Over my past corporate roles as divisional head of HR and CHRO I crossed the path of many executive search companies. Some placed me as their candidate, some others worked with me to conduct searches and many of them were banging aggressively at my door to sell their services. For a handful of them we had long lasting relationships even though I had to renegotiate fees and have sometimes difficult discussions on the financial side of the business. It has been a countless number of times when I heard Executive Search was dying and LinkedIn would be the perpetrator of their final death blow. Obviously, how can one survive in such a competitive environment, where all it apparently takes to get the right person is to search LinkedIn and get your 5 legged sheep on steroids? I wholeheartedly agree that recruiting firms which ran their business, harvesting resumes and positioning their competitive edge as names providers are faced with a painful agony. LinkedIn can indeed provide you with long blind list of names. What was I missing from most headhunting companies, that only very few could fulfill? This is what I would like to share as a former senior manager and also as a new partner of an executive search firm. Let’s call it the AIM model: Ambassador, Intelligence, Monetization
Very few governance and leadership seminars end without quoting “Culture eats strategy for breakfast, every day, every time”. It has become a cliché in leadership development and yet it is not a standard guidance in identifying senior players. Many Executive Search firms accept the mandate and start searching right away for the technically qualified candidates while not gauging the cultural dimension of the environment. The price to pay for an organization to onboard “culturally misaligned” executives is unjustifiable. I remember a leader who wanted to hire an executive for turning around part of his organization into a systematic, predictable, industry-like model. The executive and his ExCo members were all wired in the “everything is negotiable and let’s be flexible” mode. They hired a top guy coming from a perfectly well oiled, military-ran production machine. While he knew he came there to turn things around, he got ambiguous support from the top : on one hand an honest desire to cascade crystal clear guidelines, on the other hand everything is negotiable. He ended up crashing in a severe burnout. An Executive Search firm that would have been at the crossroads of search and insider would have met with the top boss, then his direct reports and would have either recommended a different profile, either spoken to the CEO to have him consider the wider issue of governance. Top executives need to extent their reach on the competencies market and it takes more than a third party slavishly repeating the marketing brochure to candidates. It requires a true understanding of the inner workings of the Corporation and the ability to disclose the meanders of management practices with honesty. That is an ambassador’s job that requires some senior corporate exposure.
I would like to focus only on one dimension of Intelligence, as it is defined in the world of defense. This is certainly not meant to exclude much needed emotional and intellectual Intelligence abilities, but rather to describe a gap I have observed in level of service. In this context, I would describe Intelligence as information collection and analysis to provide guidance to enable top management to take informed decisions. On that basis, so many Executive Search firms have the privilege to tap into an enormous reservoir of knowledge, experience, perceptions and personalities, yet so few go the extra mile beyond profile identification. When recruiting a senior executive for a leading position an incredible amount of data, hints, non verbal cues are gathered by the consultant. Some candidates would never leave their companies to move into the open position, be it for perception, reputation, unclear strategy, brand, working with a specific leader,… The art of Intelligence is to provide in an articulated fashion how the market perceives you and make this information actionable. Obviously the point is not to extend unwanted feedback, but rather to prepare the client to be equipped with competitive data. Years ago while running a search for a COO for an international subsidiary, we kept getting B players in the short list and could not put our arms around the reason of our low attractivity. Compensation was not the issue, the positioning was flattering and the transformation to be conducted by the new executive was on the bleeding edge of technology. It took us months to realize that the market perception was terrible because of a glass ceiling for locals who would never ever make it to the top. There was a history of transferring from the headquarters foreign nationals to run the local operations and keep local talents at bay. In addition the headquarters were convinced that the local operations required “tough”leadership style to be able to succeed. Talented candidates were just turned off by the mix of autocratic inertia. The Executive Search firm feared they would lose our business by telling us this central piece of information thinking it was a well thought of business model. Intelligence provided to enlightened leaders is often used to reshape for the better the operating model, let’s not ignore this gold mine. Some leaders are very well informed of their positioning and would only derive marginal benefits of this intelligence. Unfortunately the one most needing it are the one not asking for it, don’t we all know that there are none so deaf as those who will not listen?
This is the emotional one. I have been in HR business for over 25 years and surprisingly as everything was transforming radically in our ecosystem, from the introduction of outsourcing, HRIT, cloud based solutions, telecommuting, to M&A from corporations from across the globe, one thing remained untouched, the Executive Search fees/retainers construction. While I am being somewhat facetious I have never been presented with a radically different model, until I had to push hard to initiate a different approach. We are talking business and it is important for corporations to understand that smaller Executive Search practices have fixed costs and need to fuel their own engine to fly for their clients. That being said and hopefully understood, I would like to bridge a couple of compensation concepts with the invoicing practice. As head of HR I have never bought the confusing mix of base pay and variable that would be lumped in together for the basis of fees ‘calculation. Paying a percentage of an annual base salary is an established practice. Market data combined with willingness of top management to allocate a yearly amount for the impact provided by the candidate on projects or on the P&L do make sense. This is an objective reference: the price to pay for achieving what it takes to deliver for the role. Variable compensation on the other hand, will recognize the ability to have impacted the organization above and beyond what was originally scoped or what was contractually defined as commercial or delivery targets. Conceptually, based on my HR operational experience, I would strongly recommend not to invoice a client for a percentage of a target bonus. It fundamentally defies the logic of variability and poses as certain the fact that the variable compensation is due in full. The other critical leadership element is to walk the talk. Being the Ambassador calls for proximity with the managing culture of the organization, Intelligence helps understand the inner strength and flaws of decision making process. Executive Search are therefore equipped to minimize the risk of a stalled recruitment. We have all seen CEOs dreaming of getting by their side a top strategic and entrepreneurial CxO and as they meet with top flyers, realize that they will no longer be calling the shots therefore they downgrade substantially the original profile of the search. This is a common risk that can be alleviated by gently confronting the decision maker at first, rather than bill him an extra amount for his likeliness to derail later. No one like to waste time, after we are in in business to succeed.