May 6 2016
Companies must have a compelling hiring need to pay the fees of executive search consultants. Otherwise, they would do the search themselves through their network, LinkedIn or hiring boards. Many companies even start by looking at their own networks before hiring an executive recruiter. Here are the reasons why companies look to executive recruiters.
Top talent - Executive recruiters are continually talking to executives and thus have a network and know the benchmark for talent in the market. Companies strive to find "A" plus talent, not just to do a good job, but because once a "B" level executive is hired, most will then surround themselves with "B" and "C" level talent to raise their own profile. Executive search consultants can find and attract "A" caliber candidates.
Disruptive technologies - A disruption in technology creates a need for new skill sets. Think about hot technology areas: cloud, cybersecurity, Internet of Things, autonomous vehicles and more. These new technologies create a need for enhanced skill sets, which may be nascent in the job market or new to the company. As an example, in the very early days of the Internet, when corporations had four page websites, one search client needed a VP of Engineering to build the products to help companies build websites. But there hadn't been any commercial websites a year earlier so very few people had the technical skills to create websites, let alone build the tools to do so.
Think about how these new technologies create the need for new skillsets in the executive and employee base as well as at the board level. Boards are looking for digital and cybersecurity experience. Executive recruiters are hired to find these innovators.
Changing roles - Changes in business can also lead to new titles in an organization chart or new responsibility for existing roles. For example, the current digital era is creating the chief digital officer, which can sit in many places within a company, from leading a new group, to joining marketing or information technology. We see marketing executives now leading shadow IT functionality when purchasing SaaS based applications to improve marketing and lead generation. As executive roles evolve, companies hire executive recruiters to help define roles and location in an organization, as well as finding executives who have the added experience.
New markets - As companies grow and expand into new geographic markets, new vertical markets, or product extensions, companies look to executive recruiters to bring in the skills needed. For example, recruiters are hired as companies expand sales or operations into Asia or Europe or as Asian-based companies set up US operations. A new vertical industry may be taking a solution that has been effective in the financial services market and introducing a solution for the healthcare market. Or, the company requires product marketing, engineering development or sales expertise as it launches product extensions. Executive search consultants provide expertise beyond a company's core markets.
Company growth - Executive search consultants are hired to help a company scale. Whether working with venture capital-backed entrepreneurial companies or other high growth corporations, a different skill set, processes and leadership are required to grow the company to the next level. Looking at entrepreneurial companies as an example, the executive to grow the company from start-up to first customer is different that the executive team to grow to $5-10 million in revenue, or from $50-100 million and beyond. Executive search consultants are brought in to upgrade talent to the next level of company growth.
Talent shortage - As market conditions heat up, the pool of candidates shrinks and candidates have multiple offers. Recruiters bring a strategic, objective approach to attracting talent in a competitive marketplace. Recruiters reach out to candidates and find those at a reflection point in their career to make the move to a new company.
Breadth of network - Companies may start recruiting and then exhaust their network. Sometimes, they have tried to hire and been unsuccessful. The market may even react to these “broken searches” thinking there is something wrong with the employer. Recruiters bring focus, dedicated resources, broad market coverage, and a marketing pitch to get the search filled.
Confidentiality - Companies hire executive recruiters for sensitive searches, whether replacing an incumbent or entering a competitive market without signaling the market. Recruiters may reach out to competitors, suppliers or customers that a company may not be able to. Executive search consultants can execute confidential searches only sharing company information when a qualified candidate starts talking with the client.
Critical hire - Companies that have made a previous hiring mistake or have a mission critical need will leverage executive recruiters to get the business results needed. The costs of a wrong hire can be high, so the executive recruiting fee will look small in comparison to the value of the right hire.
Consensus - Executive recruiters can be brought in when a consultative approach is needed to gain strategic, objective consensus from divergent stakeholders at the board or executive levels. At the start of the search, executive recruiters will meet with the different members of the jury to assess whether the team is in agreement with the candidate need. If not, the recruiter will work to gain consensus early in the search saving time to reach agreement on a candidate.
Marketing - Some companies hire major executive recruiting firms to provide branding through consistently presenting marketing messages to customer and partner ecosystems. Companies that are venture backed or not the top company in the space can leverage the brand of large executive search firms to bring credibility to the company and the role.
Diversity - With the big push in industry to have diversity of thought or an employee base that matches the customer base, companies look to executive recruiters to introduce slates of women and minorities to add diversity. Executive recruiters can also bring best practices and coaching on increasing diversity hiring. Executive recruiters that specialize in diversity recruiting can add significant value in increasing the pipeline for diversity.