In times of change, a crucial executive-level appointment can mean the difference between success and catastrophe. Last time, your company may have kept this critical search in-house, leveraged its own network or hired a contingency recruiter. But, mistakes were made, and you now know that a bad hire to a crucial position can have detrimental consequences that can take much time and expense to recover from.
That’s why companies often choose a retained executive search firm for their executive-level appointments, according to Mickey Matthews, international chairman of Stanton Chase and managing director of the firm’s Baltimore/Washington, D.C. office. “In contrast to a contingency recruitment, where an employment agency is hired to collect CVs and send applicants to the client company, an executive search firm is retained in an advisory capacity and is engaged in all aspects of the talent acquisition and hiring process, from defining the search through candidate onboarding and integration,” he said.
At times, the advantages of a retained executive search outweigh all other options, said Mr. Matthews. Here are the foremost reasons he offered as to why a company retains an executive search firm to help do the groundwork required for game-changing hires at the senior level:
1. It is critical to hire not just a qualified person, but the most qualified person.
Only a retained executive search firm will locate and persuade executives who are not actively looking for a new job, delivering only candidates with the right mix of experience, skills and knowledge, along with the requisite cultural fit, said Mr. Matthews. A contingency firm presents only candidates who are likely in their database or who have responded to an ad, with little chance of finding the best, most successful executives.
Mickey Matthews’ experience at Stanton Chase has been generalist in scope, with a focus in working cross-functionally for global clients in the industrial, professional services and consumer products sectors primarily. Over the last several years, he has executed numerous senior management assignments in general management, business development, operations and finance, for example, for numerous clients —including companies such as ADM, Aramark, Axalta, Tyco, Deloitte Touche, Kohler, DuPont and others.
2. You are seeking a candidate with a rare mix of skills.
In this case, very few people are likely to be qualified for the position, a needle in the haystack. “A retained executive search firm directly approaches potential senior candidates who are currently employed and successful at target companies,” said Mr. Matthews. “As contingency firms usually represent only candidates who are actively looking, the one person with this rare mix of skills is likely not to found be among them.”
3. When discretion is an issue.
An executive hiring decision is sensitive on many levels. It is prudent to keep this information from the client’s competition, while being careful not to alienate customers and shareholders. Furthermore, the executive to be replaced should not feel prematurely concerned. “While contingency firms often talk to a large number of people about the search and rely on advertising the position online or in print media, retained search firms talk only to carefully selected people and reveal the client’s identity at the latest possible stage in the process,” said Mr. Matthews. “This confidentiality is appreciated by candidates and clients alike.”
4. You are searching for an executive position that has just been created.
When an executive search falls outside your area of expertise, it is important to plug the knowledge gap with a leader rich in domain know-how. “A retained search consultant will invest significant time and effort to get to know your organization, its culture, the responsibilities and requirements of the position, all before initiating the search,” said Mr. Matthews. “They work with you on the needed skill set and advise on the right candidate profile to ensure the long-term success of the new hire.”
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5. You are looking to broaden the senior leadership team’s diversity.
Not all backgrounds are well-represented at the senior executive levels. An executive search firm can help level the playing field by conducting proprietary research to ensure equal opportunity. “The available pool of candidates seeking a given position is often rather homogeneous,” said Mr. Matthews. “A retained search consultant will work hard to broaden that pool by identifying, approaching and persuading candidates who are normally gainfully employed, but fit the required skills and bring the desired diversity to your leadership team.”
6. You do not have the time or resources to take on an executive search yourself.
If you already have too much to do and too little time, taking on an executive search can quickly seem like its own full-time job. A contingency firm leaves much of the recruiting process entirely to the HR department or general management of the client, while a retained search firm engages in the entire due diligence process. “Beyond identifying and presentation of candidates, a retained firm takes great care in assessing the candidates, often through highly sophisticated methodologies, including referencing, psychometric testing and broader assessments,” said Mr. Matthews. “They support the integration and on-boarding of the candidate, and work to ensure the long-term success of the hire. All this greatly reduces the time required for you and your team’s commitment in this process allowing you to focus on more strategic initiatives.”
7. You want to give your company a strategic advantage through better hires.
Retained search firms are in the business of delivering top performers — the 20 percent that are so effective they are responsible for 80 percent of the results. Retained executive search consulting firms operate on an exclusive, client-centered basis and work only on a limited number of assignments at one time often with deep expertise in a client’s industry. They are therefore best positioned to help clients trade up to a top performer who drives results.
“A senior executive or vacant spot on the board is no easy position to fill,” said Mr. Matthews. “The search must be wide and pinpointed at the same time, targeted and discreet. The ideal candidate is most likely not even looking for a new job and is hesitant to speak to anyone they do not know.”
Search Consultants Weigh In
“The reason a company hires a retained firm vs a contingent firm is because they are committed to finding the best possible leader to join their team, amongst a pool of qualified candidates,” said Helen Lao, founder and president of ClearPath Solutions. “At ClearPath, our clients do not hire us to search for candidates. They hire us to deliver the perfect match.”
As a retained firm, she added, “we are an extension of their brand. Executives do not want multiple calls from various sources about the same role. And finding the perfect match requires two priceless resources: a tremendous amount of energy and a vast pool of potential candidates. Generally, growth companies have neither of these at their access because they are laser-focused on developing their products, fine-tuning their offerings, and serving their customers,” Ms. Lao said. “By hiring a search firm, or in our case, a “match” firm, brands commit to finding the perfect leader, not just the most accessible one.”
“A company retains a search firm to consultatively lead them through a process that ensures the pursuit, attraction and assessment of the very best culturally aligned talent that can successfully execute (or define) a vision for its respective business,” said Dave Sobocinski, partner at CarterBaldwin Executive Search. “By retaining a firm, it also demonstrates a commitment to a partnership whose goals are mutually aligned. With this commitment, a firm can comprehensively identify the relevant talent pools – direct competitors, indirect competitors, industries that have similar market considerations, operational nuances, etc., going well beyond any one individual’s or organization’s network.”
As an external partner, a search firm is able to engage a broader talent market that is more inclined to share professional and personal information, than it would necessarily share with a company acting on its own behalf,” Mr. Sobocinski said. “This information is in many cases what determines whether or not a candidate will even meet with a client. A search firm is able to guide its client and the prospective candidates to and through a personal process that leads to a positive outcome for all. Ultimately, it is through this collaborative effort that a company can confidently make the best hiring decision and investment for their business.”
“Companies retain executive search firms simply because the ‘cost’ of getting a hiring solution wrong outweighs the ‘price’ and upfront investment required by a premium firm, said Simon Kent, principal at Wilton & Bain NYC. “As we move up the organizational chart, the negative consequences of a poor or delayed hire become exponentially greater. For this reason, a firm with an established track-record will usually be the preferred solution for the most critical and senior hiring requirements. Retainer fees are integral to the operating models of these firms which often employ large research teams.”
“Researchers conduct industry analysis, candidate identification and referencing which are essential towards ensuring a great hire,” Mr. Kent said. “Since researchers are not a front office resource, they increase operational running costs for a search firm. Retainers and staggered fee installments improve forecasting and cash-flow, making it possible to employ the scale and expertise of team needed to get a senior hiring solution right; on time, every time.”
“If you want to catch a trophy fish, you hire a guide,” said Walter Baker, managing partner and founder at PitcairnPartners. “The same holds true with finding tier one executive talent. Nobody knows the employment marketplace better than professional recruiters. They serve as talent guides with the ability to identify, engage and attract game changing talent: those executives typically not looking for a change,” he said. “Retained search professionals have the experience and capability to access hidden talent sources that will never be accessed by LinkedIn postings, applicant databases, or other familiar sources.”
“A crucial reason to hire a retained search consultant is his/her ability to provide unbiased third-party input,” Mr. Baker added. “The consultant must provide clients with key data points as to what talent is in the market, as well as how to attract them and integrate them into their organizations. In short, the stock and trade of a retained executive search consultant is his/her integrity and reputation for finding better candidates than the organization could have found on its own.”
“Project based rolling retainers are a good option when a firm is looking to make multiple hires or decides to engage and build a new line of business,” said John Ricco, founding partner at Atlantic Group.” Retained searches are well suited for hiring done with a strategic initiative or very specific senior needs. To add some more clarity retained searches usually entail a streamlined process in which the client defines specific targets which need to be met by the search firm. The search firm then engages with the market in a unified voice for the client’s needs – again this is more evident with C-suite positions.”
“From our experience, there are two instances when a company almost certainly must use an executive search partner,” said Rick Slayton, managing partner and CEO of Slayton Search Partners. “High level confidential search, in cases where there is an executive already in place or a major strategic shift in the business is about to take place, a trusted executive search partner should be used. This is even more important if the client is publicly-traded and the executive is a named executive officer,” he said.
“Market moving searches should always be done by an executive search firm,” Mr. Slayton continued. “We recently completed a confidential CFO search for a large, publicly-traded company. If news of the search had gotten out publicly, it would have had large ramifications for the stock price. In other cases, the client is entering a new line of business or the search is in a function where there is no internal experience. Leveraging a search firm with deep experience in a particular industry or function can help educate the executive team while also ensuring a high-caliber hire.”
“Securing new talent is an investment, said Simon Wan, CEO of Cornerstone International Group. “It is only expensive when you don’t get it right! Either retained or not retained, the total cost to client is the same. The only difference is that the senior consultants at retained search firms like Cornerstone takes the role as trusted advisors seriously. We do not compromise on the rigor of our work or the forthrightness of our advice and guidance to our clients and stakeholders; which is so critical.”
“Contingency or retained? On the surface, it appears to be simply an issue of how the recruiter gets paid, he added. “A contingency recruiter earns a fee only when the organization hires someone. A retained search consultant, on the other hand, is paid in advance to conduct a search that usually results in a hiring. But that difference, when you think about it, dictates two completely different methods of searching for the person you need — and usually ends in two quite different result scenarios.”
“The retained search firm is being paid to conduct the research,” Mr. Wan continued. “They therefore undertake a much more exhaustive process. The contingency search firm is paid only when someone gets hired. Their search process is skewed to producing results rapidly since the more time spent the less profitable the mandate. The retained search recruiter on the other hand maintains exhaustive databases of candidates, cultivates contact in sectors in which they work frequently so they know who might be restless, and pre-selects the candidates carefully using advanced assessments for suitability and job fit. You only see the finalists.”
“While retained search may be perceived as expensive, the key is that retained search firms are looking for the most qualified candidate, said Tomilee Tilley Gill, founder and president of firm Executives Unlimited. “On average, a retained placement ends up being a better fit in their position and ultimately stays in the role longer than with any other type of recruiting scenario. Companies will most often request a retained search when they are looking to fill an executive level position, and sometimes when all other less expensive — and ineffective — search options have been exhausted.”
“It is also important,” she added, “to note that 75 percent of professionals are called passive candidates — those that may be open to switching jobs but are not actively looking. Only about 25 percent of the total workforce is actively looking for a new career opportunity. Most forms of recruiting are searching that smaller pool of candidates, while retained search firms aggressively seek out the ideal candidate for the role that must be filled, and utilize their skills, abilities, and methodologies to identify candidates in the much larger 75 percent passive pool who may not be looking but are open.”
“When partnering with the right executive search firm, a company will experience an increased return on investment, and a newly placed executive will begin performing on or above expectations in a short amount of time,” said Ms. Tilley Gill. Executives Unlimited has successfully researched and placed executive level contacts for the past 19 years. More than 90 percent of the executives placed over the past five years remain in their position or have been promoted.
“A company retains an executive search firm to ensure the most independent, objective, discreet and thorough process has been conducted to identify and attract the most superior passive talent for a C-suite role,” said Craig Lapham, chief executive officer at The Lapham Group. “No other method of search, whether in-house or contingent, can completely satisfy each of the aforementioned criteria as effectively as a properly conducted retained search. Companies understand this fact and recognize the investment in a retained search as cost effective given the meaningful top/bottom line impact of a senior executive on the organization’s success.”
“We view our role as executive search ‘partner,’ said Ron Schiller, founding partner and senior consultant at Aspen Leadership Group. “Clients select us because we are capable of extending their human resource capacity in multiple ways. In some cases, clients need us to handle all aspects of defining a role, identifying and recruiting candidates, and providing onboarding and executive coaching to ensure a successful launch in the position. In other cases, an internal talent manager or hiring manager can and would prefer to provide some of these services, and Aspen Leadership Group partners with those internal professionals to add industry expertise and expand reach. In each search, we customize the partnership to the client’s needs.”
“In the case of Aspen Leadership Group,” he added, “our depth of experience in the field of philanthropy – hundreds of years across our team – and our daily engagement with the field, position us to enhance the recruiting capacity of just about any client seeking fundraising talent, even when in-house recruiters are also involved. We have hundreds of conversations each week with leaders and emerging leaders in the field, going well beyond what any in-house talent manager or hiring manager can do, given their other responsibilities.”
“Retained search is the right way to go for C-suite positions and critical or unique leadership positions,” said Ted Pryor, managing director at Greenwich Harbor Partners. “A retained search firm is a full-time partner with their client to thoroughly canvas the marketplace to guide their client to the best possible candidates, especially if the solution is not obvious.”
“When we are retained, we become maniacally focused on finding the best possible candidate, regardless of how much time it takes, and 90 percent of the time the finalist is not in the market at the time we approach them,” he said. “A contingency recruiter must be much more efficient with their time and the best ones are hyper focused on repeat hires and build a book of available candidates for very specific functions to be able to show a client on short notice. This is a very different process and serves a very different market.”
“I am a big believer in simple and direct messaging; a search is expert project management,” said Todd Bennett, CEO at R. Todd Bennett Retained Executive Search. “In all cases, clients hire consultants because they are missing one or two critical project management elements: time or expertise. The more effective and efficient you are, the higher the degree of success there will be.”
“When we pitch to clients the value of a retained search vs. a contingent or internal search, we drive home the following three elements… Time: Retained search professionals are focused full time on their client’s critical and specific hire, often times with multiple resources that far exceed anything a client could dedicate. Expertise: Retained search professionals have the benefit of being involved with hundreds of complex searches. Value: The difference in expense between a contingent firm and retained firm is generally five percent. We believe it benefits clients to have a sole paid expert focused on their specific need to locate the best candidate, a candidate who is generally not looking,” Mr. Bennett said. “This versus a firm who focuses on placing known market candidates as quickly as possible, with as little research as possible for virtually the same fee.”
“The objective is, of course, to get the best candidate for the role,” said Mannie Gill, founding partner at Renovata & Company. “Retained search contributes to senior talent acquisition in two fundamental ways: depth and process. Depth comes from exhaustive research of the market by sector experts with deep and current knowledge of the talent pool and rich competitor intelligence. This also means your retained partner will hit the ground running with no learning curve.”
“Meanwhile,” he added, “a professional process meets the needs of world-class talent and the sensitivities of search at the highest levels through best practice. That means a refined methodology from research to offer. It also means operational excellence behind the scenes, whether that’s data security or making complex travel arrangements for interviews.”
“From my standpoint, clients only rely on retained searches since this method demonstrates transparency, where candidates are validated not only for their technical skills, but also for their soft skills through the monitoring of assessments,” said Patrick Van Lijsebetten, CEO of Rialto Executive Search. “Retained search is based on confidence, and it is not a process of sending CV’s. It is an interactive process between the client, the candidate and the consultant. The consultants do invest in the appropriate processes and resources.”
“Retained search targets long-term commitment of selected candidates,” Mr. Van Lijsebetten said. “It guarantees support to the candidate during the recruitment process and afterwards during the integration period. It also guarantees that although difficulties might arise, the consultant implements extra resources and continues to pursue the search while discussing options with the clients. Retained search provides for a persistence rationale versus the speed process in contingency recruitment processes.”
“Executive search provides the client with an expert analysis of the executive market in a way that advertised recruitment does not achieve,” said Alison Gaines, CEO of Gerard Daniels. “Specifically, the search consultant will have a broad pool of relationships with candidates who will not respond to an advertisement, but may be willing to have confidential conversations with a trusted third party. And the search consultant can use their research capability to find new candidate pools, especially for specialized roles.”
“Because of their constant engagement with the market the search consultant can also give the client advice on the attractiveness of the roles and compensation offer.”
“As a diversity-inclusion-equity focused search firm, we’d typically jump-in on point 5 but, this time, will advocate for a greater emphasis on the value a search firm brings in relation to cultural fit,” said Tory Clarke, co-founder and partner at Bridge Partners. “The article references this halfway through point 1, ‘The most qualified person’ but, assuming the functional and technical skills as a given, I would say that understanding and assessing cultural fit is probably the greatest investment a search firm can make to ensure the long-term success of a candidate, and would therefore argue is critical when considering the value/benefit of using a retained search firm. After all, the definition of a successful hire reaches beyond the mere acceptance of an offer!”
“By working with a retained search firm,” she added, “a client should be engaging a true partner who commits to the task of finding the perfect hire beyond a business transaction – the search firm should learn who you are, who your team is, and what ‘works’ in your organization. At Bridge Partners, we believe that investing time with a client at the outset and deep-diving into their culture has enabled us to maintain our 100% success rate as well as supporting the success of our candidates – and it has led to a high level of repeat business. It makes sense that, when we have done a good job understanding the “cultural fit” with the first search, it becomes mutually beneficial for a client to retain us again (and again!).”
“There is arguably no more important driver of success for a company than their leadership team,” said Deborah Markus, managing director at Ridgeway Partners. “Leadership drives impact – across a company’s culture and its bottom line. When an organization adds or changes a leadership lever, the best option is often to partner with an executive search firm. Companies that truly understand the impact of leadership recognize the value of executive search to do two things: First, drive the talent outcomes they need to achieve in the short term, and second, cement the talent-driven business impact they need to achieve in the long term.”
“Experienced executive search professionals have deep industry knowledge and long standing relationships across industries,” said Ms. Markus. “They work diligently to ensure that top talent is identified, recruited and successfully integrated into the organization. They also build a long-term versus a transactional relationship with their clients because they work so closely with them and they understand both their immediate and longer-term goals. This deep level of insight allows executive recruiters to think creatively and to prioritize the qualifications needed for a new or challenging position. They will identify candidates with the requisite skill set, but moreover, they will also hone in on cultural fit, and provide access to talent that would otherwise not be ‘findable’ or available.”
“Retained executive search firms have a broad reach and deep networks of quality industry talent,” said Dr. Kim Villeneuve, CEO of Centerstone Executive Search & Consulting. “A dedicated recruiter will quickly and skillfully assess candidates’ skills and qualifications, while cultivating the candidate-client relationship through the entire process. That means they can close searches faster. Moving with both speed and precision, the advantage in retaining a firm is faster time to hire, which results in faster time to productivity.”
“We’re in a tight labor market, probably the tightest ever we’ve seen for top talent,” said Nick Cromydas, CEO of Hunt Club. “That means the best talent is passive and they aren’t out there looking for their next move. Using a firm can help you leverage the best relationships and interact with the talent that you want to talk to. All channels today are incredibly saturated. What I mean by that is five, six, seven years ago, if you reached out to someone to introduce an opportunity, the probability of them responding to an email or a LinkedIn message would be high.”
“In today’s world,” he added, “with all the marketing messages making their way into inboxes, direct messages and mobile — there’s so much noise that if you don’t use a real relationship, one that has trust, it’s nearly impossible to get somebody to actually listen to what you’re working on and what the opportunity might be.”
“The foremost reason Slone Partners is retained for key executive & leadership searches is because of the market knowledge we bring relative to industry talent,” said Leslie Loveless, CEO of Slone Partners. “We provide counsel around the competitive landscape, and in such a tight labor market, how to navigate ‘the war on talent’ and win. With the best candidates, we help our client partners understand what’s individually important to them, then advise clients on what they need to do to attract these professionals and secure acceptance. Equally important, we relieve the anxiety clients feel about filling a vacant position by finding the person they need, regardless of how unique the profile.”
“Clients are seeking search partners that take ownership of the process while always effectively communicating the status of a search so that clients are confident in forward progression leading to success,” said Ms. Loveless. “Slone Partners develops a complete profile that includes a thorough assessment of skills in addition to cultural fit and motivations. We look beyond the resume and delve deeper to determine if the candidate can do the role, will love the position, and will fit into the company. Everything must align.”
“There are a slew of variables that drive the selection of a retained firm, as well as multiple advantages to having a retained partner versus a contingent dynamic,” said Michael Bitar, partner & managing director at Protis Global. “Some of the most common and biggest factors we find are urgency, a business critical position need, confidentiality, employer branding and innovation. Partnering with the right retained firm provides you an accountability partner.”
“They will be invested and ensure that they are finding the best talent in the marketplace not just the talent that fits a set of qualifications, often times retained firms are working with passive talent versus active talent,” he added. “The accountability on both sides allows for a higher degree of urgency and overall results, when having a business critical role arise being able to address and handle it swiftly is incredibly valuable to an organization.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media. Original post here.