The Case for Search Firms

Over the last several weeks, I’ve been refuting an ill-argued claim that executive search firms offer six advantages over in-house search teams. The fact is, I am not an enemy of search firms. I began my career in retained executive search and I recognize inherent value in competent executive recruiters whether in-house or third-party. There’s both room and need for each; and there are numerous circumstances under which the argument for third-party recruiters trumps that for those in-house.

The first of these pertains to volume. If a company does not routinely hire upwards of twenty executives every year, the case for building an in-house function is not strong enough. Instead, I recommend that these companies establish master level agreements with a few key firms and appoint an internal liaison to work with them (but never at the expense of the relationship between the hiring executive and the search consultant).

Second, there are searches I would advise an in-house teams to avoid. Those include projects where:

• there is an incumbent who is not aware that they will be replaced—it’s nearly impossible for an in-house recruiter to conduct a blind search;
• the placement will have supervisory responsibilities over the recruiting team—this presents too many conflicts of interest;
• the search is unmitigatingly politically charged—an inside recruiter has a lot to lose, or
• the competency requirements are extremely technical and outside the realm of the in-house team’s expertise. For example, I can conduct a search for a company controller or a CFO, but if you’re looking for a head of risk derivatives trading, I’m not your gal.

Third, if a client adamantly prefers an outside firm despite the positive reputation and performance data of the in-house team, outsource to the third-party. I learned this the hard way.

A few years in to my tenure managing an in-house team, a business sector HR VP required that his sector’s general counsel use my team to find a deputy GC. About four months in to the search, after having numerous qualified candidates rejected by the client, I realized the GC had no intention of closing a successful search with us. I advised the HR VP that we were stepping away from the assignment, and that he should allow the GC to use his preferred firm. A few weeks later, the GC hired one of our candidates (whom he had originally rejected) and the search firm received a fee. The GC clearly had motives beyond successfully closing his search—the project was a waste of time and headache for my team.

Finally, unless the lead recruiters do not have significant experience in executive search within a retained firm, most likely they do not have the requisite knowledge, gravitas or client management capability for true executive recruiting. You’ll need to outsource assignments above the mid-management level.

There are recruiters both within corporations as well as within search firms who are gifted at meeting the challenges of finding the right leaders for any given situation—find those practitioners wherever they are and leverage the heck out of ‘em.  If they’re good at what they do, they’re worth their weight in gold; their costs are inconsequential compared to the ROI that the right leader provides.