In a tight job market many corporate recruiting functions are strained to the limit. One option is to “outsource” your higher-level searches to executive search firms. Unfortunately, because of the large number of firms, it is often difficult to decide which firm to choose. Should it be a small “boutique” firm or a large multi-national? Is a retained firm better than a contingency firm? Are firms that offer “unbundled services” superior to those that don’t? Because not all search firms do an excellent job, it is essential to do an extensive assessment of their capabilities. Some are slow, others produce a low quality (performance) of hire, and some recommend candidates that result in a high turnover rate. Few firms meet all of the criteria, so it is important to first select which of the following are relevant to your needs. The one certainty I have found is that firms that say that you should “trust them” and then refuse to provide answers to the criteria listed below are NOT top firms. Here is a checklist that I use when I help firms select from among the many, categorized as follows: I. Results
II. Their database
III. Their range of services
IV. Their responsiveness
V. Ethical and legal issues
I. The Results Of Their Searches Talk is cheap and almost all exec recruiters are great at it. Focus on the numbers and the results, and ignore the bravado about whom they work with, their size, and how long they have been in the business. It is a good general assumption that if they don’t measure their results, then they are not the best. If they say it’s too hard or not necessary them, I guarantee they are “all boots and no cattle.” Here are the “results” standards a good firm should meet:
- The firm has a high past success rate for all jobs with your company or similar firms in your industry. Where success is measured in quality of hire, speed, cost, the retention rate, manager satisfaction and the performance of the hire.
- They must have verifiable track record of successfully locating and placing qualified candidates for this targeted position with your or other benchmark firms (your competitors?).
- Search firm-placed employees must have higher performance on the job (performance appraisal scores, promotions, bonuses, output etc.) than employees from other hiring sources or firms.
- They must be cost-effective (lower cost vs. benefits) than other firms and other methods of recruiting.
- Candidates that accept have a longer average tenure in the job (lower turnover) than other firms and other methods of recruiting.
- The use of this executive search firm must result in a __% higher overall recruitment success rate than other firms and your own internal recruiting function. It must be able to demonstrate a positive ROI on the use of its services over those of regular internal recruiters, and its rates should not exceed industry standards.
- The firm must have a verifiable track record of successfully placing diversity candidates for your hard-to-fill jobs at our firm or other benchmark firms (our competitors?).
- Recruited candidates request lower starting salaries than equally qualified candidates from other sources and firms (some firms “shop candidates and as a result they demand higher salaries).
- Candidates referred by them must yield a higher offer-acceptance rate than other firms and our own general applicant pool. This is to minimize manager frustration, and it also shows that they have strong “closing skills.”
- Completes a higher percentage of searches on time, under budget and within specifications. In low unemployment times, the rate of unfulfilled searches for retained firms can be quite high.
- The overall time to hire must be faster than using your own recruiters, and better than other firms. In a competitive world the cost of a vacant position can be in the millions, and a delay can mean losing the best — who are often gone in a week.
- In a “side by side” simultaneous search (with your internal recruiters continue searching at the same time), they provide better candidates in the same time period.
- When asked to prove their capability in a “test” they can give you a list of your own firm’s top talent within a week. (It is hard to know if the talent they find in other firms is the best.) But since you know your own talent, if they can find it in a “dry search” odds are that they can find talent in other firms also.
II. The Quality Of Their Database The very best firms don’t start the search the day you hire them. They have active “who’s who” databases with the names of the top people already identified. The best pre-assess prospects. They also keep in touch with their database, and already know their interests and decision criteria. There are no secret superstars, so if they start cold calling on the day you hire them, they are not the best.
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- Their database must be made up primarily of currently employed people who are top performers in their organization (passive job seekers). If their database has a large percentage of unemployed people, avoid them (in low unemployment times, those that are in “need” of a job are not top performers. The best have to be “poached” from good jobs at top firms.)
- Since hiring top performers from direct competitors has a double whammy (you get better…they get worse), the number of top performers working at your direct competitors in key jobs is a sign of an excellent database.
- The firm must be able to demonstrate that it has a wide variety of industry contacts and candidates from your targeted benchmark firms. Hiring from benchmark firms means you learn about best practices and acquire good employees.
- They must be able (and willing) to prove both the size AND quantity of their database to you by sharing a sample of their database for a given position (anonymous resumes and skill sets).
- The firm’s database must contain qualified candidates that you have not identified yourself. If you compare your internal database with theirs…they should have different and better candidates. Often you find that they “have the same people that you do” — which means they offer no value unless they have better selling/closing skills than your firm has.
- Their database has few “blocked firms” — i.e. those protected from “raiding” because the search firm is on retainer to the firm (so it agrees not to recruit from them).
- How old/dated are the resumes in their database is a key question. Is it continually updated? Having old resumes of people that have left the area, retired, or recently started a job can frustrate mangers and slow down the process.
- They must have a diverse database that will provide us with a minimum percentage of diverse referrals especially in our under-represented jobs. Diversity candidates are among the hardest to convince, so the firm should have a long-term relationship among these candidates.
- Does their database contain candidates from geographic regions where you have offices/needs?
- Do they have an international database and international hiring capabilities in areas where we are weak in recruiting?
- Does the database include a large number/ratio of “turkeys”? Having a high proportion of low performers means frustration and the need to closely screen all referrals. In reverse is the database rich with superstars? Soon to be superstars? And lesser-known superstars from other industries that could make the transition?
- What firms do their candidates work for? Large databases can be clogged with talent from smaller or weaker firms that just have no chance of surviving in our firm (culture).
- Do the people in the database know and look positively on your firm? If a candidate admires a firm, it means an easier sell and a faster hire.
- The firm must be able to provide “pre-screened” candidates that result in a __% or less of rejection rate of unqualified candidates in your searches.
III. Their Processes And Services Everyone puts on a good show before the deal is closed, but the best firms execute consistently in all geographic areas.
- Does this firm track the amount of management time they use? The best reduce the time they take up of your executives (and internal recruiters) on each requisition.
- Is the firm willing to provide advice and counsel on how you can improve our in-house recruiting efforts?
- They are Internet savvy. They use technology to find and assess candidates. A significant portion of their database was sourced from the Internet (Internet sourcing yields high quality candidates).
- Their databases and HR systems are compatible with yours. Their “extranet” allows you access to their talent database 24/7.
- Is the firm willing to provide advice and counsel on how you can improve your retention rates and help you understand why other firms successfully poach your employees. Can they teach you how to identify the “targets” and then block or minimize it?
- The firm provides advice and counsel on which firms you should target to acquire (for their talent).
- The firm assigns the best (specified) search consultant or consultant team to your account. Great firms often do a “bait and switch” with account executives. Make sure you don’t get the rookie!
- Do they measure the effectiveness of their sources and search tools? Can they show that their recruitment and sourcing methods and practices are the most advanced available and are continually improving? Assuming you are going to work with the firm for an extended period, it is essential that they continually improve everything they do on a regular basis.
- Are they consistent and reliable? Some large firms “franchise” their offices. As a result you can easily get spotty results in different regions. This can also be true of non-franchised offices, but generally it is less of a problem.
- Does the search firm demonstrate a working knowledge of your culture and your values? Placements must fit into your corporate culture more rapidly than the norm, and they can’t “quit” because of a bad “fit.”
- The firm uses post-exit interviews to assess what went wrong in any failed placement in order to prevent future occurrences.
- Does the search firm utilize the best state-of-the-art technology available (online databases, Web tools, ATS, Extranets etc.). “Paper” slows up the hiring process and technology can aid in finding the very best in remote places.
- Does the search firm demonstrate that they can accurately forecast and anticipate hiring and economic trends. Can they warn you of upcoming surpluses and shortages?
- Do they provide us with advice why people quit or take a job? Do they also give us a “heads up” on superstars that are looking.
- They act as a benchmark double check to ensure that the salary survey information that we use to make offers is not inaccurate and costing us hires.
- They practice “relationship recruiting” over an extended period of time with potential candidates. This means that candidates are slowly assessed over a period of time, and that the recruiter knows their “real” needs.
- They offer a guarantee (a free redone search) and they track to see that their candidates actually work out. The guarantee is found to be seldom necessary.
- If they are on retainer, they have a “no raid or poach” policy that protects them from shopping you own talent. They also have a track record as well as policies and procedures to back it up.
- Is the firm retained or contingent? Do they fit your needs and explain the advantages/disadvantages of each?
- Does the firm has instant/emergency search capability? Is there a backlog of searches or does the firm “bump” you ahead of others?
- Has the firm done a sufficient volume of recent searches for this job to demonstrate their current competency?
- Does the firm accurately pre-screen candidate using your required competencies? Are candidates ranked or rated using numbers for easy comparisons? When they (and you) simultaneously assess the same candidate, do they give a similar assessment score to yours?
- They demonstrate that they provide immediate follow-up and feedback to managers after meetings and interviews.
- They have a local office in your area or are “in town” on a regular basis.
IV. Their Customer Service And Responsiveness Angering candidates can mean lost customers and a bad image.
- They provide accurate and timely candidate synopsis/summaries and consistent evaluations. Candidate profiles must include accurate assessments of their skills, needs, and job acceptance decision criteria.
- The firm’s response time to calls and requests exceeds the industry average, even during busy and off-cycle periods.
- The firm measures candidate and manager satisfaction. This firm’s satisfaction rate exceeds the industry average, even during busy and off-cycle periods.
- The best search firms are capable of rapidly adjusting and modifying their procedures to meet our changing needs. They modify their approach as economic conditions change. The search firm listens to your needs and is flexible and willing to readjust procedures if your business needs require it.
- They are experts in our industry. They know your business, competitors, products, and customers.
- The actions, progress, and responsiveness of the account are monitored and rewarded by the search firm.
- Their recruiter maintains a continuous relationship with your firm long after the placement to ensure the success of the placement.
- Placed candidates and hiring managers have a high percentage of satisfaction with the search firm and the recruiter.
- Your use of the search firm must result in the reduction of the time spent by our internal recruiter and the line manager on each requisition.
- The search firm verifies that each candidate has not previously applied to your firm (thereby eliminating disputes over whether a fee is owed by our firm).
- The firm has a dispute resolution process that is quick and fair.
- Their firm has a low turnover and transfer rate for its search consultants so we don’t have to continually r-orient their new account reps.
- Our manager’s rate the quality of the service and candidates provided as excellent.
V. Legal Issues, Values And Ethics
- They have a reputation for not exploiting your database. When you give them access to your database they don’t “steal” from it or try to charge you for candidates that you already had.
- The firm has an exceptional track record in privacy/confidentiality and conflict of interest matters.
- They must have a track record, image, and brand both so that they can attract the top candidates and also to protect your reputation.
- The firm/recruiter has no history of attempting to “go around” or circumventing HR and dealing directly with line management.
- The firm has a near-zero complaint rate among clients.
- They have an excellent record of adherence to applicable Federal and State employment laws (ADA, EEOC, Title VII etc.). Their sourcing/pre-screening methods demonstrate no adverse impact, or no disparate treatment.
- They have a recent proven track record in our industry as demonstrated by their positive references and their adherence to high ethical standards (NAER/AESC).
- Their percentage of lawsuits and complaints is below your internal rates.
- They use the best available objective system to assess candidate skills and to ensure only valid “knockout factors” are utilized.
- The executive search firm demonstrates a working knowledge of and adherence to your corporate values and culture.
- They have the broad capability to help you improve your retention rate, refine your offers and compensation to make them more competitive.
- They forecast labor trends.
- They are the “place to visit” to find answers and best practices relating to the employment function.