Case study: establishing a candidate research practice

This recession has been difficult for people in our industry. I started to say past recession because there are some positive signs that companies are hiring and reaching out for our help. I know first hand that the contract recruiting industry is booking significant business. In past recessions, increased use of contract recruiters was a powerful indication that things were improving. Another encouraging preview of good things to come: candidate research firms are remarkably busy.In 1973 I made my first placement with an employment manager, who spent a few years in the contingency industry. He saw that I was inexperienced and was destined to make some hall of fame mistakes in this business. He went out of his way to help me understand the business, took me under his wing, and became an unofficial mentor and trainer. His career was on the rise and, as he progressed through the ranks of this international conglomerate, I did business with him every step of the way. I owe him big time for his guidance and friendship, which continue to this day.In 1988, he founded a retained search firm that was successful from day one. He built an effective internal research function, which brought his candidate research in house. Three years ago the economic downturn took its toll on boutique search firms. I encouraged my old friend to establish a candidate research practice either as part of his portfolio of services, or, as a separate entity. He countered with, “No way. That would send a negative message to my clients.” I disagreed: “On the contrary. Offering a candidate research product will convince them how sensitive you are to the tough times they are experiencing. Candidate research is a unique, cost saving service that will enable them to continue to attract the best and the brightest even in a recession.”He had another issue: “Marketing candidate research on an hourly basis to my clients would make it difficult to sell retained searches; they will opt for the cheaper candidate research.” I reminded him that his clients were not contracting retained searches because of the economy and suggested that they were probably giving their research projects to someone else. I argued: “Candidate research will get you a slice of the pie, enhance your client relationships, add a new strength to your product line, and increase your cash flow. I genuinely believe that candidate research gives your clients some options, shows them what you can do, and leads to retained searches and more business.”I offered to spend a morning discussing the candidate research business with his researchers and staff. This was a meaningful way to make a down payment for all his past favors. I found his researchers to be very adept at information gathering, knowledgeable in research techniques, and comfortable using the Internet as a tool; they knew where and how to find information. They were organized, detailed, great on the phone, and had excellent people skills. They seemed to be creative, persuasive, persistent, and energetic networkers. Best of all: they were gung-ho to jump into the candidate research business.

That morning we discussed a few things:

  • Making sure that a proposed research project is doable
  • Selling candidate research
  • Knowing what kind of business to walk away from
  • Getting detailed information from the client
  • Confirming objectives with the client
  • Setting due dates and turnaround time
  • Negotiating the contract
  • Maintaining client communication during the project
  • Preparing the research report

My friend has been in the candidate research business for a little over two years. He opened a separate company with a New England sounding name, which he promotes through an attention getting, well-written marketing brochure that is graphically attractive. Clients reacted very positively; he began getting business immediately. Recently I asked him to send me one of his research reports and requested some telephone time to get his impressions on the candidate research business for this article.First, let me describe his research report, which, by the way, is the best and most comprehensive I’ve seen in the candidate research business. The assignment, a fifty-hour project, was to build a database of prospective candidates for a Regional Sale Manager position in California. The report, produced on white paper, was wire-bound with glossy front and back covers. Each section, separated by a tab page, began on colorful company stationery. The title page gave the project name and a summary of the contents. The second page presented an overview of the company, the position, experience needed, and compensation.The first two sections of the report provided a status report of the first twenty-five hours and the second twenty-five hours, the names of prospects contacted and the results, a listing of potential candidates, their credentials, resumes, interview comments, compensation information, and references. One interesting difference: this firm gave each candidate a rating and included an extensive rating sheet. The last section of the report was a spreadsheet summary of each prospective contact and it provided: name, company, title, location, phones, email address, source, and compensation information.My friend offered a few comments. Here they are, unexpurgated and uncensored:

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So far, it’s a great business. There was a definite learning curve. It certainly helps our cash flow especially in this market. It’s made the difference: we have not had to cut staff nor curtail our business development expenses. The margins aren’t that great but maybe that’s due to our pricing, or, probably we just have to sell more research projects. We can make money on this but you work for the money.This is a labor-intensive business. The researchers work very hard. Do many researchers burn out?It’s different from search. The companies don’t pay us for our talent, experience, advice, guidance, and expertise; it is not a consultative relationship. It is very transaction-oriented. We find the people, do a telephone interview, rate the people pretty quickly, and then leave everything to the client who decides which candidates are appropriate. It is not like search when you do in-depth candidate evaluation and make judgments.I think our clients appreciate that we offer this service. Most of them have not been giving out searches in this climate, so they like candidate research. I also think that our clients know that we will go all out to serve them, even if it’s on our own nickel.Candidate research is a grinding process; the mindset is different; the money is different; the workday is different; the life style is different.

I wish you and your families a very happy holiday season. I hope and pray that 2004 will be filled with health, happiness, and success for all of us. An Irish blessing:

May your heart be light and happy,May your smile be big and wide,And may your pockets always have a coin or two inside.May God keep you in His handAnd never close His fist too tight.

And a special Irish blessing for our esteemed Editor and Publisher:

Paul, may you live to be a hundred years,With one extra to repent!!

Frank X. McCarthy is Partner in Charge of Diversity Practice with The Corporate Source Group. He was a Catholic priest from 1956-70, working in parish and school assignments, serving as a paratrooper chaplain with the 101st Airborne, and as pastor and director of an African American community project in Paterson, NJ. He founded Xavier Associates and conducted diversity searches for over 25 years. Frank is a well-known and widely respected author and speaker on workplace diversity, recruiting, and candidate research. He can be reached:


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