Research indicates that 40% of hired senior executives either fail to achieve the desired results, quit or are pushed out of the organization within 18 months.[1] Moreover, the cost of a bad hire is estimated to be three times higher than the salary paid, and the key to safeguarding against a bad hire is: Executive Search.
What is an executive search firm?
The process of finding a candidate to fill senior-executive roles is significantly more rigorous, time-consuming, and research-heavy than hiring an entry-level or middle management position. Finding the right candidate for a strategic role can be challenging and finding the right executive search firm to help you is imperative. Executive search consulting firms are specialized management consultants retained on an exclusive basis by clients in an advisory capacity. An executive search consulting firm typically partners with a client to identify, assess and select the very best possible candidate.
A Comparison: Executive Search Firms vs. Contingent Recruiters
Executive search consulting firms operate with an exclusive, client-centered approach, handling a limited number of assignments simultaneously. They specialize in sourcing candidates with diverse backgrounds and have access to individuals not actively seeking new positions. These firms are deeply involved in every phase of the process, from search definition to candidate integration. Their compensation typically involves a consulting fee (retainer), aligning with their comprehensive advisory services. The hallmark of executive search consultants lies in their delivery of top-tier service, presenting a slate of highly qualified candidates, and fostering enduring relationships based on trust.
On the other hand, contingent recruiters prioritize placing candidates swiftly, often juggling multiple assignments concurrently. Should a specific assignment lack progress, contingent recruiters might opt to discontinue efforts due to the absence of binding commitments. Their services are rendered without upfront payment, and they earn their fees upon successful placements sourced from the resumes they present. These recruiters typically charge lower fees, reflecting their more limited scope of operations. Their strength lies in providing access to a wide pool of candidates ready for immediate transition and a rapid presentation of numerous resumes.
Approaches in Talent Acquisition
Executive search consultants initiate their process by deeply understanding their client's industry, business strategies, and specific requirements. They employ sophisticated methodologies, such as competency-based interviewing, comprehensive referencing, and thorough due diligence, often complemented by psychometric evaluations and broader assessments. Their goal is to curate a slate of exceptionally qualified candidates that align seamlessly with the client's culture while possessing the requisite background and experience for the given opportunity. Their success metric hinges on securing a lasting, impactful executive hire, emphasizing commitment and long-term impact.
In contrast, contingent recruiters rely on networks, advertising, and online databases to gather a large pool of candidate resumes that potentially match the client's criteria. Resumes are shared with the client, who assumes a more hands-on role in evaluating and reviewing candidates. Due to their payment model based on successful placements, contingent recruiters are incentivized to swiftly present numerous resumes to multiple clients.
Designated Assignments
Executive search consulting firms predominantly cater to senior-level executive positions and board director roles. Their expertise is sought for positions where identifying and persuading the best candidate proves challenging and where the potential impact of the hire, whether successful or not, is substantial. Conversely, contingent recruiters primarily handle mid-level roles or positions with a surplus of qualified candidates. They focus on candidates actively seeking new roles and positions of comparatively lower impact within the client's organization.
Candidate Perspective
Executive search consultants often engage with senior executives who may not actively seek new roles and handle their potential interest with utmost confidentiality. They guide these 'hidden' candidates in recognizing the benefits of transitioning for the right opportunity. On the other hand, contingent recruiters primarily tap into candidates within mid-management roles, most of whom are actively searching for new positions. Their approach is strongly sales-oriented, centered on engaging with numerous clients and candidates.
These distinctive approaches showcase the nuanced strategies employed by executive search firms and contingent recruiters, catering to different organizational needs and candidate landscapes within the dynamic realm of talent acquisition.
When should you use an Executive Search Firm?
Here is a summary of situations where your organization could benefit from partnering with an executive search firm:
Placing Top-Tier Executives: When seeking the best candidates for executive or board director roles, especially those individuals not actively pursuing new positions.
Mitigating Risks of Bad Hires: To reduce the risk associated with a poor executive hire, which can lead to significant financial losses, wasted hours, and a negative impact on company morale, performance, productivity, and brand image.
Conducting Confidential Searches: When conducting a search with a high degree of confidentiality is imperative for the organization.
Defining New Executive Positions: In scenarios where a company has created a new executive-level role and requires assistance in defining the responsibilities and constructing a comprehensive profile for the position.
Accessing Diverse Talent for Innovation: Seeking access to diverse and unconventional candidates capable of driving rapid change and fostering innovation within the organization.
Summary
Today, organizational leaders face multiple challenges: disruption, rapidly evolving technology, shifting economic forces, and fierce competition for the best talent in the world, and the need for leadership teams and boards in getting the right executive talent onboard is ever present.
The value that executive search consultants bring to leadership teams and boards stems from their profound industry or functional expertise, coupled with their extensive experience in tried-and-tested assessment, coaching, and onboarding processes. Their specialized expertise significantly enhances the probability of a successful hire while ensuring access to a top-tier pool of candidates known for their high quality. Therefore, partnering with an executive search firm is not just a one-time transaction—it’s a long-term relationship.
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Sources:
[1] Masters, B. (2009). Rise of a headhunter.