July 13, 2021

Executive Search: Where Traditional Executive Search Firms Fall Short

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Executive Search firms often rely on traditional approaches that are not always best for their clients. Fee percentages are high and often include extra “admin” fees. Full payments are locked in regardless of search success. The Practice leader who sells the search often hands search execution off to focus on the next client pitch. And staff who may not have the requisite domain experience are left executing the search.

In this video, Hirewell CEO Matt Massucci and Lead Recruiter Barclay Burns discuss how Hirewell offers a more client-friendly approach to Executive and Retained Search.

Episode Transcript

Hi, I’m Matt. I’m the founder and CEO Hirewell. I’m excited to be joined here by Barclay Burns, one of the leaders of our managed recruiting practice. Barclay, why don’t you tell us a little about yourself?

 

Yeah, I’ve been doing executive search for 20 plus years, in boutique as well larger, more traditional executive search firms. I’ve been with Hirewell for just under a year now and kind of feel like it’s a great match for kind of all that I’ve done in my career as a search consultant. Yeah, absolutely.

 

 Hirewell has been in business 20 years now. We’ve done executive search for a good amount of that, that falls into our managed recruiting practice and we’ve been able to help companies with the C level and VP level roles, both with startups and fortune 500 companies.

 

But I think for people who aren’t as familiar with the concept, talk a little bit about executive search and what does that mean? What all is involved? How’s it structured? I mean, I guess there’s different concepts here. I think some people are familiar with contingent versus retained. And executive search is almost all exclusively or retained search, what defines executive quite level, that could be C suite, fortune 500 companies, board searches of those, all the way down to kind of mid-level “executives”, maybe a director, a VP.

 

And so that can be a wide range of experience and compensation ranges for those types of candidates. Sure.  In Hirewell, where we focus is it tends to be kind of in the base salary of 150 to say 300K annual base, obviously. Short-term long-term incentive on top of that.

 

 You mentioned retain, like, what does that mean and how are our fees typically structured by companies? Yeah. So in the past, in my previous employers, I’ve worked on retained searches at the executive search that are very, very structured. The fees can be upwards of 33% of total comp that’s base, bonuses, everything.

 

And it’s usually structured such that it’s paid out the one-third upfront and then one third after a month at one third after that month, regardless of the outcome of the search. What I found to be very helpful at Hirewell is some flexibility around how we structure that and in kind of building in maybe a lower percentage, maybe just base salary, and then just one thirds upfront to kind of get the search started maybe even less.

 

And then the rest is what we call a success fee and only do when we’re actually successfully complete the search. But I think kind of builds in a little bit of a sharing of the risk, a little bit more of a closer partnership and kind of just intertwines kind of what we’re doing with what the client needs to be done in terms of their hiring needs.

 

Sure. So you’re talking one third of a person’s total compensation is often in the price range for executive search. So easily, fees automatically get started, 80 to a 100k for just about any role that any executive search firms going to take on it.

 

Those are some big numbers.  Who’s typically involved when it’s a larger firm who does what, as soon as there’s a partner who’s heavily involved in the search or kind of who plays what role? In my experience at the larger traditional executive search firms, there’s a partner or a practice leader or whatever you want to say,

 

sometimes they’re a veteran of their respective industries. They maybe have a large Rolodex and it’s really more of a sales position, kind of a business development leader role.  I guess they execute the search at a high level but the actual nuts and bolts on the ground recruiting for each of the search is usually handed off to a more junior level associate.

 

Sometimes these are folks right out of college. Sometimes they’ve had a number of years of experience under their belt, but they’re usually the ones that are out actually contacting prospects and really running the search on a day-to-day basis. That can create a disconnect, where the quote “salesmen” of the search is maybe closes the deal and the search starts, but then that person moves on to other prospecting and is not really involved on a day to day of the search. That can lead to some problems with the search going sideways without that direct interaction.

 

Yeah. So company thinks they’re either kind of buying the big name of a large organization, as well as kind of his partner who will post the 30 years of industry experience but in fact, the bulk of the work is done by someone that may have a couple of years out of school and someone essentially tend to recruit people know twice their age, as you said, that can be a challenging scenario.

 

What are some of the other challenges of traditional executive search? Again, I’ve been doing this a long time, 25 plus years. Not quite that long into it both are veterans of this space. I think about it, you know, I got any recruiting before LinkedIn was a thing. It’s ultimately the largest Rolodex in the world and it’s all essentially public information.

 

 So it seems like paying for a role of X might be a bit of an antiquated notion. What are some other challenges with anything of the traditional executive search model? Yeah, I think that you’re right about that. The idea of hiring somebody who’s got a Rolodex and is able to fill a position just from their own personal network and the world is not like that anymore.

 

And I think that perhaps at a lower level positions or they’re kind of a commodity and maybe it’s easier just to go after a very specific type of profile and match up a resume with a job description. And once you get to a certain level of experience each search has just its own fingerprint

 

that is just unique enough that I think it’s very difficult to rely upon your personal network. Now I mean, that is important. That is valuable. And that you might happen to just get luck out and know somebody who’s a perfect fit or getting the word out to your network gets referrals going.

 

And that is definitely valuable.  More often than not, you really have to rely upon research whether it’s LinkedIn or other database or other, you know, our own internal database that’s been built up over 20 years, which has its own value. So usually the person that fills the role, it can come from your personal network but not always.

 

And to think you’re going to pay a higher fee for somebody who’s going to come in and just kind of fill the role very quickly, with their own personal network- I don’t think that’s a smart move at this point. Yeah. And I think you touched on that last point is another key one that quickly, I think that’s sort of one of the antiquated notions of the traditional sort of rigid structure approach of retained executive search, that it can take six months to fill a role. I mean, that’s perfectly fine if it’s the CEO of  Coke or something where, you need to really make sure you’re doing your due diligence and it can take a while to find the right person had them come available.

 

But for a lot of roles, especially kind of with the speed with which the markets- the velocity  of hiring across the board, whether it be mid level roles or executive, a lot of companies don’t have that time. And so they really need to have a top person identified.

 

in 45, 60 days.  Can you talk a little about that? Yeah. Yeah. I agree. I mean, I think a lot of the very traditional protocol and approach to search that has been developed over the years, again that very well may be relevant and appropriate for very high fortune 100 C-suite types of searches that really do require a lot of due diligence that the board requires before they can make that kind of hiring decision.

 

The problem I think is when you try to apply that methodology to these mid range positions where yes, it needs to be thorough. The hiring company needs to feel comfortable that they’ve really vetted a lot of candidates and seeing what the market has to offer, but to your point, speed and efficiency is as a premium and especially now. But really, I mean I know the market’s really hot right now, but even just outside of that I think that taking a rigid, structured approach

 

at the expense of timeliness and urgency and efficiency, I think that that could lead it to a search going down the wrong path.  Especially since, hiring managers have a million other things on their plate as well. Maybe they don’t have time to have weekly elaborate meetings with their search consultants about what’s going on and maybe they just want to see what the market has, see who we recommend and kind of move from there. 

 

Yeah,  one other thing we’ve come across where- you know quite a bit,  there’s the old adage in consulting or technology. Like you don’t get fired for choosing IBM. And if there’s the biggest name out there and if you’re going to make a big decision, you’d rather die on the hill of the biggest name out there.

 

And I think we see a lot of the same thing in executive search, right? Where companies sort of gravitate towards the same familiar names and they ended up paying twice as much for really no added benefits. I think it’s kind of a funny cliche, not to rag on the folks at IBM but like the fact that they’re kind of a little bit of an antiquated name themselves.

 

And so the cliche from 10, 15 years ago now sort of rings true with them where most companies aren’t good with them, if they want to be cutting edge and then sort of nimble and agile with the market. I think we’re starting to see the same thing in the search space.

 

And that’s what has us excited, what we’ve been able to accomplish and sort of being able to see what the last couple of years and how we’ve been able to help companies. We’re able to do it quicker, nimbler and at a better price point. Yeah, no, I agree. I mean, I can say that as a relatively new member of the Hirewell team, but who’s been in search for 20, 22 years or however long it’s been.  It’s across the board.

 

There’s just a lot of progressive thought about how to approach searches and especially in the managed search space and just what is best for our clients? What do they really need? And how can we customize a solution based on what the client needs? Because every search is not the same. If you  try to apply one methodology across the board

 

it’s going to frustrate prospective clients and I don’t think the results will be as strong. Again, as a new person, I’m noticing that on a day-to-day basis, across Hirewell, and is that been a conscious choice on your part to really kind of rethink how we can approach managed and structured searches?

 

Yeah. We’ve been doing this for a while but over the last probably five to seven years where we’ve seen some pretty tremendous strides.  We pride ourselves in these flexible solutions where companies will retain us or engage us for a block of hires.

 

That could be one C-level role or VP but oftentimes it’s that role, plus the 10 or 15 roles that are going to be following that person on, right. Oftentimes when we bring on a new executive, it’s driven by growth or an inflection point in the organization, and it’s not just this one hire need to do.

 

You’re going to need another 10 to 15 hires after it. And so we’re able to package those roles under our managed recruiting engagement and  it’s much more cost effective, but we get to learn the company really well, understand kind of their culture, their sort of where they’re trying to go.

 

And a lot of it becomes  employment brand amplification, where we understand what a company is, who they are, and we help convey that message to market. We’ve got 70 recruiters kind of across all functional areas and that sort of depth and the ability to spin that message across a number of different companies, it makes a big impact. Yeah, no, I agree. I mean, I think that we’ve really built a diverse set of skill sets across verticals, across functional areas and we can kind of cross pollinate and build teams around the search that makes sense and get the right people  to be assigned to it.

 

But also kind of going back to an earlier point I said, is that whoever is the point person who has a relationship with the client, they remain very hands-on on the search on a day-to-day basis. And I just, I think that that accountability is really important because otherwise what happens is that if in the traditional recruiting situation, new clients come along, that takes focus and then the emphasis on that on the original search starts to drift away.  I see it myself as well as colleagues I’ve worked on the searches, whereas they feel personally invested in making sure the searches go right for the clients here at Hirewell and I think that’s very impressive.

 

Yeah, I agree. And the results, the most impressive numbers. I mean we’re engaged in these roles. First of all, the way we structured it, is as you mentioned, there’s an engagement fee but the bulk of the fee is not owed to us until we’re successfully able to hire somebody.

 

And, it’s just the way to do it. That’s more cost effective and creates a true partnership. And as you said, having a consistent team that gets to know the company and is with you from sort of point a to point B or C or however long you’re engaged with us.  That familiarity, creates a lot a much smoother process.

 

Yeah. I love the ability to really fully customize a contract with a managed search engagement that really does it’s fair for the client. They feel that they’re getting value, it’s not an exorbitant rate compared to what other search firms pay or are charging.

 

 But the service, hopefully they feel goes above and beyond and it creates value.  In terms of kind of the last piece, and I think we’re really able to differentiate, I mean it’s all about results, right? I think we’ve got a great track record of delivery, but I think how you get from kicking off a search to successfully identifying a strong person, it’s a process.

 

And I think that process that we execute on, it’s a strong one. I mean, it all starts with heavy, heavy research where we’ll do a deep dive to the market and understand kind of where the appropriate talent is, where they’re working right now, what they’re doing, work, collaborate with our clients and up the various hiring managers to understand kind of what that looks like.

 

And then kind of do that deep dive to find those people. So it’s pretty exhausting, it’s going to be outreach to a couple of hundred of professionals narrow that down to 50 or 60 strong people that we’ll interview and screen for the opportunity, and then narrow that down to- it could be like a short list of the 10, 12 that we’ll share with the client.  I think that transparency goes a long way.  Not all clients want to see it. I think oftentimes they just care about the successful result  of a great hire. But I think having that, being able to report on that and share that on a weekly basis, whether they frankly want to see it or not, it goes a long way.

 

It helps companies recognize, right? There’s a lot of work that goes into this. There’s going to be  weeks and weeks of work to kind of delve into it, find the right people, but then it helps them be confident that they’re making the right decision because they’re going to know that we talked to a lot of people- say 50 to 60, they talked to 10 of the best, five to 10 and they can be competent in sort of what that market knowledge looks like and rank kind of what sort of experience in compensation and how that all ties together.

 

Yeah, it helps. It helps Hirewell and the client. Some searches are tough that there’s sometimes they don’t go well despite the best efforts of everyone involved, you know, flexibility from the hiring manager,  all the additional research we’re doing, some searches are hard. And when we have data to back that up to show, “Hey look, we’ve contacted 200 people.

 

We’ve talked to 35 people.” At least we know we can show we’ve done the work. Hiring manager, human resources, whoever, they can show their people, “Hey look, this is what the search firms doing. This is what’s happening. This has just happened to be a tough search.

 

And we’re just going to have to dig in and grind it out.” Yeah. Agreed.  And with all that, it still becomes a pretty efficient process. I mean, our typical time to fill them on these is having that the candidate identified in success, successfully offered roughly the  two and a half month mark

 

start to finish. People are seeing people kick off a search and then somebody start between month, two, month three, which is quick. And I think for these times where the world’s evolving and good counseling off the market quickly being that efficient, it goes a long way.

 

Yep, absolutely. Great! If somebody was interested in talking to you about this, how would they get in touch with you? Yeah, obviously, all of our contact information is on our website. We’re all heavily on LinkedIn. Anyone of us could be- anyone could talk to anyone at Hirewell about this.

 

 I love that my email is simply barclay@hirewell.com. Makes it simple.  Happy to chat through this with anyone. My background has been a lot of insurance related clients, but over the time that has diversified and touched a lot of different searches over the past few years.

 

I mean, we all have our specialties, but we all also have the ability to be versatile in kind of work on different types of clients and different types of searches and unique sort of needs that clients might have. So I think reaching out to me, you, really any of the Hirewell family could really- someone could help them.

 

Perfect. Yeah and I’m matt@hirewell.com. So, yeah. Thanks for joining us. Great to catch up Barclay and look forward to talking to anybody else about this in the coming weeks. Thanks. Excellent. Thank you.

 

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