Archive
By Gary Kaplan
Aug. 30, 2000
It’s both the best and worst of times for HR.
We are enjoying the most dynamic employment marketplace in recent history. Unemployment hovers around 4%, the lowest rate in 30 years. This year, the U.S. has been averaging the creation of 222,000 new jobs a month. Hundreds of thousands of jobs go begging for qualified people and 8 out of 10 Americans today feel secure in their jobs.
While the double-edged sword means full employment for workers and HR, employment needs in technology-related positions seems endless. Yet, the need for talent transcends into traditional corporate America, or old economy, as well as in higher education and the world of non-profits.
1. Now and Ahead: The State of the Employment Marketplace for Executives
The crunch in the hunt for talent is a function of:
The net effect? We simply do not have adequate numbers of professional and managerial talent to fill their shoes.
One look at demographic trends explains what we are experiencing today may be just the tip of the iceberg. The next generation of workers is smaller in size than the current one, and decreases dramatically after that. Even with the recent liberalization of work rules for seniors and a possible loosening of immigration quotas, the shortfall is not expected to be cured.
As we look ahead, the demand for professionals, managers and senior executives will greatly outstrip supply, with the greatest demand for general managers, financial officers, marketing directors and the continuing need for a wide range of talent in information technology.
Already keenly aware how difficult it is to find and secure the talent your company needs to keep pace with normal attrition, let alone grow, HR is continually searching for recruiting solutions to fill positions.
The challenge becomes even more daunting at the executive level. Senior management recruiting is different. At this level, the most wanted senior executives are tied up elsewhere, bound by the golden handcuffs of high levels of pure compensation, stock options and other benefits, vested pension plans and vested interests stemming from convenient geographic location, family constraints, and personal quality of life preferences among others.
Those with special skills in information technology, general management, marketing, and finance are in high demand — and they know it. For senior executives, it takes a compelling opportunity to pry them loose from their current positions.
Today’s high-demand executives — the people with proven track records and leadership abilities — come with their own special set of needs. At this point in their careers, they are apt to look long and hard at the company, its place in its industry, strategic growth plans, and the macro-economics of the business.
Smart recruits also evaluate the potential position within the company, its duties, responsibilities, reporting and evaluation measures and opportunities for promotion, even up to the top leadership positions of the company. Some potential hires may also judge the company and package as a springboard to their next career move.
Further, with your most likely executive already fully employed elsewhere and relatively satisfied there, approaching a desired candidate takes a more sophisticated approach for him or her to even entertain the idea instead of rejecting it out of hand.
Normal recruiting techniques, including job postings and looking within the company, may not yield high quality or appropriate candidates. Rather, both creative and targeted recruiting can be more productive in seeking your next executive.
Given the current difficulties and differences in executive recruiting, the imperative to fill the position goes well beyond “getting a body on board.” In reality, the very future of the company depends on securing the kind of executive and attendant skills who will contribute significantly to its progress.
A new executive hire is (or should be) a strategic hiring decision because that person assumes responsibility for not just the department or division, but contributes to the overall health and well-being of the organization itself. Each new executive, either recruited internally or externally, has an impact, for better or worse.
Therefore, defining just what is needed now and in the next five or ten years, becomes part of HR and the company’s overall strategic planning. Restricting the depth and range of the search for key executives limits, in no small measure, the ultimate strategy and growth of the company. Viewed in the context of broad company strategy, the outcome of each executive recruiting event is critical.
In the following sections, we’ll examine the components of contemporary executive search for success.
2. Qualities in the Executive Candidate: The Universal Wish List
Given the shrinking executive talent pool available, which will only get smaller in the years ahead, HR is under pressure to shift its traditional recruiting approaches. What has worked in the past may not be appropriate in today’s market. First-rate executives are not only unavailable, they are also critical in evaluating new opportunities.
For HR, flexibility, openness and adaptation to new realities are the cornerstones of successful executive searches.
In approaching the senior executive market, bear in mind:
In spite of this tight labor market, the demand for executives and managers increases. Along with it comes the request for certain qualities that organizations have articulated as needs in facing their 21st century issues. In conducting executive searches, the most universally requested qualities from clients are expressed in this “wish list” time and again:
While employment opportunities for professionals, managers and senior executives have never been better, and the demand will continue and accelerate, HR managers have their work cut out for them in seeking solutions to the crunch in executive talent. A thorough knowledge of the options and alternatives help lighten the burden.
3. Hire From Within or Without?
Rather than a negative, the prospect of filling an executive position presents an opportunity for HR and upper management to look at the existing strength and depth of its executives’ capabilities and for orderly succession planning with an eye on the future.
An executive opening should prompt management to evaluate the position and the company in terms of:
Most important, in defining the strategic direction of the company, the critical skills needed in the next executive will become abundantly clear. Depending on the company and what is important to its plans, it may be that a candidate’s leadership and astute analytical skills, industry knowledge and creative problem-solving, and ability to grow in the position to something greater may emerge as highly desirable traits vs. a particular skill set or experience.
For HR, internal hiring saves costs in time and effort spent on external searches, additional compensation and perks needed to attract outside talent while protecting the compensation structure, reducing turnover, and, of course, as a potent morale booster.
There is also the power of “the known entity factor.” In other words, the internal candidates’ working relationships, work style and abilities are known and can increase the odds of success in the new position, provided the person can adapt to change. Formal and informal training programs, mentoring and coaching a newly promoted executive can help solve some of the issues involved in an internal hire.
Still, sometimes the necessity of going outside may be a better option.
External hires should not be made for quick fixes; there are none. Rather, an external search should be made to fill a need for long-term growth.
Looking outside the organization may be most appetizing when:
Bringing in outside talent helps avoid inbreeding and a calcified corporate mindset. This cross-pollination opens up an organization to fresh perspectives and new ways of doing business for the corporate good. A new executive contributes a flexible and competitive response to a constantly changing business environment.
However, a new executive hire is not without its risks. Assuming a good, qualified hire, the new person must be able to bridge the gap between the company’s traditional methods of doing business and a different vision and method of work style.
By the same token, the company must be flexible in adapting to the new executive. Otherwise, the person will leave in frustration and a learning opportunity for the company will be lost. The company returns to corporate sameness, defeating one purpose for the hire.
However, going outside means additional costs in search, in premium compensation and benefits, and, the “unknown factor.”
Weigh both options against what is to be gained – or lost. It is a delicate balance set against the backdrop of the corporate mission and business plan to determine which route is best in a given situation.
4. Why Your Next Executive May Not Be Posting On the Internet
Reality check.
Senior executives may lurk, but it is highly unlikely that their resumes are posted in any of the Internet’s hundreds of job sites for the world to see.
And even the most attractive executive job posting, among the estimated half-million or so, may not elicit the resume you want from among the hundreds, if not thousands, that are bounced back to you.
Such is the reality of recruiting on the Internet today. What has been missed in the hype about job seeking and finding on the Internet is that when all is said and done, successful executive placements still depend on the old fashioned power of personal relationships. Nowhere is this more apparent than in seeking talent for upper middle management to CEO positions.
While Internet recruiting may be effective for entry level professionals, specialized technical jobs and middle management, it has yet to yield top tier executives who are eyebrow deep in their work and already have the connections if they are even entertaining the idea of change.
Internet recruiting rests on one invalid assumption — that the people who post their resumes on the various Web sites are prime candidates for these positions — the best of the best. In truth, Internet job postings appeal to “active seekers” — people who are shopping for jobs. This approach is not much different than the classified ads’ audience reach, with similar results.
A flood of resumes from job postings inundate the Human Resources contact, most of which are consigned to a database somewhere. Once in a long while, an appropriate potential candidate may be identified, but, with the l% or less who actually make it to the interview stage, and even fewer hired, this approach comes with a costly personnel effort-reward ratio.
What then of the large executive search firms and their new Internet recruiting offspring on the Web? Rather than conducting an exhaustive search of the appropriate marketplace, especially the more difficult passive one, they are relying on in-bound resumes. And, quiet as its kept, their collection of resumes are really an end run around the “off limits” rule in recruiting, an honorable agreement not to recruit anyone from the client-company for at least two years, even if approached by a current employee.
With this limitation, the larger the recruiting firm’s client base, the more restricted their talent pool is, and the harder it is to recruit. Yet, by spawning these separate Internet divisions, they are now free to recruit and place individuals in the companies they are already serving. Not an appealing prospect when you are the company enjoying a confidential client relationship with a search firm only to find your executives are being recruited through the same firm’s Internet “back door.”
On the other hand, in-house and external recruiters seeking senior executives know that the people they want are “passive candidates.” They are already fully employed and relatively happy with their positions. While some may log on and lurk out of curiosity, for most of the successful executives, a job change is furthest from their minds.
Confidentiality is still a major issue on the Internet. Despite promises otherwise, a posted resume has many reviewers; some welcome, others not, and it can easily be bounced around. From the active seekers’ perspective, there is more to gain by posting, even at the risk that the resume will end up on their current employer’s desk.
For the senior level executive, there is much, much more to lose. The lack of confidentiality is more than enough to deter a senior executive from risking their positions — and reputation — by posting a resume or submitting it electronically.
Enter the human touch. Personal recruitment, either through HR’s own resources or with the assistance of an executive search firm, identifies the best candidates for their clients through a value-added process well before a presentation of finalists to the client-company.
Armed with a clear definition of the job and knowledgeable about the client-company’s culture and expectations, and bound by confidentiality agreements, executive search surveys the current marketplace. In whittling down a list of anywhere from 15 to dozens of candidates acquired through a network of personal contacts and other tools coupled with intensive reference and background-checking, a manageable group of pre-screened, qualified prospects emerges.
For a search involving overseas experience, one executive recruiter went through 1,000 prospects, contacted over 200 people, of which 15 to 20 were interested and qualified, in order to present a final list of five candidates to be interviewed by the company.
Rather than settling for what’s out there on the Web, the company spent its money and time wisely in selecting from the objectively evaluated, highly qualified group of candidates and gained a satisfactory conclusion to the search.
Internet recruiting does provides a valuable tool for both companies and job-seekers to gather information about each other and, perhaps, eventually get together to fill certain jobs. But, while the Internet has its place in sifting through the active job-seeker market, the lion’s share of top executive jobs are still being filled the traditional way — by identifying viable candidates in the passive market, qualifying them and stimulating their interest in a meaningful and substantial opportunity for career advancement.
Filling these senior level positions are more about finding and evaluating the human qualities of leadership, vision and decision-making and that requires the human intermediation of experienced judgment.
The greatest asset any company has is its people. Nowhere is that more important than in recruiting upper management who are the leaders of the troops and your company’s future. However, just when you need them the most, companies are keeping their executives close to the vest with guaranteed bonuses, stock options and compelling perks.
Given today’s 4.2% unemployment rate, the lowest in 29 years, experienced, knowledgeable executives are increasingly difficult to entice away from their current positions. The result — a limited pool of available talent in the market.
Yet, conventional wisdom says that the best recruit is someone who is already employed, and with good reason. Approximately 60 – 70% of executive placements are recruited from the ranks of the fully employed. High quality, seasoned executives have a known track record and an enviable record of accomplishment. With limited selection in a drum-tight labor market, what are the options available to a company with shoes to fill?
In-house company resources, such as referrals, over-the-transom resumes, personal contacts, current staff suitability, online job postings, and even, where they exist, the Human
Resources department’s own recruiting staff, have their limits. In securing upper management, reaching out to use these resources only extends as far as the company’s grasp and the amount of time and patience available. The opening may call for a person with higher level skills and experience than is known to you or the company, or you may prefer to approach a desired candidate through a third party to feel out interest, let alone to negotiate the deal effectively.
Other signals that it is time to call in a search firm are:
Executive search firms generally come in two flavors — the specialist firm which concentrates on a particular industry or area of expertise and the generalist firm, which ranges across a variety of industries and management levels.
Specialist firms have their advantages and drawbacks. Their in-depth familiarity with the language of their specialty area and the major players in the industry may make them cognizant
of appropriate candidates immediately. But be aware that they tend to call on the same base of people frequently with little fresh research as to the up-and-comers.
More importantly, potential candidates and companies within that industry and specialty may be “off limits” because of current client commitments and ethical considerations, severely limiting the depth and range of their reach.
Generalist firms, on the other hand, have a network of contacts across a broad range of industries and are ever watchful for candidates with transferable skills and complementary experience. Their expertise lies in search and research techniques to identify and secure high-demand candidates, without restriction.
Although they may not know all the nuances of a specialized field and may need to get up-to-speed on industry lingo and competitive players, the generalist firm relies on fresh research for each new search, thereby turning over all the stones in the field.
Another important decision before engaging an external search firm is the issue of choosing a retained firm versus a contingency agency. That choice hinges on the particular position to be filled. Best suited for hourly staff and lower to middle management searches, a contingency search agency generally has lower fees, partly from its limited service offerings.
They get paid when a candidate is placed and it is in their interest to send as many candidates as possible, without too much pre-qualification or evaluation. All responsibility for verifying candidate credentials and determining compatibility lies with the company. Companies are free to use as many contingency agencies as they want to, often resulting in producing the same candidate from the various agencies.
For their part, contingency agencies, without a binding retainer, are free to give up the search at any time. Even more important to the safety of your search: A contingency firm is not bound to honor the “off limits” rule affecting recruitment. That means the contingency firm is able to raid the very executives you paid them to place in your firm. Indeed, revolving executive placements are not unusual. One contingency firm re-recruited and placed the same executive in three different companies over the course of four years.
Retained search firms are a different breed. Most appropriate for upper level, executive and board searches, retained search firms offer valuable input to and assume responsibility for the search and placement process. They have a vested interest in producing attractive candidates for several reasons. The retainer focuses their attention and commitment to stay with the search until a satisfactory conclusion as good business; their reputation is at stake.
Retained firms put a great deal of unique research effort and candidate development into their work. Working with the company to define both the tangibles and the intangibles of what is sought, they are also objective in evaluating potential candidates to present for the best fit.
And, with their coverage of the market and lengthy experience, their work in reference and credential checking of candidates along with insight into just what the position and the company requires. This can minimize the risk of presenting inappropriate, unprepared candidates.
Retained firms circumvent the potential land mines of the unexpected. For example, they uncover the candidates’ hot buttons: relocation issues, compensation expectations, willingness to negotiate perks, and other decision-makers and breakers in considering the position and the offer. With the client’s best interests in mind, a retained firm’s search intent is to leave nothing to chance or last-minute surprise for all involved.
Regardless of the selection of the search firm, you should expect solid references, prompt responses to requests and questions, honesty, confidentiality and expert advice through the recruiting process. Any less, and you fire the firm, and seek another.
Expect contingency agencies to produce resumes of pre-screened for qualifications, although they may not be pre-interviewed before submission. They should provide information on the available talent pool, assist you in scheduling interviews, offer some insights into the candidate’s expectations, and help you negotiate the terms of an offer.
Hold retained firms to a higher standard, for, as collaborative partners, they add more value to recruitment activity. Beyond all of the above, a retained search firm presents only a manageable group of candidates already thoroughly screened and evaluated for qualifications and character-corporate culture fit. Retained firms perform market surveys, do complete background profiles, degree and employment verifications and reference checks.
They’ve seen all the tricks of the trade and know where the bodies are buried, if any. Experts in interviewing, they present objective recommendations of the candidates and submit periodic reports on the search’s progress to keep you informed. By the time candidates show up for interviews, you can expect them to be the best available.
In this era of reluctant job-switchers, a good search firm will market the position at your company to a desirable candidate, positioning the company, the position and the offer as advantageous and responsive to the candidate’s personal and/or career interests. It’s one thing to find a terrific candidate; preparing him or her to actually accept a change to your company is the second half of the retained firm’s task.
Finally, the hallmark of a really excellent search firm not only produces just what you are looking for, they also anticipate your needs before and during the search’s progress.
Hiring recruiting expertise is important to your company’s short and long term development. You want a responsive firm who returns phone calls promptly and produces results.
You also shouldn’t have to suffer inundation with scores of candidates, even if they are qualified.
It’s up to the recruiting firm to be selective in its presentations. Be wary of recruiters who promise too much, too quickly; a typical search for quality candidates takes 60 to 120 days. Warning bells should go off if candidates say the recruiter didn’t accurately describe the position or the company.
Before calling in a recruiting firm, check internal readiness. Know early on who needs to see the candidate within the company, what steps are required to hiring and identify any potential hiring issues so the recruiter has the complete picture.
Engaging a recruiting firm is a two-way partnership transaction. Just as you have expectations from the recruiting firm, do your part by being thorough and candid about the company, corporate culture, history and details of the position, and expectations for a candidate’s education requirements, special skills, personality traits, salary guidelines, and wiggle room.
Share the company’s current and future plans in confidence, including annual reports and collateral material, with the recruiter and provide access to the hiring manager and other decision-makers.
As worthy as recruiting firms are as contributors to the company’s progress, hiring does not happen in a vacuum. Take responsibility for managing the company interview process. Make sure company-side interviewers practice the finer points of current interviewing techniques, including the boundaries of legal questions, allow ample time to interview candidates, and communicate back any changes, feedback and recommendations to you and to the recruiter.
Similarly, be open to the recruiter’s suggestions. It may be, given the parameters of the search, you have to lower expectations of the hiring manager and about the position itself. Five years of experience may be just as useful as requiring ten years; a record of accomplishment can substitute for a degree from a top-tier business school.
Be flexible in structuring the job offer; one size does not fit all today. One desirable candidate’s decision point may be a highly attractive salary; another’s may be willing to forgo a portion of the compensation for more vacation time or less travel. With today’s seller’s market, be realistic and adjust accordingly. The exact executive you want may not exist, but there can be others with the right stuff who will grow into the position.
Should problems with the recruiting process arise, and they will, bring any issues up promptly, either with the recruiter or alert the managing partner of the search firm, to clear the air. A top-notch search firm will respond immediately; they want to preserve and deepen the relationship…and be called back for your next search.
6. The Candidate Defections Issue
Just when you think you’ve got ’em, your prized candidate bows out. It can happen at any stage of the recruiting-hiring process, and for any number of reasons.
Essentially, candidates defect because somewhere all the process, a clue was missed, a dropped hint was not picked up on. The most common causes are:
With executives in a buyer’s market, HR and their recruiters would be wise to make sure that these things that are within their control are set up to minimize losing desired candidates:
Above all, desired executives need to connect with the company and see themselves there. Every contact between the candidate and the hiring company should be warm and inviting. Informal meetings, meals and tours with the company’s senior executives help develop that connection so that by the time the offer is made and accepted, the new hire is already familiar and comfortable with the people there.
After the new executive is installed, continue the relationship by anticipating questions, provide coaching or partnering with another executive, and generally smooth the way. Productive executives should not be bogged down with the details or frustrated by procedures. If they are, that becomes another reason for them to take executive recruiters’ calls.
Without question, the search for and placement of A-level executives is of strategic importance to an organization. Doing the job well does more than replace an executive successfully. It speaks well of the HR Department for its skills, resources, intelligence and forward-thinking in shepherding the health and welfare of all those involved.
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