What’s Wrong With In-House Executive Search

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Sep 1, 2015

A few years back I participated in a discussion about an article on the corporate recruiter site, “Executive Hiring Gone Rogue” by Shanil Kaderali was  thoughtful, interesting, and spot on from the standpoint of the need for companies to create effective executive recruitment strategies.

With respect to some of the assertions made by the author regarding the placement’s lack of longevity, I need to disagree. (My opinion is based on over two decades of direct experience.) Additionally, two of the “commenters” got into a debate over the corporate dollars saved by hiring internal executive recruiters vs. third party executive recruiters, which began to devolve pretty quickly. I’d like to look at these items a bit more closely.

The external recruiter worked with the CEO in past and was an industry expert in retail, but not with this new industry.

Executives typically want to work with recruiters they have relationships with, as Shanil pointed out. After all, don’t we all want to do business with people we know, like, and have confidence in? I just think it’s just too easy to place blame on the CEO for hiring a CTO from a recruiter who isn’t familiar with the industry.

All too often, when talent doesn’t work out companies want to point the finger at the recruiter. I do want to make it clear that the recruiter may share some of the responsibility, but if the company doesn’t have a clear talent strategy and isn’t clear about the hiring requirements, it must bear the onus. That said, as a search professional I do NOT need to know an industry to successfully complete a search. I need to be able to ask the questions to determine the “what” and “why” of the company’s requirements. I’ll interview employees as necessary to help them define a hiring profile. If there are any components I’m unfamiliar with I’ll do the necessary research, as well as ask my client more questions so I get up to speed quickly.

Search – and Research – Is What We Do

Case in point: I did a search about 15 years ago for a company looking for a sales rep to sell a new technology to the hospitality industry. I had no experience recruiting for his industry. I found the client exactly what he was looking for in under two weeks. “How did you find him?” the shocked client asked me. I told him that this was what I did for a living, and as long as I was clear about what he was looking for, I’d be able to successfully complete the search.

A second example is something I’m currently working on. The company is a tier one VC-backed startup in a major metropolitan area. They are looking for a director of engineering, a job I don’t typically take on, but I accepted the search for a number of reasons:

  1. The management team and founders have a track record of success.
  2. They are in a great space with IP no one else has.
  3. They’ve only taken an A Series of funding and don’t anticipate needing a B Series.
  4. They have a half dozen paying customers in production and many more in active evaluations in less than a year.
  5. They are growing and will potentially put a great deal of money in my pocket.
  6. I’m confident I can complete the search.

The first candidate took me about two weeks to find and was exactly what they were looking for. I had the second within another week, and I still need to present one more. Candidate number two is working for a company no one would believe a candidate would consider leaving. My client is thrilled that I was able to locate and attract someone from a company that most people are beating down the doors for a chance to even interview with.

I could provide other evidence of successfully completed searches in industries and areas I’m unfamiliar with, as I’m sure many other successful recruiters would be able to do as well.

Little to no HR involvement in selecting the best outside recruiters for your company.

Having a talent strategy is imperative, as the article suggested; however, I’m not so sure HR really has the qualifications to select the best outside recruiters. The ones who do are the exception, not the rule. Sorry if any HR professionals reading this are heating up, but that’s what’s so.

Most HR people have little, if any, direct executive search experience. Are they really qualified to help make the choice? Asking HR to help decide if I’m the right executive search consultant would be like asking me to take on HR responsibilities. I’m a professional recruiter not a HR professional. I’ve been saying for over 15 years that HR and recruiting are NOT the same job and shouldn’t be treated as such.

Recruiting happens before the hire. HR happens after someone becomes an employee. This doesn’t mean there shouldn’t be some dotted line association, but these functions shouldn’t be joined at the hip.

If external recruiters know their market, have the portfolio of top candidates, it’s likely a good call to use them.

All great recruiters have top candidates in their portfolio, but they don’t have every top candidate; hence, the term headhunter. It is imperative that companies retain recruiters who know how to find candidates, get them to return their calls, and potentially be open to the possibility of meeting with their clients. Enough said.

YTD we have saved over $600k on traditional executive search fees.

This is great news posted by a commenter who is a SVP of global talent for a large company. He obviously planned his strategy carefully to sell his management on hiring an internal executive recruiter, but saving money isn’t enough. Here’s what we need to know:

  • Have those hires been successful?
  • Have you quantified what determines success?
  • Have you looked at the success of executive hires done by external recruiters vs. the internal executive recruiter and compared the ROI of each?

I’m not singling out this commenter, but referring to corporate talent leaders as a whole. I read and hear statements about how much money they saved, but not the actual ROI or success rate. For me, financial savings are meaningless without empirical evidence to back it up.

The Missing Link

In the story about the CTO in Shanil’s article, what was missing were any specifics or data to tell the reader why the hire only lasted two weeks. Without that information how can we possibly make a case for an effective solution? It’s too easy to place blame on the CEO without these details. For example, recruiters/recruiting leaders often tell us how many people they placed (or how many their teams placed) without EVER providing metrics on success. We should be reading something like, “Responsible for hiring 500 employees over a three year period, with an 80% success rate.”

What Is Success?

Defining the success of hires is dependent upon the company and how success is measured. Here is a basic example:

  • 80% of our hires will perform at or above expectations. (You must clearly and objectively define the expectations.)
  • Employees will remain at our company for a minimum of 2.5 years. (Is this all employees or only the people at/above expectation?)
  • Top talent (clearly define this) stays at the company for a minimum of four years.
  • When top talent leaves the company we will have a third party perform an “exit interview.” (I have found exiting employees far more willing to speak candidly with a third party.) I know this one doesn’t actually define success, but it will enable you to determine what can be done differently in the future.

Effective Talent Strategy

This is something I’ve been talking and writing about for years and it’s encouraging to see other people writing about this subject too. Building a talent strategy that is aligned with business strategy is paramount, yet most companies don’t want to invest the time to do this. Most companies (CEOs) say that talent is of utmost important, yet never put their money where their mouths are.

Without the “right” talent strategy companies are doomed to mediocrity and will never truly reach their potential, financial or otherwise.

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