Frequently Asked Questions
The largest recruiting firms do maintain offices in major cities around the world. This can be an advantage if they can bring local knowledge to bear in finding good candidates. These candidates can then be interviewed in person by the local office before going to the expense of flying them to see the lead recruiter and client.
If an assignment demands a local executive be hired, then it does make sense to use a hometown recruiter. Consider local presence as a tie-breaker between otherwise comparable search firms.
Executive recruiting firms have their own New York-based professional association called the Association of Executive Search Consultants. The AESC was founded in 1959 and now has over 100 member firms including most of the largest in the business. Membership in the AESC is indicated in the listings. For a client, AESC membership is perhaps less important than whether a firm adheres to the professional standards set down in the association's Code of Ethics. This code is intended to assure clients of a confidential relationship with their recruiter as with a banker, lawyer or accountant.
Some individual recruiters are members of the International Association of Corporate and Professional Recruitment (IACPR). This association maintains entry requirements, and members must pledge to honor the group's ethical code.
- evaluation of the employment need
- candidate screening and reference checking
- candidate "short list" identification
Once prepared, a draft of the position description is submitted in writing to the client team for approval. It is imperative that the job description reflect a clear understanding and agreement between the client and search consultant before proceeding.
When the job description is finalized, the intensive research phase of the search commences. The search firm engages in extensive industry research and networking; existing sources are contacted, leads are vigorously pursued. If the client wishes, an internal search of the client company can be performed to identify company employees suitable for possible promotion.
Based on research well underway, the search firm contacts prospective candidates by telephone and begins screening interested and promising candidates. Personal interviews ensue in parallel with thorough reference checking activities.
Good recruiters regularly report their progress and, at some agreed-upon point, present a strong candidate pool to the client. Recruiters sometimes recommend the best candidate(s), though the client and recruiter often arrive at an initial selection of the most promising candidates. Client interviews are arranged with the best two or three prospects. The search firm prepares the client to meet the candidates and may or may not attend the interviews.
After the successful candidate has agreed to accept the position ¬ and when candidate and client have agreed to acceptable terms, the dynamic aspect of the search effort is complete. Most search firms "guarantee" their executive candidates for 60 days (contingency firms) to a year or more (retainer firms). The firm will replace such an executive should he or she leave the client company for any reason. Often these replacement searches are free or at a greatly reduced price. Though a sensitive topic, clients need to have a clear understanding of the search firm's replacement policy and all fees associated with such searches. The search firm stays in touch after the new hire comes on board to help smooth the transition and assure client satisfaction.
Making the right executive hire pays huge dividends for the client. The right choice can dramatically increase a company's value, and that value rises exponentially as you move up the management chain. So from the clients' perspective, retaining an expert to identify these candidates makes perfect sense. The fees associated with any particular search become almost incidental considering the ultimate payback.
- clients cancel the search, usually for budgetary reasons
- clients cannot agree internally on job descriptions or continually change the descriptions
- compensation for a specific position does not coincide with what the marketplace demands
Another point that should be covered is the so-called "Off-Limits" policy, under which the recruiter is barred from recruiting from the client for a specified period. Some clients want this spelled out very carefully, others do not give it much or any significance. Our point is that the issue should be addressed, so there are no subsequent surprises or disappointments.
It is the recruiter's responsibility to help the client define the terms of any search engagement. A good recruiter usually works around the aforementioned obstacles that can lead to failure. The best recruiters take the consultative approach with the client. Such objectivity means search pros may turn down business rather than start a hopeless engagement -- which in the end is a much better prospect for the client.
It may seem fundamentally more attractive to pay for success (contingency) rather than for the process (retainer). Culturally, and in terms of working methods, the two types are quite different. Most contingency firms tend to operate like brokerages, working quickly and uncovering lots of resumes. Retainer firms typically assemble a small slate of pre-screened short-list candidates to present to the client. The right choice depends on your particular assignment. Fees are comparable.
When to Focus on Contingency Firms:
- The job is entry or mid-level management, typically paying a salary of $75,000 or less.
- The job needs standardized, clearly-defined skills and experiences.
- Filling the post rapidly is more important than locating the "ideal" candidate.
- It would be valuable to see many resumes on a continuing basis.
- Multiple positions with the same skills need to be filled.
- It is important to fill the position at minimum cost.
- The post can be filled locally, to save time and relocation costs.
- There is a wide pool or universe of potential candidates.
- The position is senior or top management, typically paying a salary of $75,000 or more.
- The search will be a difficult, customized effort in a narrow universe.
- Locating the perfect candidate is more important than filling the post rapidly.
- It is important to maintain strict confidentiality about the search.
- The position is new, involving unfamiliar skills.
Sometimes clients change the job description substantially during an assignment so that the recruiter has to, in effect, begin a new search. It is common practice in these circumstances for client and recruiter to negotiate a partial payment on the previous work and begin a new fee agreement.
When the search fails to produce a candidate that the client is prepared to hire or when the executives offered the position turn it down, contingency firms walk away without compensation. In theory, retainer firms will be paid in full, since their agreement is independent of the outcome of the assignment. In practice, there should be some discussion of why the search failed. If the recruiter bears some responsibility, it is not uncommon for the search firm to receive partial payment only or to give the client a credit against future work.
Not every newly hired executive succeeds in his or her new position. When the executive is terminated or resigns for performance-related reasons within a year of being hired, most search firms will agree to find a replacement for zero or modest fees.
Clearly there are a number of ambiguous and potentially awkward situations that can and do occur regarding fees. While these problems cannot be predicted in advance, they can be mitigated if the client selects recruiters on the basis of building a close working partnership, not simply to carry out a hiring transaction.