What Do Executive Search Firms Charge?

Most of the people in my neighborhood have never used an executive search firm, they are doctors, teachers, dentists, college professors, and government workers. They work in organizations where it’s incredibly uncommon to use executive search firms.

Even in Washington’s huge nonprofit and association market, where the use of search firms is prevalent, some organizations choose to engage search firms very rarely. We regularly work with people who have never engaged the services of an executive search firm before. So naturally people have questions about who pays (the employer always pays), when the fee is due (it depends on the search firm), how much the fee will be (it depends on the search firm), what services are delivered (it depends on the search firm) and what replacement guarantee is in place if the placement does not work out (it depend on the search firm).

Let’s start with fees. Search fees vary widely depending on the business model the firm uses.

Retained executive search firms typically charge 25 – 33% of the estimated total annual compensation a candidate is expected to receive in their first year in the position. (Many search firms include first year commissions and bonuses in the estimated total compensation figure, but not the cost of benefits.) Some portion of the fee is always due when the search commences, but the final fee is often dependent on what salary the candidate accepts. So if a search firm charges 30% of annual salary and places someone earning $100k, their search fee will be $30k. But if that same candidate negotiates for a starting salary of $110k, or a salary of $100k with a sign-on bonus of $10k, the search fee would rise to $33k.  Additionally, some firms charge back their expenses to the client, so the total fee can easily rise to 35% of total annual compensation. Staffing Advisors is a retained search firm, but instead of tying our fee to the candidate compensation, we prefer to charge a simple flat fee with no charge back for expenses. We set our fee in advance of the search based on the level of effort we anticipate, and our fees are typically 15% of less of total compensation. Like many retained search firms, Staffing Advisors handles executive searches in a wide variety of functional areas (and not just Accounting, or IT, or HR). Consistent with most retained search firms, we offer a replacement guarantee of a full year if a placement does not work out for any reason.

Contingency search firms do not guarantee to fill positions, but if they do, their fees are often between 20 and 25% of annual compensation. Contingency fees are usually due only after the candidate starts work, so if nobody is hired, no fee is due. Some contingency search firms are even willing to negotiate placement fees, but negotiating lower fees can sometimes result in a lower level of effort being spent on your search and a lower chance of filling it. Contingency based firms tend to specialize in one functional area (like accounting). If a placement does not work out, contingency search firms typically offer replacement guarantees from 30 days up to six months.

Some firms take a hybrid approach of requiring some portion of the fee in advance, and making the remainder contingent upon the placement. They key for you as the buyer is to understand which business model best suits your needs. For more insight into the differences between retained firms and contingency firms, read Contingency vs. Retained Search, Common Fallacies.

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).

Dealing with a Work Avalanche

Are you feeling overworked and understaffed right now? You’re not alone. Under-staffing is common during this stage of the business cycle. Some people think it is a long-term trend–calling it the “Job Squeeze.” Perhaps it is. I do know that work pressure has been building quietly for years in many organizations–like snow falling on mountaintops. And when something small triggers it, you are suddenly faced with a “work avalanche.”

Here is how work avalanches are created: When confidence is low, your organization responds to good news differently. You try to grow without corresponding staff growth. Headcount starts to trail revenue growth, and then falls further and further behind. Good news for the organization actually becomes bad news for the team. They were overworked before, and “good news” just makes it worse. Every new contract, new client, and new project just makes it harder to keep up.

How do you know you waited too long to add staff? Your best people are getting sick more often. You are seeing more preventable mistakes being made. Small issues cause tempers to flare, people are less tolerant of each other. They take things personally. Work just seems less fun. And eventually your best people burn out, give up, or quit–triggering an avalanche of work on the remaining team members.

Here’s the thing. Often, when you force your team to “do more with less” they are not doing more. They are making trades. They are trading long-term thinking for short term thinking. They trade planning time for reaction time. They stop making deposits into the relationship bank, and start making withdrawals–using up the goodwill they’ve built over many years. And the cost of that short term focus builds up… like snow building up on a mountain. Eventually the bill comes due in a work avalanche.

Here is what to do about it: When your hiring fails to keep pace with your growth, you can no longer afford to drag out the hiring process. But when confidence is low, that is exactly what happens. “Let’s try it first on our own, before we put it out to a search firm.”  Three months later the team is exhausted, frustrated, and at wit’s end. In your cautious desire to save money, you not only lost time and focus, you created even more risk–from people quitting.

Newsflash: When you are chronically understaffed, nobody on your team has the time or energy to do hiring on their own. When you are running from a work avalanche, you don’t want to make your backpack heavier.

If your business strategy requires you to keep staffing levels lean, you must be prepared to hire very quickly when you get good news. Either beef up your internal recruiting capabilities, have qualified contract workers on speed dial, or be ready to call in search firms the instant you know you need help.

Because standing still is not a good strategy when an avalanche  is bearing down on you.

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.

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’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.

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?

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)

10 Signs Your Search is “Going Off the Rails”

Every week I get at least one call from a frustrated HR executive or hiring manager who has just had a search “go off the rails.”  Disappointed and at their wits end, they call me.   And in about 10 minutes I usually have a pretty good idea what was not working for them … because most searches don’t fail suddenly and for mysterious reasons.  Most searches fail for fairly predictable reasons and they often give quite a few warning signs along the way.

So, help keep your searches on track, here are 10 common warning signs that signal your search is heading for trouble.   Hopefully you won’t have to waste three months on a doomed search, because as you will see, most of these warning signs actually appear very early in the process. 

1. The hiring manager either never defined what they were looking for, or key managers disagreed on what they were looking for.   A sure sign of  trouble is an old, borrowed, or vague job description or one that is mostly a laundry list of qualifications.   (Be sure you know what is expected of new hires and how their performance will be judged before you start recruiting and outreach).
2. The primary “recruiting” method was to post a dull job description on job boards.  Bad ads attract bad candidates - period.  (Be sure you also reach out to the networks of your current employees.  You simply must look beyond job ads if you want to develop a strong candidate pool).
3. After weeks of collecting resumes, nobody has looked at the resumes yet.  (Be responsive, get back to people quickly – good people almost never stay on the job market very long.  Think about the impression you make on candidates with a haphazard, sluggish, indecisive hiring process. )
4. Resumes are screened looking for “the perfect fit” instead of looking broadly at qualifications.   Hiring managers often try to use the resume to make assumptions about the candidates, rather than actually talking to the candidates.  Often hiring managers pre-judge a candidate by their title alone.  (The resume never tells the whole story and most attempts to “save time” by carefully screening resumes … only wastes more time.)
5. Hiring Managers did not pre-schedule interview times, so when a good candidate comes along, it can take weeks to get them scheduled for a first interview.  Then long lags occur between first and second interviews.     (Schedule your hiring process like you would schedule any other project. Cluster your interviews into one week, so you act decisively and move quickly from first interviews into second interviews.)
6. Qualified, interested candidates are ruled out of consideration based on the budgeted salary number, instead of looking at the most qualified candidates, and then determining the fair “market rate” for their skills.   (Ignoring market realities and hiring to fit the budget often leads to hiring the wrong people, chronic turnover and poor productivity – it dooms a search right from the start.   Sometimes smart hiring requires the courage to stand up to internal politics and fight for the budget you need.)
7. Hiring decisions were made based solely on an unstructured interview with a busy executive.  (See what the research says on that – the unstructured interview is only the 9th best way to predict job performance.)
8. At the end of a long, grueling interview sequence there is only one finalist, and you have serious reservations about their ability to do the job.
9. References are not checked, and background checks are not performed before making the job offer.
10. Salary negotiations are left to chance, and not addressed early in the interview sequence.   (Never make an offer without knowing how it might be received).

Consistent, predictable hiring is not only possible – it’s a business imperative.  So if you are settling for anything less, maybe you should stop and look at the staggering cost of an executive mis-hire.

Why Pay a Search Fee When You Can Do it Yourself?

My new clients are often referred to me when they are at their wit’s end.  When they have looked and looked everywhere to find that one great employee and have been disappointed.  

They come to me when they are frustrated by their own search process dragging on month after month without success.  Only then, do they reluctantly consider paying an agency fee to get some assistance. 

“Well of course!” you say.   ”Search firm fees are so expensive!  Why pay someone else to do what you can on your own and save all that money?” 

Let’s examine the logic there.  

• First, is a search firm really just doing the same thing you would do?  Are they just saving you some work -  or is their approach to recruiting fundamentally different than your approach?  If they are just doing the same work you are doing … with all due respect, you are using the wrong search firm.   Your search firm needs to know a heck of a lot more about hiring than you do.   Not just recruiting – because great recruiting is not enough.  No, a search firm needs to fully support your entire hiring process  (your hiring managers are stressed and understaffed, remember?)
• Second, are you really saving any money filling your most critical positions  by yourself?  Leaving a critical position vacant for 4 to 6 months – producing no results, inflicting barely qualified candidates on your understaffed hiring managers,  forcing your already understaffed HR team to spend days plowing through a numbing mile-high stack of bad resumes instead of doing productive work, creating ill will among hundreds of job seekers who did not even receive an acknowledgement of their job application … only to end up hiring some ”best of the worst” mediocre candidate.   Yeah, that sounds like the pinnacle of fiscal prudence right there.  Hey, just because your hiring problems are not visible on your profit and loss statements does not mean that poor hiring practices aren’t costing you a fortune.

So if “saving money” isn’t really the issue, what is the real problem with paying search fees?   (Don’t tell me about your budget.  Of course you can afford the fees – once a position has been vacant a little while, all the money you saved not paying a salary can easily pay the agency fee.  In our case, once the position is vacant for about a month you can afford our fee – and our searches typically complete in just about a month - see how nicely that all works out?  But I digress, now let’s get back to the point of this blog post.)

I think the real problem is not the amount of the fee, but rather the perceived value of the service relative to the price.  Many search firms just do not appear to be a good value to hiring mangers.   “You present me a guy who has been lying around in your database for 3 years and then you charge me 30% of annual salary for it?  What did it take you?  A couple of hours?  That just does not feel like a good deal!”   

It’s true.  That kind of recruiting fee does not feel like a very good deal.   It might get a great outcome, it might be the only way to find a top candidate, but it does not feel very good to the manager paying the fee.

Now let’s look at what our existing clients do:  They don’t beat their head against the wall trying things on their own month after month.   When they invite us to help them with a search, it’s almost invariably at the beginning of a search, not after they tried it on their own.  So what’s the difference?  The difference is that they know the value of all the services they will get, know what the caliber of candidates will be, know how much faster our hiring process will be and they know they will not feel like they overpaid.  

So let’s agree, it’s not about the money – it’s about your perception of value.  The next time you have a critical position to fill, would you pay a search fee if you were absolutely certain that you would end up with a significantly better person hired than you could possibly have attracted on your own?  What if you could get that great person hired far faster than you normally do, spend less time on the hiring process and never have to look at a stack of resumes?  Further, what if your new hire was guaranteed to get results for at least a year or you could replace them at no cost to you?   You’d probably feel pretty good about paying that search fee wouldn’t you?  

So if you are feeling uneasy about paying a search fee, maybe it’s not the fee.  Maybe you are just talking to the wrong search firms.

Great Recruiting is Useless …

Many people think the reason to engage a search firm is to get help with recruiting.  Well, maybe that approach works in big companies, but in small firms great recruiting is nearly useless by itself. 

Hiring smart internal recruiters, engaging search firms, and even turning the recruiting process over to a Recruitment Process Outsourcing firm is usually a really bad idea for small organizations.  Recruiting support is absolutely useless to you …  if it is not integrated within a cohesive hiring and performance management process.  (NOTE: By cohesive, I do not mean expensive).

Do you ever wonder why so many companies are frustrated and disappointed by contingency search firms?  It’s because most contingency search firms do not see it as their “place” to suggest how organizations should run their internal hiring process.  So contingent search firms focus their efforts on recruiting.  But great hiring involves a lot more than recruiting.  And you can’t improve the whole until all the parts work together:

• Simply writing up a typical job description is useless … unless you first understand what performance is expected from the new hire and what competencies are necessary to drive that performance.
• Developing an interesting and complete job description and ideal candidate profile is useless … unless you reconcile your target hiring profile with market realities.  (You might find you have champagne tastes on a beer budget and may need to revise your performance expectations to fit the budget).
• Simply posting a job description on job boards is useless … unless you employ additional strategies to recruit less active job seekers.  You can’t make an intelligent hiring decision selecting from only those people who happened to see your ad.  Conversely, you should not avoid ads, they can be a good way to diversify and expand your candidate pool.  If you want great hires, it’s important not to limit your candidate pool to people found using any single recruiting method (including employee referrals).
• Simply recruiting more candidates (or paying an agency to recruit) is useless  … unless your hiring managers know how to interview and how to distinguish top performers from other candidates.  Research shows that most hiring managers do not use the best strategies to select top candidates.
• Simply doing a better job of selecting resumes and interviewing candidates is useless … unless you structure your interview sequence to provide a great experience for the candidates.   You can do more harm than good when your disorganized interview sequence reveals internal organizational conflict and indecision.
• Simply making the occasional good hire is nearly useless  … unless your managers have confidence that your hiring process can reliably produce great people “on demand.”   Until the hiring process is considered reliable, managers will always be reluctant to manage poor performers.  (When managers are confident they can “trade up” then performance management becomes much more effective.)
• Improving your hiring process is a fine start, but you will not be able to keep improving your process … until you follow-up on every hire to ensure that they achieved the business results you expected.   After all, getting business results is the whole point of hiring isn’t it? 

A great hiring process is a “force multiplier” for a great performance management process, and vice versa – both processes support and multiply the effectiveness of the other.  

But recruiting?  Don’t even think about spending money on recruiting until the rest of your hiring process warrants the investment – you will just be pouring fine champagne in a dirty, leaky, plastic cup.

Here’s Why I Don’t Call You …

If you are not yet a client of Staffing Advisors, do you ever wonder why I don’t call you?  You obviously read this blog, maybe you read our newsletters, maybe you heard me speak somewhere or we met at a networking event, or maybe you just know someone who knows me. 

I could find your contact information (DUH, I’m a headhunter) and it’s likely that you would take my call if I called you, and yet I don’t.  It’s not that I don’t want to talk to you …  far from it.  

So why don’t I call you when it appears that everyone else in the search business calls you regularly?  And further, how exactly do we remain busy, without cold calling, while so many other staffing firms are struggling?  

Because the world changed.  People want communication, conversation and engagement on their terms, not cold calls.   So we’re here on your terms, and as you can see, we put all our energy into researching and sharing how to solve your staffing problems … not pestering you for work.

What’s probably not obvious is just how many people call us.  Friends, casual acquaintances, people who have never spoken to us, people who have no budget to engage our services this year, people who might never be in a position to engage us for a search … all kinds of people call.  All the time.

This blog has been a great way for me to start a conversation with you, without interrupting your day.  You can continue that conversation by posting a comment on this blog, connecting with me on Twitter, sending me an email, but really, most people just call me.  So what do people call me about?  Well last week it looked like this: 

• “We have someone retiring and need some help to rethink the position.” 
• “I need to prove a point to my executive team, can you send me some articles or research on … ?”
• “We’re too busy to even come up with a job description, but need help in our … department, can you help?” 
• “I’m trying to find good candidates for an open position and have no idea where to find them, any suggestions?” 
• “Can you look at this job ad and suggest where to post it?”
• “We have someone who is just not working out and we need to replace them, what should we do?”
• “We simply must develop a pipeline of candidates for this role, these hiring delays are costing us a fortune, and our managers are afraid to fire anyone because they are so hard to replace.”

Sometimes people engage us to solve the problem, sometimes we just have a nice conversation and share a few ideas.  No matter.  

People feel comfortable calling me because the cash register does not have to ring every time someone calls. The financial stuff always works out in the long run.  I’m an inquisitive guy and love hearing what’s going on in your world.   It’s all a fine education for me, so you are never wasting my time by calling, and I never expect anything in return.  (That’s how things work in social media, it’s a “pay it forward” mentality, full of small acts of kindness).

But just don’t expect me to call you.  I already know you are overworked, understaffed, doing more with less … you’re swamped.  I have no intention of being that rude guy who interrupts you.  So call me when you have a question, okay?  

Oh, and every time some other search firm cold calls you?  Please just consider that a gentle reminder to call me with your question, because I’m right here, researching your answer, not on the phone - interrupting other people.

Executive Search Hiring Mistakes

Hiring is expensive.  Mis-hires are even more expensive, as we recently discussed in the staggering cost of an executive mis-hire.   We all know hiring mistakes happen occasionally, but just exactly how often is acceptable?

In a recent interview with Financial Times, Kevin Kelly, the CEO of global executive search powerhouse Heidrick & Struggles, revealed the results of an internal study of  20,000 executive searches performed by his firm:

“We’ve found that 40 per cent of executives hired at the senior level are pushed out, fail or quit within 18 months”

Astonishing.   He’s describing a 40% failure rate by one of the most trusted and reputable brands in the executive search business.  (If that statistic is true, I’m glad they didn’t build my house or service the brakes on my car).

Mr. Kelly concluded from this research that more follow-up was called for.  The article noted that Heidrick ”now offers companies everything from initial training and early feedback for their new recruits to regular assessments of current executives and succession planning and staff development programs.”

I applaud Mr. Kelly’s candor - he had no obligation to share this internal information.  I presume he did so as part of his ongoing effort to spur much needed change and innovation within the executive search industry. 

Hey, I did not see the details of his research, so perhaps his conclusion is correct.  But a 40% failure rate?   I’m not sure what that says to you, but to me, it screams “perhaps we have a problem in our process.”   Surely some of those mis-hires could be avoided by using a better hiring process.  As quality guru W. Edwards Deming famously observed  ”If you can’t describe what you are doing as a process, you don’t know what you’re doing.”

So, if you want to outperform those elite search professionals and keep your executive hire failure rate below 40%, here are a few aspects of your hiring process you might want to improve: 

• The most common hiring mistakes small companies make
• How to talk candidly about the job during the interview
• How to write better jobs ads
• What to look for in resumes
• Who should interview candidates  
• How to best assess skills
• How to determine cultural fit 
• How to check references
• How to determine a fair salary
• How to make the job offer

How to Solve Your Recruiting Problems Long-Term (but it won’t be easy)

You pay to post jobs on a job board, but then you don’t like the candidate pool.  You pay more to search the resume databases of the job boards, but you still don’t find anyone you actually want to hire.  Search firms incessantly cold-call you,  offering to fill your jobs for a fee of 30% of annual salary, but you can’t afford that, and besides, you really wonder if they aren’t just sending you the same people you saw on the job boards.  So how do you break out of the vicious cycle?   How do you solve your recruiting problems long term and break fee of the cycle of job board disappointment?

You turn to Seth Godin.  His post on the reality of new media is so simple it’s revolutionary.  Admittedly, his post discusses marketing and never mentions recruiting, but when you read it you’ll see exactly what I mean:

• In marketing, we used to “rent” an audience from old media companies (TV networks).  In recruiting, the old media giants are not TV networks, but job boards like Monster.     And of course, when you “rent” an audience, you don’t have to treat it very well (just like a rental car).  Who cares what happens to the portion of the audience you were not interested in?  No sense even sending them a rejection letter, right?  You’ll never talk to them again…
• But in new media, you don’t have to rely on someone else’s disgruntled, beat up, poorly maintained rental audience.  You go direct.  You build your very own private communications channel and invite the good people there.  It’s yours, so you invest in them, lavish attention on them with a Facebook fan page,  Twitter account and maybe even a job seeker blog.  You show them what it’s like to work for you with videos.   (Check out  The Sodexo job seeker blog, RSM McGladrey on Youtube, and Comscore on Twitter) .
• As you invest and your audience grows, you eventually bypass the job boards entirely because you have attracted an audience of candidates on your own.  You started your own conversation.  You built your own community, and because you treated them right, they are eager to hear from you. 
• It’s cheap, but it’s not fast and it’s not easy.  It’s an investment, but the benefits are yours and yours alone.  And when you invest in building and maintaining a platform – your own media channel – you will have a powerful, sustainable competitive advantage over the “renters” who have to share someone else’s audience.  Your community of people wouldn’t dream of looking there for a job – they have you.   

One recent study showed that job seekers spend an average of 5 hours a week on social media sites each week.   Another study showed that internet users overall have tripled the percentage of time they spend on social network and blogging sites just since last year.  Clearly the time for action is right now.

So here’s the real question.  The tools exist, the audience is ready.  Do you want to solve your recruiting problems and gain the first mover advantage now by building your own channel?  Or do you want to keep renting and be shackled to that familiar recruiting problem for just a little while longer?