Almost 31% of practitioners in our recent Consultant Earnings Survey indicated that they employ a “researcher” or an “administrative assistant” in some capacity. Often this is just a secretary/receptionist. More frequently it is a sort of junior consultant. In fact, many firms start all people off as researchers as a prelude to a possible promotion to full-fledged consultants.Retained firms have almost always had a separate research function while contingency practitioners have just begun to learn the joys of delegating the grunt work involved with the search/placement effort.A whole sub-set of independent search research firms has sprung up over the past decade, most of which have been listed in the Executive Search Research Directory annually compiled and published by The Recruiting & Search Report (850) 235-3733. This directory lists freelance researchers located in the U.S. and Canada. And here’s the best news of all. Ken Cole, president of RSR and producer of this directory’s 10th annual printing will send this $100 directory to subscribers of The Fordyce Letter absolutely free. All you need to do is send him a $5 bill to cover postage. No checks, no money orders, no credit cards CASH ONLY. Send it to: The Recruiting & Search Report, PO Box 9433, Panama City Beach, FL 32417The biggest problem we hear about in-house researchers comes not from the search pros but from the researchers themselves. Typical is the complaint that the search pro will not let go of the mundane tasks. If they are always looking over their researcher’s shoulder, there is really no need for the researcher.The main reason for employing a researcher is to free you up for more profitable pursuits . . . those things that have a direct bearing on profit. Closing search deals is the name of the game and clients typically want to deal with the dealmaker, not some back-office researcher (no matter how well they do their job). So do candidates, but your involvement is rarely needed until the short list is developed.Some search pros directly involve the researcher in many of the phases of the search process. Whether you do depends upon the prowess, desire (and charisma) of the researcher. Some are strictly back-office types and want to stay that way. Others are search pros in training and can help the process as often as they can hinder it.Here’s how some practitioners use their research staff:
A good in-house researcher can be your right hand if you give them the latitude to do so but, unless you have a steady assignment flow, you may want to share a researcher with another (or two or three others).A good researcher will free you up to handle more assignments but if the additional business does not more than justify the cost of what you have to pay and support a good researcher ($35-50,000) you are doing something wrong or you have the wrong researcher.Frank McCarthy, in his epic booklet Sources, said that his firm’s use of research people increased their placement activity by as much as 30% per consultant with each researcher serving the needs of two consultants. Others report even more dramatic results.McCarthy wrote, “The search/placement business is an information-gathering business. The more information we have – about client companies, candidates, business trends, the marketplace, hiring practices, the projected growth in an area, and the competition – the better we will be able to make placements and serve our client companies.”Many devotees of the search research function have turned their internal capabilities into a research for profit center and have significantly increased their firm’s bottom line. More on this later in this article.Where to look for a researcher?Ken Cole suggests that the prime choice would be someone with a degree in Library Science or graduates performing research and legwork for graduate students, professors and instructors. Both Cole and McCarthy suggest newspaper advertising for possible prospects in addition to accessing your other networks. Colleges, graduate schools and continuing education programs are worth a shot. Their admissions or placement people can often suggest people. Even teacher’s unions can often suggest ex-teachers or substitutes who might work out.The advent of the Internet has opened up other avenues for researchers, especially part-timers who can just as easily surf the Web from home as from an office and many practitioners have several “surfers” out there working on different projects, usually on an hourly basis.Some selected traits of a successful researcher
One practitioner told us, “When my specialty area started to decline, my researcher investigated several new specialty areas and presented me with a detailed analysis of two possibilities. He had already made dozens of calls to the major players within each specialty area, analyzed the trends, determined what types of people would be in the highest demand, narrowed my “call list” to only those firms which used recruiters and pointed out the upsides and the downsides based upon the number of competitive recruiters already working the field. He compressed what would have been a month-long task for me into one which only took me a week to explore. As a result, I now work in a different growing niche and my production in this new area far surpasses that which I had in my old specialty.”How do you pay a researcher?This may vary depending upon whether your researchers are part-timers or full-time employees.Most part-timers are paid on an hourly basis. This ranges from $2 above minimum wage to $15-30 per hour depending upon their proficiency and experience. Freelancers’ average hourly billing rates are $86.30 according to the latest Executive Search Research Directory.Some firms also pay a bonus when any of their “sourced names” are placed or they have a demonstrable impact on the process. This is usually a set amount but, occasionally, represents a percentage of the fee collected even though this can get sticky and confusing.Full-timers are normally salaried employees. Depending upon experience and supervisory responsibilities, these people can range from $20-50,000. Often they are granted a bonus on a regular basis (quarterly, semi-annually or annually) usually on a discretionary basis.The four main methods as to who pays the researcher are:
NOTE: All of these plans are modifiable depending upon the level and extent of service provided by the researcher to the search pro.BUT HOW ABOUT SEARCH RESEARCH AS A PROFIT CENTERHave you ever wondered, when a company gives you a juicy assignment, if they really want to fill the job or are just using you to test the market or fine tune their compensation programs? It happens all the time, especially as companies attempt to reconfigure themselves.Do they really need to hire two people or is there a talent pool of people who have both the needed skills? If so, what might they have to pay such a person? Why not make up a job spec and dangle it in front of a few contingency recruiters?This Johnny Appleseed syndrome is one of the major reasons why recruiters are increasingly hesitant to take on business without some upfront, non-refundable engagement fee or partial retainer to diminish the risk that the company is on a fishing expedition.In addition to these window-shopping exercises, more companies have become do-it-yourselfers. There are dozens of convincing reasons why this is a bad idea but, just as many of us mistakenly try to fix our own leaky toilets before calling a plumber, untold time and dollars are wasted by in-house recruiters before realizing they need professional help.Search research guru Frank McCarthy whose stand-alone research activities grew so fast he had to spin them off to another company unit told us about just a few of the opportunities that have been seized by search firms willing to separate their research from their search activities:A company wanted to enter a different business about which it knew very little. The research effort was to identify the major players in the new business and supply an organizational chart of the top executives of each, including an educated estimate of compensation as well as an assessment of how to structure the sales and distribution for the new product line. The research showed the initial direction to be risky but uncovered a peripheral area to explore which led to a second assignment. Total cost of the research effort: $40,000Secondary benefit: the research showed one of the target companies to be woefully understaffed. They were approached for search business and two searches were the result.Another firm planned to promote someone from within but wanted to know who else might be available. Not wanting to pay a search fee, they asked for a quick “periscope” or “benchmark” search to affirm the decision they had made. Done on an hourly basis plus expenses, the research project took two weeks and brought in $8,000.Considering an acquisition, a company wanted an unbiased confidential assessment of the potential acquisition’s senior executive staff before preparing their letter of intent. Time was of the essence so they turned to their search firm’s research department for help. The report was prepared within five days. Cost: $10,000.Mr. McCarthy, whose firm specialized in minority/diversity search, was frequently asked to assess the potential availability of diversity candidates prior to a client wanting to move ahead with full-fledged search efforts. Once, he was asked to build a database on minority Ph.D. organic and polymer chemists.He has also occasionally suggested a two-phase approach, the first element to be a research project to assemble the candidates. Then after evaluating the candidate pool, the second phase was to recruit those of interest for a slightly discounted fee.Frequently, a company will begin with a request for research only, generally wanting a list of potential candidates they can contact on their own. As often as not, they find the follow-up task too daunting and turned the project into a full search effort.Often, companies will request nothing more than a report on competitors’ salary/bonus structures. Others may want a complete assessment of the talent market in Ethiopia.One practitioner, when faced with an employer who was adamantly opposed to ever paying search fees but who had a key opening to fill, convinced the employer to finance a $5,000 candidate identification project in place of one of the expensive advertisements he planned to place. After comparing the vast difference between the caliber of candidates provided by the researcher and those from the ad, the company made the decision to start utilizing search.A new research wrinkle has arisen because of the Internet. Companies may feel that there are some candidate pearls in the internet oyster bed, but have neither the time nor the expertise to efficiently access them. Several research firms have sprung up to accomplish this task for them. Normally the client gives the researcher a number of openings. The researcher surfs the growing number of candidate databases and submits the results to the client. Usually this is done on an hourly plus expense basis, but several firms have accepted assignments on an ongoing basis for a fixed amount.Also some highly specialized search firms, both retained and contingency, have asked these firms to continually surf these sites to make them aware of people within their particular niches.Presumably, if you have a captive in-house research group, you can keep them fairly busy with your own activities. But there are lull times in every practice and some have found the marketing of research to be so easy and profitable that they’ve beefed up their staffs just to service those outside client needs. It’s amazing how inventively they can be used to generate revenues apart from your traditional search business.What can you charge for research?As mentioned above, the Executive Search Research Directory would seem to indicate that $75-90 per hour plus expenses is the norm. Some charge more, others less. Still others will negotiate a project price or a fixed fee depending upon the complexity of the assignment. Some ask for an up-front engagement fee; others bill the client weekly.We know of several contingency firm research units who have worked for retained firms on selected assignments, especially where the retained firm was constrained by off-limits policies. We know of no researchers who will perform research where the payment for such services is contingent upon a hire being made. There have been, however, some sticky situations where the research client, after reviewing the end product of the research, has asked the research firm to handle the rest of the task, e.g., to get one of them hired.In fact, it is not uncommon for such an arrangement to be made known and available at the beginning of a research assignment. Sometimes the placement part of the effort is billed as a percentage of the hire-in salary, sometimes as a flat fee and often as just a continuation of the hourly billing arrangement.Just as often, the research client may ask the researcher to check references and submit a report on the results… usually done on an hourly basis.WHO OWNS THE RESEARCH?Another challenge is determining who owns the research, both for searchers and search researchers. Just as most search firms specialize, so do search researchers. That is one reason why search research within a particular specialty area becomes more profitable for the research firm as the database of relevant information increases with each assignment. A specialty researcher has a diminishing need to “re-invent the wheel” with each successive search which is why many can offer 48-hour turnaround. Having done several recent research assignments for a particular type of person, a “start from scratch” effort is no longer needed when a new assignment crops up.This unspoken fact is also true of search professionals and is one of the reasons frequently given by hirers for demanding lower fees. They seem to feel that specialty firms do less research for each assignment because of their accumulated database on that specialty. Maybe so, maybe not. Their ability to react quickly because of their accumulated database should bring a premium fee rather than a discount.We received a letter a few years ago from a subscriber who said that his retained client refused to pay the final installment unless he turned over all the files on people he had contacted during the search. He wrote, “This is a firm with talent problems and I expect to receive a number of additional assignments from them but their request makes me very uncomfortable because (1) many of the candidates requested anonymity because of no interest and (2) a few of them are strong potential candidates for follow-on assignments with this company. If I turn the paperwork over to them, they’ll have no need for me.”We advised that, unless there was a prior agreement to share this information, it was a bad idea. You contracted to solve a problem (which they did). How it is done is none of their business and disclosure of this information could be legally dangerous to all involved. Confidentiality works both ways.Addressing this subject, one practitioner told us, “When I buy a car, I don’t feel I have the right to the design drawings of the parts that make it run. When I ask someone the time, I don’t expect them to tell me how to build the watch. When I accept an assignment, I’m being paid to produce an acceptable candidate. How that process evolves is proprietary and confidential. I don’t feel it’s fair to those who didn’t become finalists or those who didn’t get the job to have their names and/or confidential information given to a client who probably just wants it out of curiosity. God knows where it might end up.”Another told us that he didn’t mind sharing the research but he makes it clear up-front that putting it all into transmittable form is an additional cost, usually several thousand dollars to locate, bring together, type and present information that often consists of scribbles on the back of a plane ticket folder or info on a tiny hotel memo pad. He said, “Two things which are ugly to watch being made are sausage and laws. I’ll add searches to that list. We’re paid for the process, but Budweiser doesn’t share recipes with Miller and I prefer to keep my recipes off the record as well.”