The Investigative Recruiter

The End of Men and What it Means for Retained Search's Patriarchy

This year, women become the majority in the workforce for the first time in American history. It is a critical milestone, one that we in executive search ought to pause to consider by reading an intriguing article in the Atlantic Monthly entitled "The End of Men".   The reason? 75% of the 8 million jobs lost in the recession were lost by men, as testosterone dominant blue collar and Wall Street jobs have gone the way of the dodo bird. At the same time men are having a tougher time getting by, women appear to be on the rise.  One reason may be that companies that employ woman leaders are simply more profitable. (Do I have your attention yet?)

A 2008 study attempted to quantify the effect of this more-feminine management style. Researchers at Columbia Business School and the University of Maryland analyzed data on the top 1,500 U.S. companies from 1992 to 2006 to determine the relationship between firm performance and female participation in senior management. Firms that had women in top positions performed better . . ."

At a time when excessive risk nearly drove our global economy to its knees, studies also suggests that men may be hormonally inclined to make reckless mistakes. Ironically, women's hormones -- the very chemicals held against us for so long -- appear to make us better decision-makers, especially in today's economy.

Researchers have started looking into the relationship between testosterone and excessive risk, and wondering if groups of men,in some basic hormonal way, spur each other to make reckless decisions. The picture emerging is amirror image of the traditional gender map: men and markets on the side of the irrational and overemotional, and women on the side of the cool and levelheaded.

In fact, women's recent majority win in the workforce may be just the beginning because women are graduating in higher numbers from college. "For every two men who will receive a B.A. this year, three women will do the same." The article goes on to explain the implications:

IF YOU REALLY want to see where the world is headed, of course, looking at the current workforce can get you only so far. To see the future—of the workforce, the economy, and the culture—you need to spend some time at America’s colleges and professional schools, where a quiet revolution is under way. More than ever, college is the gateway to economic success, a necessary precondition for moving into the upper-middle class—and increasingly even the middle class. It’s this broad, striving middle class that defines our society. And demographically, we can see with absolute clarity that in the coming decades the middle class will be dominated by women.

The domination is also being expressed in gender selection at fertility clinics. Based on anecdotal evidence, parents seeking assistance in getting pregnant are choosing girls over boys three-fourths of the time.  While that particular fact and the idea of women's collective rise to power may be shocking to some, it is yesterday's news to my teenage daughter and others her age raised on a steady diet of girl power videos from artists that include Beyonce who tours with an all-female band. In song after song (Irreplaceable, If I Were a Boy, and her earlier Destiny Child's Survivor), she conveys that rather than being worthless or worth less than men, we of the female persuasion are actually worth something -- at the very least, a ring. 

 Beyonce's Single Ladies (Put A Ring On It) begat a flash mob in Piccadilly Circus in London . . .

 . . . and morphed into a gay power subplot on the Fox show Glee . .  .

 . . . which begat SNL's rendition.

If Justin Timberlake feels secure enough in his manhood to don a leotard and high heels in a Single Ladies send-up, then perhaps we have, indeed, arrived. However, the major retained search firms yet to come to that realization when you examine the percentage of women they employ.  I actually stopped and counted the women listed at each of the U.S. offices. The unofficial tally is as follows:

• Korn Ferry: SeniorLeadership: 20% women - 3 of 15, U.S. Consultants: 24% women - 75 of 311
• Heidrick: Senior Leadership: 16% women - 1 of 6, U.S. Consultants: 25% women - 46 of 184
• SpencerStuart: Senior Leadership: 0% women - 0 in 7, U.S. Consultants: 38% women - 54 of 141
• Russell Reynolds Senior Leadership: 0% women - 0 of 1*, U.S. Consultants: 39% women - 41 of 108

Despite the paucity of women in top leadership roles, the retained search industry hates, hates, hates to discuss sexism as if closing its eyes to gender bias will make it all go away. It is the same kind of wishful thinking practiced by a toddler who thinks covering his eyes with his hands makes him invisible. The old boys that remain of the Old Boys' Network are Masters of Denial, an impulse rooted their privileged white male DNA.

The retained search industry emerged in the 1950s as firms spun off from professional services companies.  Gardner Heidrick and John Struggles were both veterans of the management consulting firm Booz Allen Hamilton. Spencer Stuart worked for them for a year before leaving to found his own search firm. Lester Korn and Richard Ferry met at accounting company Peat, Marwick, Mitchell.  Russell Reynolds worked for a time for William Clark, a firm that had been spun off from another accounting firm Price Waterhouse. Sid Boyden was ahead of all of them, founding his firm in 1946.  However, in the decades since their founding, not a single firm has chosen to name a woman as their CEO. That paticular glass ceiling has yet to shatter, mirroring the vast majority of the Fortune 500 firms that they serve.

Understandably, gender bias has long been topic that most people would rather not discuss. Most of us prefer to focus on the positive, because sexism, like any other kind of ism, is such a bummer. Besides, people get all squirmy and uncomfortable in much the same way people don't like to talk about race, which is why President Obama rarely goes there. However, the bias now appears to be getting turned on its head. Whatever was working against women now appears to be working for us as a gender. More important, it appears to be working for our society as a whole.  It isn't that women benefit: we all benefit. The End of Men article by Hanna Rosin goes on to point out:

Up to a point, the reasons behind this shift are obvious. As thinking and communicating have come to eclipse physical strength and stamina as the keys to economic success, those societies that take advantage of the talents of all their adults, not just half of them, have pulled away from the rest. .  With few exceptions, the greater the power of women, the greater the country's economic success.

In other words, countries where women are on the rise simply make more money. (Do I have your attention yet??) That capitalistic truth should be reason enough to pursue gender neutrality within our own ranks, and to inspire us to help our clients usher deserving, hardworking women up into middle and upper management where they have yet to enjoy their fair share.  The reason is as simple. To quote a campaign slogan of former Bill Clinton, "It's the economy, stupid." The End of Men, as a thesis, simply means that whenever a woman advances and gets more, it's not that she get a male colleague's slice of pie -- the pie actually grows. That fact alone ought to be enough to inspire even the most serious among us to break out in dance. Of course, Ms. B is going to help us do it in style. To learn the Single Ladies dance, simply study her dance routine below, slowed to half time.

Candidate Mapping: A Best Practice for Executive Search Due Diligence

Imagine that an executive search that you've been conducting hits the wall. The CEO or Hiring Executive calls you in for a full accounting. You walk into the office. He closed the door behind you. In that very moment, you become painfully aware that your job and your reputation are on the line.  He gives you the third degree. With each subsequent question, you get smaller, and smaller, and smaller until you completely disappear . . .

The CEO asks:

• Why don't we hasn't this position been filled?
• Have we run out of potential candidates or are there still more people we need to recruit?
• Do we need to change our search strategy? 
• What do we need to do to close this search?

If "I don't know" is the first answer that springs to mind in response to most of the above questions, then you and your searches are at risk. Quite simply, they lack due diligence. In fact, when I think the words "I don't know" in my head, I hear Bill Cosby's voice impersonating a young child as he lampoons his children's frequent use of the phrase.

You must be able to justify your recruiting work from a strategic perspective.  You cannot simply detail how busy you've been or how hard you've worked. You must think strategically about how you would answer the above questions and then manage your searches accordingly. You must "nail down" the facts as you know them.  To offer due diligence, you must aspire to map candidates at each of your primary target companies to determine how many you have identified and how many you have left to surface. 

I'm presenting training webinar on this topic this coming Wednesday July 14th Recruiting Smarter: Search as Investigation. (The training is free because Dice is sponsoring the virtual event with their friends at HR.com.) 

Embrace the Burlesque: Recruiting Lessons from Chicago, the Movie

Oscar Wilde noted more than a century ago that "Life imitates Art far more than Art imitates Life".  And thus, it should come as no surprise that there are lessons to be learned about executive search when viewed through the lens of the burlesque. Burlesque is defined as humorous theatrical entertainment involving parody, grotesque exaggeration -- and, yes, even striptease.  So what is a discussion about burlesque doing in a blog about recruiting?  Stay with me.

My teenage daughter watched the movie Chicago for the first time. For me, it was the umpteenth, but I was taken by how many of its bawdy observations applied to the world of executive search. The song Mr. Cellophane could be just as much as song about a candidate struggling to be noticed, as it is about the character Amos Hart (John C. Reilly) who is the husband of Roxie Hart (Renee Zellweger), a woman who hopes to break into vaudeville, and gets there after killing her boyfriend and hiring lawyer Billy Flynn (Richard Gere). She teams up with Velma Kelly (Catherine Zeta-Jones), who killed her cheating husband to become a vaudeville act.

Cellophane
Mister Cellophane
Shoulda been my name
Mister Cellophane
'Cause you can look right through me
Walk right by me
And never know I'm there...

Frequently, I am approached by Mr. or Ms. Cellophane trying desperately to be seen and heard. While I try to help and while I have pro bono efforts to that end, I am not a personal career coach or agent. I am paid by very powerful client corporations to find the ideal candidate for a specific role or opening. That said, I regularly foster relationships with select executives who are counted among industry's best and brightest - luminaries and up-and-coming stars. However, what's a candidate to do if he or she isn't counted among the rock stars in the 99th percentile? What's the best way to to get on my radar screen? Again, there's a lesson to be learned from burlesque.

Executives and technologists regularly call executive search consultants asking for help to in finding their next opportunity.  However, calling up and asking a complete stranger to do you a favor is not the best way to make a good first impression. That kind of initial "how-dee-do" can make you sound needy and even selfish. As a result, you are practically asking to be rejected.

Networking is not about the get, it is about the give.  When you give, you become empowered. The give may be sharing industry insight, making an introduction, or offering to refer business. But when you go there -- when you focus on what you can do for someone instead of what they can do for you -- you will consistently yield better results. You avoid "graspiness", which carries with it a whiff of desperation.  I know it is challenging to do when you are, actually, in desperate circumstances.  Unemployment has a way of pushing families to the brink of homelessness so very quickly.  But still, focusing on the give help get your mojo working again. You put energy out there in the universe that will reap rewards. I have seen it happen, time and again.

So be good to Mama, my friends, be very, very good.

How the Mighty Have Fallen

A Nor'easter hit my hometown of Westport, Connecticut -- rather, more like a hurricane, with wind gusts exceeding 60 miles per hour.  It rendered my town impassible.  Downed trees blocked egress on virtually every major and minor thoroughfare. We were without power, cable, television, and phones for a week. Hotels within an hour's drive radius quickly sold out, their rooms filled with displaced victims of the storm and CL&P crews brought in from surrounding states to repair the damage. We felt lucky to find room at a Marriott just 30 miles away, and even luckier that we could stay there the full week while others who did not foresee an extended stay were forced to find shelter elsewhere.

In retrospect it seems an fitting metaphor for our financial crisis, and, in turn, for the crisis experienced by the executive search business, especially retained search firms.  The massive trees felled on our property serve as testimony to how swiftly the mighty have fallen.

According to my CPA, the executive search business has always been cyclical.  He does the taxes for  number of search firms, large and small, retained and contingency.  He's noticed these companies are always among the first to get hit in a financial downturn and the among the last to recover.  Hiring executives pull back hard on hiring at the the first signs of a slowdown and they often postpone hiring until they're sure a recovery is well underway. Ironically, retained search is always hit the hardest: it seems they have the most to lose.

Experts believe we have witnessed what will remain the worst economic crisis of our lifetimes.  In fact, many are predicting that the retained executive search business has been forever changed.  Companies reduced their use of retained search starting in 2007 and, some say, many learned to live with it quite simply because it is so costly.  Traditional retained search charges as much as 33% of a candidate's first year compensation plus expenses.  Moreover, nearly half of the time the money's wasted because, according to industry expert David Lord, 40% of all retained searches fail to complete.  And it appears, a growing number of corporations have had enough. 

Korn Ferry's stock price is still down 30% since before the financial collapse from a high of $26 in June of 2007, dipping to as low as $8; Heidrick & Struggles stock price is down 40% from a high of $51, dipping to as low as $14. Heidrick is now ranked among the bottom five companies in the Human Resource & Employment Services industry as measured by the potential gains between the current stock price and the projected average analyst target.

As a result, the major retained search firms have diversified their service offerings to make up for the deficit in search engagement revenues.  But the writing is on the wall.  An increasing number of employers are breaking with tradition and are turning away from traditional retained search and toward more innovative firms that offer a better return on their investment.

Selecting A Search Firm: The Greatest Myths

Retained search firms frequently provide guidance to prospective clients on how to select a search firm. But a number of their assertions have gone unchallenged, much to the detriment of employers that have been hoodwinked into paying far too much for too little in return. Well over half of all retained searches fail to complete and it is estimated that 40-50% the executives who are recruited don't make it past their first year.  Clearly, something needs to change.  I suggest we begin by exposing some of the myths regarding what an employer should look for in selecting a firm.

Myth #1: Find a search firm that specializes. 

On the face of it, specialization seems to make sense.  Clearly, you want a firm that understands your business and its players. But there are many ways to come by that wisdom.  Moreover, seeking industry specialization is like tying your feet together at the beginning of a foot race.  Industry specialization cripples your search efforts because it sets up client blockage: any search firm that specializes in your industry will be unable to recruit from all of your ideal target companies because a number of those companies will be clients of the firm.  Of course, the search firm will promise to tell you if there is a conflict, but why should you believe them? They have intentionally pursued a model that sets up a conflict of interest.  In other words, it doesn't bother them enough to do something different and do the right thing.Why don't they make a commitment to serve just one major client per industry?  Bain & Company did that to leave no doubt in their clients' minds that Bain was loyal.  It is a commitment that we have decided to make. Rather than specialization, buyers of search should seek loyalty instead and choose a firm that takes pro-active steps to prevent conflicts-of-interest.

Myth #2 - Choose a retained firm that charges 30% of first year total compensation plus expenses.

Retained search firms, on average, charge 30% of annual first year total compensation of the candidate they place plus expenses. While it isn't technically price fixing, it is sure seems as if the search firms got together and colluded. In fact, if you actually stop to think about it, retained search firms have significant motivation to enforce their exorbitant fees.  For executives whose total compensation exceeds $300-thousand, search fees top $100-thousand and beyond.  Retained firms get paid that whopping sum whether the search lasts a week, a month, or a year.  In other words, the fee is completely disconnected from the actual work that they do.  Certainly, it is time for some other pricing options, such as a pay-as-you-go monthly retainer for as long as you need. No more, no less.

Myth #3 - Find a search partner that claims to have extensive network to tap for candidates.

A good search partners works their sources the way a reporter does. (As a former award-winning investigative reporter,  I know a great deal about the care and feeding of sources.)  But do not assume that a search partner will be able to recruit a candidate simply based on a preexisting golfing or country club relationship.  Conversely. do not assume that a candidate will refuse to engage just because they're hearing from a recruiter for the first time. Either the timing and the opportunity are right or they're not.  Executives do their due diligence.  In light of the many ways we can reach out and touch a candidate, what seems to matter more is the ability to uncover all viable candidates.  You usually don't do that from the 9th hole.

More on the myths in future posts.

Turnaround Talent: Turnaround Search 911

It's been a long, hot summer.  Dog day afternoon.  Far too many gifted executives caught by the undertow of the economy. It is as if we -- the keepers of talent -- have been standing on the beach as we watch companies, colleagues, and loved ones dragged out to sea.   But we are the lifeguards, the company-guards, the keepers of the flame and of talent. 

When business plans fail, it is talent that drives a corporate turnaround.

For nearly a year, colleagues in executive search have put on a brave face: they've witnessed profits plummet as companies stopped hiring C-level executives. Phone 911.  But our comatose economy is showing signs of stirring. 

Our practice is picking up turnaround searches from vast financial institutions who have had their playbooks rewritten, and who have regulators as referees.  For other clients, we're conducting confidential searches to replace senior executives who are not matching force with the increased demands of the economic downturn. Helming a company that is downsizing or controlled by regulators isn't easy or pretty. But somebody has to do it. Frequently, that somebody has to be brought in to save the day.

Recruiting into companies as they reorg and restructure is like switching out the engine of a 747 in flight.  It is like playing football, only the playing field has goal posts on roller skates.   These are the times which try corporate souls and test the mettle of top search consultants.

But the neat thing is this: The strong will survive.  In fact, they will thrive.  Increasingly, we are diving in to rescue companies and colleagues. We will breathe life into the executive suites of the companies we serve -- stat  -- which in E.R. parlance is short for statim, the Latin word for immediately.

When Retained Firms Come Up Short

You’ve engaged a top retained search firm for a high profile C-Level executive search.  You willingly pay a retained of upwards of $150,000 in good faith. The retained firm has conducted numerous searches that are practically identical to yours.  Better yet, this particular firm specializes in your industry and the senior partner handling your search hails from that same vertical – even golfs regularly with industry’s VIPs.  However, the moment the firm starts presenting executives you become concerned.  The candidates aren’t just a little off.  They’re so far off you wonder why they were presented in the first place.  Well, you are not alone.  On average, 40% of retained engagements fail to complete, wasting hundreds of thousands of dollars in retained search fees.  While that level of waste clearly is unacceptable in today’s economic environment, it remains the norm.

Problems with the retained search model include:

• Senior partners focus on securing new business, not on execution
• Junior associates do most of the actual recruiting
• Their research is often amateurish, missing star candidates
• Specialization in your industry does more harm than good:  they cannot recruit from important target companies that were clients
• Golfing with candidates does nothing: no top candidate would ever accept an opportunity just because a retained partner said so
• You never really know what they’re doing for all that money: they provide little transparency
• They never hand over all the research at the end of the engagement, even though your retainer paid for it

Retained firms can’t help it.  The model is flawed.  It is based on the illusion that the more you pay the more you get.  The truth is retained search is expensive: you always pay an average of 30-33% of total compensation, even when they don’t deliver the candidate you need.  And when they come up short, you pay even more in wasted time, lost productivity, and lost revenue.  The solution is easy. Invest in a pay-as-you-go model, one that can save you money at the same time it consistently delivers quality candidates. You’re free to stop at any time. But you won’t want to because will have found a better way.

How Much Do You Trust Your Search Firm?

Trust. I don't know about you, but it's huge in my book. It makes and breaks deals, friendships, and, at times, fortunes.  In the world of executive search, the best companies and the most brilliant leaders depend on us to have their best interests at heart.  Yet, if that's the case, why do off-limits remain such a big issue? And why, at the end of the day, do so many clients trust their search firms so little?

I would argue a couple of issues are at play.  One is a lack of transparency.  A good many retained search firms refuse to share the information they've gathered over the course of a search, arguing that to do so would violate search consultant - candidate confidentiality.

Please.

As a former investigative journalist, I know all about confidentiality. In fact, unlike search partners, I had to be willing to go to prison to protect a source. If there are some details that a candidate would rather not share, it is easy enough to redact from data exports and update reports to the client. That is why I suspect that the primary reason search firms refuse to share the data they gather over the course of a search is pure self-interest. They simply don't want to help their clients build their own database.  Another reason is that some firms may be afraid to "show their work" quite simply because they haven't done it.

Whom do you trust?

Because we're positioned as the next-gen alternative to traditional search firm models, we power every engagement with investigative research that gets us to the winning candidate in a matter of days. In fact, we learn that by drilling down and providing granular detail, we've provided an important platform from which to build out a real consultative relationship of trust and collaboration.  It takes courage to show that level of detail, but it speeds corrections of errors and in so doing brings strength and resiliency to the process.

Another issue is off-limits.  Ironically, whenever a search firm specializes in an industry it becomes more of a liability than an asset, as increasingly that search firm is unable to recruit from target companies because those same targets have been clients of theirs. Search firm specialization creates the very off-limits issues that clients wish to avoid.

My firm's primary specialty is how we do search. It is our investigative approach to recruitment. It enables us to work across numerous business verticals to deliver star candidates other firms miss. (He who has the best information wins.) Quite simply, that kind of specialization rewards trust with less search, more find. 

The Six Degrees of Separation Myth and Why It Matters in Executive Search

The other day, I was discussing social network mapping theory with Valdis Krebs and the amazing things one could learn from the networks of executives to inform recruitment and retention.  During the conversation, Valdis casually mentioned something that detonated in my mind in the hours and days immediately following our discussion: the six degrees of separation thing is, essentially, a myth. 

The six degrees theory emerged, according to wikipedia, as follows:

The small world experiment comprised several experiments conducted by Stanley Milgram examining the average path length for social networks of people in the United States. The research was groundbreaking in that it revealed that human society is a small world type network characterized by shorter-than-expected path lengths. The experiments are often associated with the term six degrees of separation, although Milgram did not use this term himself.

It may not be a small, small world afterall . . .That may explain why Jobster - the social networking meets job referral site - has had so much trouble catching on.  Basically, as Valdis explained it, with luck one's direct connections (to the second degree) might be willing to make a referral, but with every degree beyond that, the likelihood of a subsequent referral becomes exponentially smaller.  In the end, only a small percentage of a social network actually makes referrals to the sixth degree. In other words, most referrals reaching beyond one's immediate connections go nowhere.

So, if the myth argument wins out, then online social neworks are not the silver bullet they've been made up to be . . .at least when it comes to referrals.  The lesson for executive search? Do not depend on online social networks for referrals and introductions. At The Good Search, we've always found it to be far more effective to simply pick up the phone. 

The Big Idea in Executive Search

Donny Deutsch, Host of the CNBC television show "The Big Idea" features successful entrepreneurs who've launched products, companies, and at times, even whole industries inspired by the realization "there must be a better way!"  Where are the big ideas in executive search?

In the recruiting industry, we essentially have two flavors of search firms: Retained and Contingency.   The two models are distinguished primarily by how they prefer to be paid.  And while the end product is essentially the same (a placement), the process is very different.  Retained tends to be fairly consultative and labor-intensive. The candidates are scrutinzed to a higher degree quite simply because more is at stake. Contingency is highly transactional and is typically aimed at the staffing level.  They have to make a rapid placement or else they move on.

Research firms have primarily taken a back seat to search firms, whether retained or contingency. Retained search firms, in their effort to stave off competition, frequently marginalize research and framed it as a low-level, if not secretarial, back-office function . . .  this even though research is the very thing that identifies and develops candidates.  Ironically, it is viewed as tactical -- simple name generation -- when, done properly, the very opposite is true.  Search that does not leverage hard-core investigative research (human capital intelligence) is tactical. In other words, most retained search is tactical. 

Denigration of search research, from where I sit, is mired in the good old boys' network that attempts to keep clients snookered into believing that they make better placements simply because they say so.

The reality, my friends, is that one makes better placements if one is smarter as in  "he who has the best information wins".  And the only way to make yourself smarter in search is to power every engagement with an investigative process that analyzes the date you gather to transform it into actionable intelligence (translation: to find short cuts to the best candidates).  This form of research is not a simple list of names. Search without it is like searching with your eyes closed. 

At the end of the day, search should not be defined by how you bill for the service (retained versus contingency), but by how you deliver the candidates.  If your search process isn't informed by actionable intelligence, than it is search dumbed-down.