It’s not always clear, from the outside, what time of recruitment firm you are talking to. It doesn’t help that many Agency Recruiters use the word ‘Search’ in their company names, which further confuses the distinction between Executive Search and Agency recruitment. But they do have clear differences in methodology and process.
So this is a guide on how to identify whether a firm is a Search firm and, if so, how to manage us.
Godliman is an Executive Search firm. We actively search for candidates by researching our Clients’ competitors.
We draw up a ‘Long List’ of potential candidates based initially on quantitative criteria (eg: experience level, assets managed, client channels covered, track record, etc). We then filter that down to a ‘Target List’ by taking qualitative references on the Long List from people we know in the market. We then actively approach the most promising – most of whom may have expressed no prior desire to move – with the aim of encouraging them to consider moving to our Client’s company.
There used to be considerable barriers to entry to become a Search firm: you needed a proprietary knowledge base, and a robust research process to reveal the ‘research universe’ of candidates currently in employment across the market.
But, with the arrival of LinkedIn, the barriers are far lower. LinkedIn gives any recruiter a comprehensive map of the market – up to a certain level. As a result, many Agencies do now offer a more proactive search service, using LinkedIn to identify candidates.
With Agencies offering a slimmed-down Search service, it’s sometimes hard to tell if a company is an Executive Search firm or an Agency – particularly from the job seeker’s perspective – and particularly when many Agencies include the word ‘search’ in their company names, even though they are agencies.
Even so, there are some clear markers about how Search firms operate which can help you to work out if the recruiter you are talking to is an Agency or Executive Search headhunter.
How well do they know the market?
Executive Search firms are very research-focused, so have more in-depth sector knowledge. Hence, we can be a useful source of market intelligence. We can talk you through hiring trends: where the demand is for talent, which firms are hiring, which are firing (actually, you can follow this on our weekly Press Digest, which you can sign up to on the footer of our web site). We can help you with your company due diligence: which companies are doing well or badly, where is morale good or bad, etc. And we can help you with remuneration advice: what is the going rate of remuneration, what is the ratio between base and bonus, etc.
What is their organisation structure?
Executive Search firms tend to have Researchers and Consultants. The Researchers do most of the phone work, mapping the market, speaking to referees and approaching and screening potential candidates. The Consultants interview and assess candidates and manage the client relationships. If the firm you are talking to does not have any researchers, or if everyone is a consultant, they are probably an Agency. But if they have clear distinctions between Consultants, Associate Consultants and Researchers, then they are probably a Search firm.
How many years’ experience do the Consultants have?
Executive Search Consultants tend to have a lot more experience than Agency Recruiters: it takes time to build the sector knowledge and credibility needed to win retained mandates for senior hires. So anyone calling themselves Consultant under 30 is probably an Agency recruiter. Many leading Executive Search Consultants are in their 40s and 50s. At Godliman, even our Researchers are in their 40s and 50s!
How many clients do they have?
This is not always apparent, as Search firms are often coy about revealing who their clients are. But Executive Search firms tend to have a far fewer clients than agencies. To some degree, the better the Search firm, the fewer the clients. This is because of their ‘Off Limits’ restrictions.
When we work for a client, we offer them an ‘Off Limits’ guarantee. This simply means that we will not try to hire or steal any of their staff for any reason. This convention probably evolved to give clients comfort that Search firms would not use any insider information against the hiring firm. Our clients usually treat as as trusted advisors, giving us Pitch Books and giving us access to team members so that we can properly brief candidates on the firm and its cultures, and it would clearly be a conflict if we used that information to identify and steal their people.
Hence, we cannot have too many clients, as otherwise the ‘off limits’ restriction would mean we have no one left to steal from! In practice, once we got beyond a certain level of clients, we would struggle to add more as the new prospects would be increasingly deterred by the length of our off limits list. The optimal number is almost certainly fewer than 20 and, in my view, fewer than 10, on the basis that I would rather work for a smaller number of clients whom I know very well, and who treat me as a trusted advisor and give me a broad spectrum of work, rather than spreading myself thinly over 20 or 30 clients;
Are they working on a retainer?
Executive Search firms work on retained mandates. This means that, if we’re working on an engagement, we charge our clients an up-front retainer which pays for the research. And then we charge a ‘success fee’ when we place the candidate. The advantage of a retainer is that we can take our time to research the market thoroughly, to spend time getting to know candidates and to brief them on the role and client culture, etc as this is all time that has been paid for. Whereas Agencies work on a Contingent basis : this means they only get paid on a success fee basis. Hence, they are sometimes called ‘Contingent Recruiters’. Because they are not retained, they tend to skimp on the research side, looking for ‘quick wins’.
Are they the sole gatekeeper for this role?
Executive Search firms usually work exclusively on engagements. This means that, once the search has been mandated, any candidates who present themselves ‘belong’ to the search firm, and must be referred back to them for inclusion in the process; and, if any candidate is hired for the role, then the search firm is paid no matter where the candidate was sourced from. The reason we insist on this is that, in order to complete our initial research, we have conversations with many people across the market. Inevitably word gets around and this usually leads to people either being recommended to our client or applying directly to them. Hence, we ask that they are simply routed back to us for inclusion in the search, as it was our process that was the catalyst for their introduction in the first place. In this way, once a search has been mandated, the only way into the role is through the Search headhunter.
By contrast, Agencies do not usually have exclusivity. In fact, it is common for firms to mandate several agencies on a role – after all, there is no up-front fee to pay, so it makes sense to spread the net widely. Hiring companies typically hold an ‘agency briefing’ of three or four agencies at the same time, where the requirement is set out, and then it’s a ‘first past the post’ system: whichever firm lands the candidate gets paid, the remainder get nothing. This is sometimes called ‘Contingent Recruitment’ as payment is contingent on a candidate being hired. There is a recent variant called ‘Retingent Search’ or ‘Contingent Search’ which means that the firm is given exclusivity for a set period – retained for three months, say, during which period they have the sole mandate for the role – but there is no up-front retainer, and so their fee is still contingent.
Once you are sure the firm you are talking to is a Search firm, how should you manage us?
Clearly, if we have a relevant mandate, we can include you in that process. But the reality is that Search firms represent a very inefficient way to actively look for a new role. Our benefits are all loaded on the side of the hiring company. From the candidate’s point of view, Searches are slow and highly competitive. A quick search lasts for three months, average searches these days often last for five months, and some searches can run for nine to twelve months as candidates go through multiple rounds of interviews, which can each take several weeks each to arrange in busy client diaries. And, at the end of this slow conveyor belt, only one candidate gets the job, leaving six or seven other short list candidates disappointed and back at square one.
In my view, Search firms are most useful when you are reasonably happy in your role, but are offering you a role which is somehow additive to your current position. So you put your hat in the ring and see the process through its course: if you get the job, great; but if you don’t that’s fine too – no great disaster. But we are not an efficient way to look for a job if you are out of work.
So, the way to manage us depends on your level of motivation to find a new role:
I love my job and have no intention of moving.
Even in this situation I recommend that you speak to two or three Executive Search firms a couple of times a year. We are super-collators of market intelligence, and it can be useful to touch base with us from time to time to hear about market trends, as described above. That way, if you suddenly find your job is at risk, you at least have a good idea of the shape and size of the market, which firms are doing well, what the going rates of remuneration are, etc. And, if you ever do need to seek alternative employment, you will at least have a couple of headhunting relationships which you can rely on for independent advice.
My job is OK, but there are some frustrations which have arisen, which I think I am unlikely to be able to resolve. So, if I could find another job which addressed these, then I would be happy to consider it. But there is no immediate pressure for me to move: I can afford to take my time to find an additive role.
In this situation, I recommend you speak to 10 to 15 Executive Search firms. This sounds like a lot of headhunters – and it would be too many if we were talking Agency headhunters. But, as set out above, our ‘Off Limits’ restrictions mean that no Search firm has many clients. It’s is a very fragmented market, from the job seeker’s perspective. Which means that, to cover off the top 60 or 70 asset management houses, you will need to speak to a surprisingly large number of Search firms.
Many people I speak to fear that, if they speak to too many headhunters, their CV will start flying around the market. The idea of sending their details to 15 headhunters fills them with trepidation. This is just wrong: rather than reining in a team of wild horses, getting a response from the Executive search firms is more like whipping an old donkey into action. You are more likely to get no response than people firing your CV around.
In practice, you have strong privacy protections from GDPR legislation: no one will be sharing your details without your permission for fear of being reported to the Information Commissioner. And, as set out here: Executive Search firms anyway are not set up to market candidates to the market. We work on research projects, commissioned by our clients, where there is a specific hiring requirement.
So I recommend writing to up to 15 headhunters, with a brief covering e-mail, setting out your experience and competencies, and the types of roles you would like them to contact you about, and include your CV and personal contact details. Then sit back and wait for the calls to come in about relevant mandates they are working on. It’s a bit like going coarse fishing: if you cast one line, you might get a fish. But if you cast 15 lines you will probably speed us that process – and meanwhile you can sit back and relax, waiting for the bites.
For whatever reason, I’ve had enough of my current job – it’s time to move on; or I’ve been given notice of redundancy, or told my job is at risk; or I’m unemployed, and actively looking for a job.
In this situation, I recommend you talk to as many Executive Search firms as you can find. You need to spread the net as widely as possible to hear which mandates are live. But, even if you speak to all the Search firms, this is only one channel you need to cover in your job search. You may also need to cover off the Agency Recruiters, Talent Managers, Selection sites and direct approaches. More on all that elsewhere in our Godliman Insights.
There is more information on how to identify Executive Search firms here.