performance expectations, challenges, and what a top performer would find attractive about the job.
• We can review ideal candidate profiles with the hiring manager, so we know how they will evaluate resumes.
• We can put time on everyone’s calendar for interviews, and everything else we need to move the hiring process along.    That’s right, we pre-schedule interview time, so we don’t have to beg for hiring manager time later in the search. 
• We can align salary expectations with market realities, and make the necessary trade-offs that happen in every hire – but we make them before we start recruiting.

We require the ability to make these critical trade-offs before we start recruiting because we know that faster hiring speed cuts the total cost of recruiting in half.

Why is Executive Search so Expensive?

Once upon a time, twenty years ago, in a backwards country called telephone-land, all your news came from a thing called a newspaper.  And all your mail was delivered by the postal service.  And the telephone (land line of course) was the fastest way to reach someone.   Yes, twenty years ago, finding candidates and presenting job opportunities over the phone was a pretty expensive thing to do - so executive search services had to be expensive.  

But now, if you live in a place I call “the world,” your news comes to you on your computer, most of your mail comes to you on … your computer (or your phone), and, if you still have a land line, your telephone calls disappear into a place called voicemail.

So if all the technology to find and reach candidates has changed, why is executive search still so expensive?

There are two big myths that have prevented executive search firms from using technology to lower the price of executive search.   But you’ll have to read my guest post on Fistful of Talent to find out what they are.

Who is your Staffing Consigliere?

I have a confession.

I’m don’t think of myself as a Headhunter or Executive Search Consultant.  I think of myself as a Staffing Consigliere – like Robert Duvall in the Godfather.  (That’s him … quietly in the background).  

For those of you who don’t run organized crime syndicates … or go to the movies:

A consigliere is “a close, trusted friend and confidant, the mob’s version of an elder statesman. He is devoid of ambition and dispenses disinterested advice.”  (From Wikipedia -  the repository of all human knowledge).

How do I know I’m a consigliere?  Because senior executives call me every day to get perspective on complex, emotionally charged, high stakes problems.   They don’t just call when they need to engage us for a search, they often call me just to talk them down off the ledge. 

This is personal, I don’t do this for strangers, but my clients know they can call me without it turning into a “sales call.”  The cash register doesn’t need to ring to get my attention.  I just solve the problems, and the money takes care of itself in the long run.   

Sometimes it’s a hiring manager who is desperately afraid of making another hiring mistake.  I just talked to someone who had engaged another search firm to help them fill a very specialized job.  They were coming into the interview sequence and looking for a pre-employment assessment tool or anything that will help lower their risk in this high-stakes hiring decision.   In fifteen minutes of conversation we developed a much simpler solution.  (Again, this call was not about one of our searches, it was just an executive calling for advice).

Sometimes the call comes from a senior executive who is considering quitting their job (again, not the people we’ve placed, just colleagues).    They need perspective because the pressure on them is so intense.

• “Is this job salvageable or should I pack it all it and work at the local wine store until I get my next VP gig?” 
• “Is it time I tried my hand as a consultant?” 
• “How would my resume look if I quit now?”
• “How’s the job market looking for someone like me?”
• “Hey, quick question, I had a headhunter call me and they said …. should I believe them?”

Often I will tell people what they don’t want to hear.   “That key executive you are so happy with?  That’s the source of your problems.”  Or “If you quit now, you’ll make yourself far less marketable.”

So who is your consigliere? 

Who do you trust for informed, unbiased advice about the job market, about your own marketability, and for agenda-free advice on how to handle a complex staffing problem?   Because if your vendor relationships are with people who you don’t really trust, or people who just agree with you, or worst of all – people you trust who are uninformed,  then you are not getting full value from your vendors.

Because while many people think work is “strictly business” we both know, it’s personal.

Who’s That Driving Around in Your Employment Brand?

Hiring managers, who is that behind the wheel of your employment brand?  You’ve had 5 internal meetings to discuss the language on your new website, but then you hired a contingent recruiter to work on your job opening after talking to them on the phone for what, half an hour?  

What exactly are they telling people about you, your company, and your open job?

When you engage a search firm, you hand over your reputation as an employer.  They are authorized to represent you (for the duration of their engagement).  It’s like handing over the keys to your car … with your company name emblazoned on the side of it.  They ARE your employment brand while they are behind the wheel.   And remember, they are talking to a lot of people about your company.

So how much control do you have over what they say?  In most cases, none at all.  So yeah, you probably want to know who you are dealing with, what their reputation is, and precisely what they will say about your job opportunity.

At Staffing Advisors, we craft a written marketing message for you, and give you a chance to look it over before we use it.  (You told us that you offer great work/life balance, but really don’t want to want to over-promise that?  Ok, no problem, we’ll delete that sentence…).  We want to be sure the message sets the right tone for skills, performance expectations, cultural fit … everything.  

Then, when we deliver the message, someone with real credibility reaches out.  Kelly Dingee, our Strategic Recruiting Manager has real digital credibility.  She writes well enough to meet Jessica Lee’s demanding standards at Fistful of Talent (no easy feat), she was named one of the Top HR Digital Influencers by John Sumser over at The HR Examiner, and then publicly praised this week by both Kris Dunn and Glenn Cathey - that’s doing pretty well with HR’s digital royalty I’d say. 

So yeah, Kelly looks legit when she reaches out to someone.  And that is reflected in how people respond to her.  (Test this for yourself.  Google the name of whoever you are trusting with your brand.  That’s what smart candidates do before they respond.  So how does it look?) 

We’ve connected with over 25,000 candidates this year (people who were referred to us, or people we reached out to).   I hear about every single person who has had a complaint with the service.  This year, I talked to less than a dozen disappointed people – that’s less than one in two thousand who had a complaint - and remember, 24,900 of those people ended their experience with us by getting a rejection letter.   

I’m not saying you need to hire us to protect preserve and defend your employment brand (although that is an excellent idea), and I’m not bashing how other search firms do business (Relax third-party recruiters, I’ve said for years that the contingency search model is perfectly valid).

 I’m just saying you need to think harder about who you let drive your reputation around.  Because it matters more than you may realize.

3 Year Retention: The Hardest Measure of Search Firm Performance

Some people say the real measure of a search firm is their repeat business rate. How many times do their clients hire them again?   I really like that measure -  75% of our work comes from clients who have engaged us for 3 or more searches.   That’s an easy, fun measure.  But repeat business is not the hard measure. 

No, the measure I really sweat over is retention.  How many of our placements work out long term?

Most search firms can tell you their placement retention rates.  If you ask, they will tell you how many of their placements lasted through the guarantee period (often 3 or 6 months), or how many placements lasted a full year.    But we place most of our candidates at the Manager, Director and VP level, and at that level you rarely get fired within a year.   People might quit for a variety of reasons, but except for egregious circumstances, most employers will not fire an executive during their first year – it just takes more time to see the results of their work.   So for an executive,  the one year retention rate is really only a measure of hiring disasters, not productivity.  

Eighteen months is when I see executives really being held accountable.  (Incidentally, when looking at resumes, if I see a pattern of 18 month jobs, I become concerned that the executive is leaving organizations just when they are supposed to be delivering results – it’s a huge red flag for me).   So eighteen months is still not quite long enough to track retention.

We track our retention numbers for three full years (and not just for executives, we do this for every position).    Three years gives us a much better understanding of whether a new hire was a good cultural fit and whether they stuck around long enough to make a significant contribution to business results. 

And just to make it harder on ourselves, we don’t just track the numbers, we publicly share them.  In December of 2009, I committed to share our retention statistics on this blog every year when we compile them.   (It takes us some time to assemble the numbers -  we’ve placed well over 200 people over the past 4 years).  

In the midst of a recession, I was sorely tempted to exclude layoffs from the statistics, but layoffs often mask performance concerns, so excluding layoffs just seemed like a way to boost the numbers.  So we count layoffs against our statistics (and yes, it drops our results by 2 full percentage points).

So, as promised, here it is.  As of December 2010, our retention stats are:

• 92% of the people we’ve placed are still on the job at 12 months  
• 90% of our placements are still working where we placed them 18 months later 
• 84% of our placements have lasted 3 years or longer 

84% retention at the 3 year mark is astonishingly high by industry standards.  But last year our 3 year retention rate was even higher – 85% – so we’ve slipped a full percentage point this year.   People tell me that’s pretty good for a recession … but my real concern is 2011 – while there will be fewer layoffs, it’s going to be a huge year for employee turnover.   And although we continued to improve the accuracy of our hiring process, we’ll be hard pressed to improve our overall retention rates in the face of all the economic forces driving turnover next year. 

You can look at this blog next December to find out how we did.

Sharp Rise in Senior Staff Turnover Reported

CEO Update recently reported on a trend we’ve been talking about all year – the spike in executive turnover at associations and nonprofit organizations across the Washington metropolitan area.   They reported that the number of open positions posted with them is ”greater than 2008, 2007, 2006 or any other year we have tracked.”

Back in January we predicted that the local job market would be a big game of musical chairs this year, driven primarily by executive turnover. 

In August we observed that top candidates were on the move in larger numbers, and that we were seeing a spike in candidates who were receiving multiple job offers.   As you may recall, on the strength of that trend we declared the recession over  (at least as a retention tool) a full month before the economists made it official on September 20th.   (Then again, in their September announcement, they said the recession actually ended in June 2009 … so just give me 15 months and I’ll predict what happened today). 

No matter how you look at the data, this is certainly a good time to look for a job if you are an association or nonprofit executive.  Not looking?  Then now might be a really good time to update your executive succession plans and rethink your retention strategies, because your best people are getting calls.

What Exactly Does A Search Firm Really Do For You?

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?

Managers with Really “High Standards”

“I need to warn you, Mary has really high standards.”    You hear this kind of comment all the time in the workplace.   But what does it mean, really?   Is Mary some impossible-to-please overly demanding ogre?  A detail-obsessed punctillious, nitpicking micromanager?  Often the person issuing the “warning” secretly thinks so – Mary’s behavior is a mystery to them.

More often, in my experience, those “unrealistically high standards” are completely warranted – and absolutely necessary in order to achieve some kind of business imperative. 

Here’s a fact that may surprise you: 

Top performers are powerfully attracted to managers who know what they want to achieve – managers who hold people accountable to high performance standards. 

Demanding managers make you bring your “A” game to work every day.  They don’t tolerate “dead wood” – so they often have great people on their teams.  They quickly recognize good work.  And they often get things done in record time.  Top performers are very comfortable with clear expectations, and like accountability – they want to keep score.  They also recognize the fact that  that working for demanding managers is great for their career.

Often the manager with high standards is someone who sets very high expectations for their own personal performance, and is unwilling to accept mediocre performance from people around them.  Maybe the manager with “high standards” simply outworked everyone around them in order to achieve their  professional success, and made quite a few personal sacrifices along the way.   They cannot imagine working any other way, and simply cannot work well with people who have different values.

Maybe the manager with “high standards” knows exactly what is at stake, and what the true cost of errors or failure on the project would be – they are willing to be really demanding in order to achieve a worthy goal.  (When you are an engineer working on the moon launch, you want to be sure you did your math correctly).

In my experience,  the manager with high standards is rarely an unrealistic, self centered, egotistical jerk.  Far more often the person judging them is simply unaware why such high standards are so important.

Whose Problem is That?

It is said that “success has many fathers, but failure is an orphan.”  When you make a great hire, everyone takes some credit.  But when you fail, well, there is always plenty of blame to go around -  nobody ever takes full responsibility for the bad hire. 

Because hiring involves so many people, no one person ever seems to “own” it in a small firm.  The rogue hiring manager gets away with bad behavior, the HR department can often avoid responsibility for lackluster recruiting, and nobody corrects the CEO when they are out of touch with job market realities.

If you want to end the blame game and instead bring real predictability to your hiring, you need to decide who is responsible for solving the thorny problems that usually lead to hiring failure.  Problems like these:

• When a hiring manager has not thought very deeply about the position they want to fill, whose problem is that to solve?
• When your job description does not square with market realities (10 years executive experience and willing to do entry-level work for low pay) – whose problem is that to solve?
• When your recruiting and outreach efforts fail to find at least 6 qualified and interested people in your price range - whose problem is that to solve?
• When your hiring process drags on for months - whose problem is that to solve?
• When a hiring manager repeatedly selects the wrong kind of  candidates – whose problem is that to solve?

You get the idea.  Someone has to “own” these kinds of problems, or they will persist for years, sapping the strength from all your recruiting efforts.     

Oh, and one more thing?  Before you engage a search firm, ask them who they think is responsible for solving these kinds of problems.   

While many search firms (like ours) actually enjoy resolving these complex issues, many others limit their role to candidate recruiting and would not dream of ”intervening” in your hiring process.   While there are valid arguments to be made on both sides of that debate,  you – the buyer – need to understand what to expect in exchange for your search fee.  Confusion often leads to disappointment, and a continuation of the blame cycle.   (You might also want to read our previous post on the differences between contingency vs. retained search)