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Executive Recruiting

Ditching Recruiting Firms Contingency, RPOs, and Old-Fashioned Retained Search

Why are more and more forward-thinking employers ditching recruiting firms that produce, to put it bluntly crap. Most firms that have spent the time to really investigate the search marketplace have learned that Contingency, RPOs, and traditional retained search firms need to be ditched in favor of the 21st century success based recruitment?

In a 3.5% unemployment rate, most Hiring Managers know the undisciplined, inexperienced, and average “C players” are predominant on job boards.  In addition, with job aggregators, job openings get overexposure to the point the company suffers in public relations and branding.  same goes for RPOS and contingency search firms – the more they re-post the same job posting, the worst candidates are revealed.

Ditching Recruiting  Firms that Fail to Produce

You have certain objectives you want a new hire to meet, for most C-level executives there is not a cookie cutter template to be applied to their position.  Your target market are passive candidates, those that would never read job postings that have been picked over by every Tom, Dick and Harry, they simply are not actively looking,   What interests passive candidates?  A new challenge, a different product or service portfolio, location, company size, and more.   A typical job posting showcasing responsibilities and requirements is a no enthusiasm road map.  It is in reality a robotic drone of words strung together that entices only the unemployed or average active job seeker.

Even the traditional retained search model, which does produce much better candidates, is going by the wayside.  More and more companies are ditching recruiting firms that are traditional retained search models.

While employers understand the deposit to initiate a search, they expect results.   Most have a 90 day to 6 month replacement guarantee.  But they collect all the fees within 90 days regardless of outcomes.

‘The new paradigm, which NextGen Global Executive Search has used for a decade, is a search should be success based in regards to the recruitment fees.  Also known as a performance based search, after the deposit (which is a very reasonable percentage of the overall cost) the 2nd invoice is due upon acceptance of the shortlist and in-person interviews are scheduled. The final invoice is due upon the hire being completed.

Ditching Recruiting Firms with Compensation Based Fees

In addition, success based search fees should be a flat fee and not based on compensation.  The reason is simple, in that compensation based fees can cause an increase in the overall recruitment fees during offer negotiations which is an inherent conflict of interest.  As stated earlier the 3rd and final invoice occurs on the hire and is backed by a  24 to 36 months replacement guarantee.

The end result is both the employer and recruiter have skin in the game and the employer is confident that the majority of the fee is based on the recruiting firm meeting the objectives and a solid new hire.  To read further on why companies are ditching recruiting firms and comparisons between contingency, RPO, traditional retained search, and success based retained search, download the PDF.

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Executive Recruiting

Engaging a Retained Search Firm for Multiple Key Staffing Needs is Best Option

The truth of the matter when engaging a retained search firm for multiple key staffing needs is they produce far better candidates, have much deeper relationships in the industry they are working in and have a search process that in the end delivers candidates who can meet or exceed the objectives of the role in which they are hired into.

Many company’s HR and Talent Acquisition groups think more short term than long term when it comes to staffing critical roles.  The long term strategy is most often used – a combination of career site branding, job boards and job aggregators, LinkedIn talent solutions, and using multiple contingency search firms to help build a large database of potential candidates.

What is missing is that for critical roles that must be filled with quality new hires, the long-term strategy rarely works.  Even though using RPOs and contingency search firms will result in the most resumes, it is pure folly to believe quality is the main driver produced by those outsourced means.  Therefore, engaging a retained search firm is the best of all options when outside recruitment help is needed.

Let’s look at the recognized statistics in the global workforce. The majority of all workers – approximately 55%, are “C players”. They are literally just bodies taking up space.

They show up on time, can perform assigned tasks assigned such as software or QA engineer, customer service, inside sales, operations, manufacturing and production roles.  But the reality is that they don’t develop intellectual property or design anything new;

They are not problem solvers, entrepreneurial or creative and contribute virtually nothing to increasing market share or improving P&L ratios.  In addition, many “C players” are just not good employees. Often a lack of upwardly mobile skills, education, and more equates to lack of motivation outside of a repetitive paycheck.

Next are the “B players” who make up to 35% of the workforce, have real education and skills, contribute to developing IP, producing revenues, or some other vital contribution.  However, the cream of the crop is approximately 14% of the workforce known as “A players”.  From janitor to CEO every type of role has their “A players”.  What is so great about hiring them?  Leadership IQ and SHRM have developed studies and surveys that demonstrate that “A” players” produce 8 to 10 TIMES MORE than even “B players”.

Reasons for Engaging a Retained Search Firm

With over 30 years of experience in the executive search business, we have rarely seen contingency search firms or RPOs deliver “A players” and have no consistency in delivering “B players” for clients to consider. How do we know this?

In a less than a 5% unemployment rate environment, most exceptional professionals are happy where they are now in terms of their role, their employer, and compensation. If they were to become passive candidates and look to make a change due to desiring new challenges or relocation, they would simply network and reach out to hiring managers in their industry directly. They rarely look at job postings and have no need to post their resume to a job board.    They will not fill out an online application on any company career web site. They are bombarded with emails, InMail’s, and calls every day from corporate recruiters and contingency search firms who generally speaking fail to understand these professionals will likely only speak or reply to an actual executive hiring manager or a retained executive search consultant with a solid reputation among industry Board of Directors and CXOs.

Contingency and RPO firms rely heavily on job postings and job aggregators.  But many of those applicants are the unemployable, unemployed, or “C players”.

In large contingency search firms the recruiters are graded on the number of send outs (resumes that need to be sent daily to meet a quota).  And RPOs have a LOT of clients.  Ask yourself, as a client, how much of a priority are you to a recruiter working on 12 to 25 searches at a time?   What type of quality and search process would you expect?

I’m not knocking contingency recruiters.  I used to be one before I changed to retained almost 20 years ago.   Why did I make that move?  One, I realized to really have clients as a priority and deliver a superior service, I personally could only work on 3 to 4 searches at a time.  To do more than that means both the client and my reputation suffer.  Two, with using a search process that was very sound I knew the methodology would unearth those “A players” so I could assess and deliver proof that the shortlisted candidates I presented could meet or exceed the expectations and objectives of the role and client required of the new hire.

As for cost and benefit analysis, the benefits of using retained search is overwhelming while the costs are not much different than contingency search fees.

When looking to engaging a retained search firm, you are assured that the vetting and development process are superior as you usually receive only 3-4 shortlisted candidates for each role.

Retained Search provides detailed interview and assessments including current / prior KPIs, depth of industry relationships, and similar accomplishments relevant to the new role.

Team fit analysis and Target Candidate Profile – by conducting brief online surveys of the stakeholders for each role (team the role will work within and key internal customers), a team profile allows the recruiter to use behavioral analysis and assessment to determine how the potential candidate will fit in and affect team dynamics. One-way behavioral testing of candidates never works as it fails to have anything to measure against.
Much longer retention of new hires from retained search firms. For instance, 94% of our placements are still working for that client after 4.5 years.
Superior Replacement guarantee – most contingency firms incorporate a 30 to 90 days refund or replacement. Retained search firms are often 6 to 12 months.  We believe in our process so much that we offer 24 to 36 months replacement guarantee depending on the assignment.
Success based search fees – this is relatively new for retained search firms but a practice we have used for the last 5 years. With most large retained search firms, you pay 100% of the fee regardless if the outcome was successful.  Other search firms like NextGen Global Executive Search are performance based.  After the initial deposit, the remainder of the fees are paid based on deliverables, including the hire.
Flat based fees – this is also a relatively new concept. This arose out of the obvious conflict of interest associated with compensation-based search fees.  If the recruiter negotiated a higher compensation that was agreed to by both client and candidate, the search fee increased.  While some retained search firms use the same fee for every search on a flat fee basis, at NextGen we realized we are being paid for our work.  Therefore the basis of the flat fee is appropriate to each role depending on factors such as limitations on relocation, the actual candidate pool size, the number of hours expected in research, search strategy, recruiting, and delivery.

For instance we have clients in the Bay area, NYC and Boston who funny as it sounds believe few exist outside their geography that are worthy of consideration as they often think of themselves as the center of the technology universe.  Additionally, for some roles the candidate pool overall is small such as AI architects and power electronics design engineers.

Engaging a Retained Search Firm for filling multiple roles

As retained search firms are like good lawyers and executive management consultants, we ask for a deposit,.  This means the client is a priority as they have “skin in the game”, knowing the search firm has a track record in longer retention and producing exceptional new hires.  So, the overall flat search fees mean that engaging a retained search firm is clearly the best choice.

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Executive Recruiting

Effectively Manage a Remote Workforce

Many companies have used remote workforces for decades.  But that has traditionally been offshore in manufacturing and software development.  With Covid-19 we now have remote workforces domestically as most now work from home.  How do you come up with a sound plan to effectively manage a remote workforce?

The pandemic is creating a constantly changing national condition often leading to confusion, lack of proper communications, and fear.   But there are steps you can take that will empower your workforce while encouraging better behavior and allowing employees to remain engaged.

Every day the boundaries and goalposts are moving, so it is vitally important that leaders in industry, business and human resources are kept as up to date as possible to avoid generating fear, adding to the confusion or creating workplace dysfunction.

We need to know all we can in order to adapt, innovate and implement new ways of operating during a crisis.  Therefore, clear communication, accurate information and considered action are required.

Ideal tools to effectively manage a remote workforce
Video meetings:  Zoom is one of the best as it offers group meetings with employees, group meetings with customers, and more.  All meetings can be recorded.  For many, you need just one paid Zoom account and can add all your users for free.  That saves you money, but it has one limitation – in group calls of 2 or more, you cannot record more than 40 minutes.  So, make sure those who need longer times have a premium account. And to avoid hackers sending porn and scam, make sure each meeting requires a password to access for all who attend. With security concerns with Zoom, the best alternatives are GotoMeeting and Signal Wire.

Effectively manage a remote workforce for management:  Slack and Asana are both excellent and well-built tools for collaboration, even providing Agile and Scrum.  For Engineering they provide tools for work flows from code review to release; for Financial and accounting teams, it offers secure collaboration, digital transformation, and connects systems, plus internal and external teams, to reduce friction; for Sales and business development, from the CEO to the new AE, comes together to move deals forward.  Conversations happen in channels — organized by topic, territory, etc. — so the full context of a deal can be easily seen by everyone. Share sales goals and track progress to keep everyone motivated and aligned; for Customer Support, it supports urgent and routine issues from a central hub. Field requests directly through Slack or Asana or integrate your helpdesk software to assist users.  Send new tickets to a related channel and sort out issues together.  Start a new channel for incidents or response-heavy releases to keep discussions on track; for Human Resources, it speeds up their hiring process by facilitating candidate reviews and preparing for interviews.  By integrating review tools and prepping interview panels moves candidates from on-your-radar to offer letter, faster.

Cloud based sharing:  you’ve heard of dropbox, SharePoint, and Google Drive.  But the #1 easy to use system by far is Sync.  Share only what you want to share with certain team members and control the release, edit, view and download restrictions as you see fit.  Plus, no reliance on Microsoft or Google, who prefer to control you anyway.

Alternatives to the production floor:  additive manufacturing, also known as 3D printing, is a process that creates a physical object from a digital design. It is surprising how many companies produce products using robotics and RPA – very helpful when one cannot staff a manufacturing facility amid social distancing.

VoIP phone systems:  Ring Central is one such affordable system, proving rerouting of phone numbers, group video meetings, conference calls, SMS chat, and much more.   While here at NextGen that is our actual phone system, many companies are using it as a temporary alternative. Has your organization been impacted by the pandemic?  Are you a K-12 educator? A health provider? A non-profit organization? Ring Central Office is free of charge to you during the pandemic.   In other words, they will provide all those impacted with video conferencing, team messaging, business phones, and even SMS and fax—all modes of communication needed by teachers, students, healthcare providers, and non-profits as they come to terms with the impact of COVID-19. See https://nges.cc/bb63c for details

Cloud Services Security: A growing number of businesses are using cloud services as part of their commonly used tech infrastructure. What many firms do not realize is that they are responsible for the most important part of the security of their service. The three main types of cloud services offered are SaaS, PaaS and IaaS, in all three cases customers are responsible for securing their data and controlling who can access that data. While the popular SaaS providers like Office 365 and AWS secure access to their servers, only the client can control security to their individual portion of the Cloud. The largest cause of breaches of Cloud data continues to be misconfiguration on the client side of the setup. A comprehensive personalized security protocol must be implanted to suit each client’s needs to effectively manage a remote workforce with cyber security.

Other Cyber Security:  two things every remote worker should have – Last Pass and VPN.  Last Pass renders every complicated length of passwords using upper/lower case alpha, numeric, symbols, and special characters.  It is free and the trick is to make sure 1) you use your personal email address to register and a minimum 12 characters password to login to Last Pass and 2) use Gmail as is far safer than Yahoo, mail.com, and others. If you are taking your IP/Desk Phones home from work, you should be connected and configure the Windows or Apple firewall, including the firewall settings in your router.  When connected directly to a router/gateway/modem, the device’s IP will be exposed, and the device’s registration credentials can be used to connect unauthorized endpoints for the purpose of making fraudulent (international & domestic) calls.  And if using wireless to connect to the Internet, please make sure you have updated the SSID (name of your network) and use LastPass to generate a new complicated password.

Need HR support?  If your company uses Quick Books or an Inuit product or service, for a limited time, QuickBooks partner Mammoth HR is offering free HR resources to all employers.  In addition, having a new hire onboarding system (not orientation) is essential.

Effectively Manage a Remote Workforce and the Future of Workforces

How will COVID-19 change the future of work?  It’s impossible to predict the long-term implications of today’s sudden, massive shift to remote work, but a few outcomes are possible. One is that C-levels will finally open their eyes to the value that can be unlocked when each individual has the freedom to work where and when it makes most sense—which may be from home either full-time or a combo of home and telecommute.  Obviously, the future of physical workplaces will change in how we address the need to effectively manage a remote workforce..

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Executive Recruiting

How to Evaluate an Executive Search Firm

The big challenges in the recruiting is  that great talent is in short supply and most talent acquisition strategies are broken. Executive hiring managers are interested in ONLY one thing – whether internal or external the ability to not only Identify, but to recruit exceptional talent.  When you evaluate an executive search firm, look for two things. One do you have the capacity to perform research to identify target competitors and passive candidates, and two, do they have experience in cold calling, a deep network, and reputation of getting referrals?

Most Companies Fail to Properly Evaluate an Executive Search Firm

Most common is to go with the big name search firm.  The issue there is you pay a full fee regardless of outcome, other than the principals teh recruiting force is a revolving door, and a bad track record in retention.  Secondly, if you are a startup to mid-cap you really need the expertise of a team that specializes in your industry; known as niche recruiting. Most big name search firms work across all industries without specialization.  while that diversity may work for a CFO or Board role, it falters with lack of a deep network within your industry.

Evaluate an executive search firmWhat you should look for is a retained search firm that not only has the industry expertise but has a sound evidence-based recruitment process management system utilizing Ai predictive validity.    It all begins with a discovery step where the search strategy is built upon defining the objectives of the role and learning what the role with do with the required skills, not just the having of them.

Next is using scientifically based psychometric to determine team dynamics and thus the search form can then develop a target candidate profile and custom search strategy.  A great recruiter will define prior desired accomplishments in a similar environment and make sure candidates are screened who have similar.  Rather than accepting verbatim the experience and skills required, a good recruiter will drill down to ascertain in what environment and product / service those skills are used in , again further  screening candidates to validate they actually can meet the objectives of the role.

The Job of Hiring Managers to Evaluate an Executive Search Firm

For almost 30 years, we often run into Hiring Managers that say just send them resumes and they will determine which candidates to interview.  Which of course begs the question, why would you be paying a search fee?   You can simply hire an RPO to troll job boards or have HR post job openings to dozens of web sites.  Great hiring managers know three things:

  1. They don’t have the time to go through an in-basket full of unqualified resumes
  2. They know that the one-size-fits-all resume is perhaps the poorest document ever created.  It is generalist, vague, and rarely indicates if the candidate has used required skills WITHIN a similar environment, as well as accomplishments tend to be exaggerated and without verifiable substance.
  3. Great hiring managers know that professional successful  executive search consultants are good at what they do and do not pretend to be a Hiring Manager who may be a CXO or VP of engineering or sales or whatever.  So why do so many Hiring Managers assume they are great recruiters?  Trust me, in all my years, it is less than 1% who are good at both roles AND those who can do both are very successful startup entrepreneurs in early stage building their executive team.

Finally ALWAYS evaluate an executive search firm by three factors

  • Candidate placement retention rate is far and above client retention rate.  That is because some companies will prefer the cheapest or who best serves HR rather than the client on the whole.  For instance, NextGen has an average 93% in 4.5 years are still working for that client whereas we have lost new searches with the same client to other firms with an average 2 years or less of placement retention.
  • The average replacement guarantee for contingency is 30 to 90 days, which of course should alarm you as the confidence in the quality of candidates presented for you to hire just can;t be that good.   Basically any average “C player” can be presented and hired and a company not realize in under 90 days wow that hire is just a body filling a space.   The average retained is 90 days to 6 months while a very few will go one year.  At NextGen we offer a full 24 to 46 months replacement guarantee.
  • Executive levels with MBOs – most retained search firm you will pay the entire fee without regards to an actual hire or success within 60 to 120 days.   For many they believe you are paying them for their reputation and experience, NOT for their success.

For more information on how to effectively evaluate an executive search firm, download the PDF to compare what NextGen Global Executive Search does to others.

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Articles Executive Recruiting

Myths in Recruiting – Part 2 of Make Better Hiring Decisions

Myth #3: HR Orientation includes all the On-boarding Needed for New Hire Success

 

Many companies spend hundreds of thousands of dollars on complex onboarding plans that all too often require an unrealistic commitment of time and effort from several busy individuals.  One of the foremost myths in recruiting is these “one-size-fits-all” plans ever actually work. The truth is they are rarely successful.  All companies include orientation, but orientation is not actual on-boarding.

Retained executive search consultants are experts in this area as our reputation is dependent on new hire retention.  An on-boarding plan must be simple and easy and require a minimum amount of time.  As the executive recruiter has already defined the team profile and discovered how the new hire’s skills and behavioral traits will impact the team he/she will work within, it is a matter of producing two documents.

Good On-boarding Plans are Not Myths in Recruiting

 

The Personal Action Plan, used by the new hire, right at the start is based on conversations between the new hire and his/her immediate supervisor.  After consultation, the new hire has an action plan to not only meet the objectives of the role he/she were hired into, but provides self-development that will allow for career growth, utilize the new hire’s strengths, and work on their weaknesses.  A second document, the Mentoring and Coaching Plan, is used by the actual Hiring Manager.  It was designed for that new hire, not a “one-size fits-all”.

What is the result of orientation that uses an expensive all-encompassing on-boarding?  Waste of valuable time and little to show for it.  The result of a retained executive search firm’s personalized on-boarding plan?  Streamlined efficient means that results in fast assimilation, quick productivity, and longer retention.

Myth 4:  HR and/or Hiring Managers Should Always Make the Offer

 

Another of the myths in recruiting is that HR makes the offer as that is part of their job function.  Often, we see a hiring manager or HR extend an offer to a candidate who would have helped the manager’s company and career enormously – only to receive a turn down.  In many instances, the offer fails to emphasize the specific elements of the opportunity which are of greatest interest as well as fail to address the aspirations and goals of the candidate.  These quality performers are not actively looking and may need to be “sold.”

Myths in Recruiting and OnboardingIt is so frustrating to watch human resources and hiring managers think that THEIRS is the ideal company, opportunity, and offer and that passive candidates should be 100% sold into the opportunity.  The fact is often HR low balls the offer or insist they be the sole negotiator.  I’ve got news for you – great candidates don’t believe you; they are not going to work for you, and really it is rather insulting to them.

After all they are considering working for the actual hiring manager.  While there are various reasons why good candidates are open to making a change, the fact is that virtually none would be comfortable sharing those concerns with an internal recruiter.  It is extremely frustrating when an executive recruiter must come in to save the day on a turn down.  It’s gotten to the point that at NextGen we simply will not accept a loss and insist in our contract that we make the offer and close.

Professional recruiters have great expertise in developing in-depth individual relationships with the candidates they present. As part of a professional recruiter’s service, they will provide the candidate’s primary motivators to making a move – and by advising the client on the compensation plan in the offer and making the offer verbally acting as the go-between thereby reduce or eliminate turn downs, and assure the manager of securing the best talent available.

 

Who Makes the Employment Offer – Myths in Recruiting

 

While companies do experienced turn downs, retained executive recruiters rarely do. We know what it will take to get the offer signed and when a candidate appears unreasonable, retained search forms have the experience and skill set to pull the offer when needed and get the candidate won over by addressing their concerns,

In the final part of this series, we’ll look at the biggest in the myths of recruiting, which is that executive search, specifically retained search fees are too expensive.  In that article, we actually lay out why recruitment fees based on performance and delivery by the search firm, the hire, and the success of a hire that meets or exceeds the objectives of the role is far more cost effective than any other means with the rare exception of a great referral.

 

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Articles Executive Recruiting

Affordability of Retained Search Fees – Make Better Hiring Decisions – Part 3

In the first and second articles of this three part series, we discussed the differences  and utilization of HR, internal recruiters and executive search firms.  In particular Part 1 reviewed unearthing passive candidates and vetting, while part 2 looked at onboarding and negotiating offers.  In conclusion, we discuss how retained executive search actually provides affordability of retained search fees.

 

Myth #5: Retained Executive Search is too Expensive.

 

Retained executive recruiters report that many of the companies that can most benefit from their services employ internal recruiters. This may lead to the belief that utilizing retained search firms when internal recruiters or HR people are employed is not cost effective.  A simple cost analysis will show otherwise. Consider the combined cost of salaries and benefits of HR personnel and internal “recruiters”, as well as the time that HR people spend doing non-productive interviews with unqualified candidates. These direct and indirect costs are substantially higher than paying out a one-time fee for an executive recruiter’s services.

Executive recruiters eliminate the time and expense required by a firm to find, hire and train a new internal “recruiter”. And any truly successful in-house recruiter will soon leave his salaried position to become a successful external executive search consultant.  Additionally, your chances of securing a long-term contributor are much better if an experienced executive search consultant is involved. Studies have shown that a bad hire costs companies three times more than an employee’s annual salary.

many times, HR or internal recruiters will give the same search to several contingency search firms, in the hope that multiplying the quantity of resumes and applicants will result in something that sticks to the wall.  What they fail to realize is that since the companies have no skin in the game, contingency recruiters research and send the same candidate resumes to everyone of your competitors at the same time.  After all they only receive a fee if a candidate they present is hired,  At the same time, the job posting is duplicated across the Internet on job boards and emails making it seem like their may be an issue with the quality of the opportunity and /or the company.

Retained search firms never use job boards.  They unearth the best candidates, vet and assess and deliver a shortlist of 2 to 4 finalists to consider.  With retained executive search firms, their work isn’t done once a candidate has been placed successfully. A guarantee covering the candidate is often one year; at NextGen we offer a 24 to 36 months replacement guarantee – far exceeding the probationary period.  Seasoned recruiters make a point of periodically checking in with candidates that they have placed and will share any concerns with the hiring manager. This is invaluable information and directly contributes to a long-term successful employee, longer retention, and a highly productive staff.

Success Based Recruitment Affordability of Retained Executive Search Fees

 

Affordability of Retained Search FeesFinally, many retained executive search firms have gone to a performance based (or rather success based) fee structure.  While the initial deposit can range from ¼ to 1/3 depending on the role, usually the 2nd invoice occurs once the shortlisted candidates are delivered and scheduled for in-person interviews.

The final invoice occurs upon hiring one of those candidates.  For the senior executive level succession bench, the final invoice can occur up to one year later dependent upon the new executive meeting their MBOs.

It’s a win-win for the company and a good retained search firm will not look at it as a gamble on money, rather confidence in the placement they have made.

Internal recruiting can be a good solution to filling l=lower toi mid-level non-critical positions. They can screen the candidates that apply via the company portal and can provide hiring managers with candidates for lower end roles.  However, for critical and key roles, it is an excellent and necessary business decision to utilize the services of a highly skilled retained executive search firm, especially one that has expertise in your industry and knows your market.

Final Analysis on the Affordability of Retained Executive Search Fees

 

The cost of a bad hire is often 2 to 3 times the salary paid, and it doesn’t stop there.  It’s not just the loss of time and the need to hire a replacement but other aspects of failure that occur

  1. Loss of momentum in a product or service launch into the marketplace which occurs in bad hires within R&D, product management, marketing, sales, and sales engineering
  2. Failure to meet customer needs and reduce customer acquisition costs when the wrong software, hardware, or R&D engineers are hired
  3. Failure to properly implement a strategy when a functional leader role is a bad hire.
  4. Failure to meet maximum goals or M&A or IPO when the wrong CFO or SVP is hired
  5. Failure to meet sales targets and expand market share when the wrong CMO or VP Sales is hired
  6. Failure to meet stockholder and investors ROI when a bad CPO< CDO, or CEO is hired

Whether it is a key sales, engineering, operations, functional leadership, or senior executive role, a quality retained executive search firm actually SAVES you money in the long run and brings forth shortlist of candidates that can meet and most often exceed the objectives of the role. Therefore the affordability of retained search fees is evident they pay off in the long run.

 

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Articles Executive Recruiting

Make Better Hiring Decisions Amid Myths in Recruiting – Part 1

Executive hiring managers depend on the quality of their people to achieve goals and implement strategy. A better understanding of the skills and capabilities of executive recruiters can enable any hiring manager to make better hiring decisions by increasing the quality of their hiring decisions, and thereby enhance their own career!

Some executives are aware and take full advantage of the best possible means of identifying and selecting top quality candidates for critical staff openings. However, many do not. Frequently, this stems from myths regarding the merits of utilizing the services provided by topflight retained executive search firms. By a better understanding of these realities, hiring managers will dramatically improve their ability to secure the most qualified candidates in a timely manner.

In the first part of this series, we’ll explore the myths behind sourcing exceptional talent, the differences in the screening and assessments methods used by internal HR and talent acquisition groups, how that is done by experts in retained executive search, and the pros / cons of behavioral testing, and how they impact the ability to make better hiring decisions.

Make Better Hiring Decisions Start with Finding the Right Talent

 

Myth # 1: Companies Often Unearth the Same Talent that Executive Recruiters Do

 

With the rise in popularity among HR and internal talent acquisition in the use of online job boards, job aggregators, and networking platforms, many companies mistakenly believe that these sources contain the same talent that can be found through retained executive search firms.
This belief couldn’t be further from the truth. Good executive recruiters don’t post ads on job boards to find qualified applicants. Instead they focus on specific industries and even specialize by types of positions within those industries. The benefits of doing so are enormous. It allows them to invest tremendous time and energy forging relationships with high performing candidates within these niche markets, learning the types of positions in-demand people would see as advancing their careers.

Make Better Hiring DecisionsProfessionals who genuinely excel have neither the time nor desire to peruse online job ads or to respond to the dozens of email inquiries sent by internal recruiting staff. It is only when an executive search consultant personally approaches them that the best people take the step to becoming available to discuss an opportunity.

Retained executive search consultants invest countless hours establishing unique connections and building relationships with key performers. These connections allow access to talent pools built over many years…and which are available through no other sources.

 

This, along with the ability of these search consultants to carefully screen and evaluate the best candidates, is what allows them to bring the strongest talent to the table – those “A players” at any level who produce 8 to 10 times more than the next level of “B players”. Instead companies continue to rely on job boards, career sites, and networking platforms that will never find the outstanding quality of talent that retained executive recruiters can provide.

Myth #2: Internal Staff can Access and Vette Candidates as well as an Executive Search Firm

 

While this belief is prevalent within many companies, a thoughtful analysis will prove the opposite. Retained executive recruiters make a living by finding talent that companies cannot find on their own. While in-house resources may be effective for lower level and even some middle level roles, when it comes to functional leadership or key critical roles, retained search firms are not limited to C-levels. it makes sense for hiring managers to give themselves every opportunity to interview the very best candidates to make better hiring decisions.

Internal recruiters typically spend their time vetting applicants who apply or can be found through online portals. Think about it – in a less than 4% unemployment world we live in, the best candidates are simply not found that way. Retained search firms focus on finding superior candidates who are successful in their present situation and can show similar expertise, accomplishments, and skills relevant to the role you need to fill. This very different methodology results in a very different level of candidate.

A Solid Assessment Method Enables You to Make Better Hiring Decisions

 

Moreover, retained search firms look at many other factors, such as discovery and validation of candidates’ industry relationships – with internal customers, as well as suppliers and eternal customers. In addition, seasoned executive recruiters do not focus on “corporate culture”. Why is simple. Each team that a candidate will be hired within is unique.

Therefore using psychometrics to discover and measure this team members as stakeholders of the role allows the executive recruiter to measure values and motivations, real and situational communications skills as well as the traits within conflict resolution, problem solving, and decision making. This Team Profile allows executive recruiters to then conduct behavioral interviews and scientific testing of potential candidates to make sure they are only a role fit, but a team fit as well.

Finally, the ability to call proven performers with direct competitors to discuss career options is a significant factor in what sets external professional recruiters apart from internal recruiters or HR people. Having the ability to reach out to these peak performers offers hiring managers access to highly-sought-after candidates they would never see otherwise in order to make better hiring decisions

In part 2, we will discuss HR Orientation including onboarding process that do and do not work, as well as pros and cons of having human resources and/or hiring managers making employment offers.

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Articles Executive Recruiting

Engaging a Retained Search Firm for Multiple Key Staffing Needs is Best Option

The truth of the matter when engaging a retained search firm for multiple key staffing needs is they produce far better candidates, have much deeper relationships in the industry they are working in and have a search process that in the end delivers candidates who can meet or exceed the objectives of the role in which they are hired into.

Many company’s HR and Talent Acquisition groups think more short term than long term when it comes to staffing critical roles.  The long term strategy is most often used – a combination of career site branding, job boards and job aggregators, LinkedIn talent solutions, and using multiple contingency search firms to help build a large database of potential candidates.

What is missing is that for critical roles that must be filled with quality new hires, the long-term strategy rarely works.  Even though using RPOs and contingency search firms will result in the most resumes, it is pure folly to believe quality is the main driver produced by those outsourced means.  Therefore, engaging a retained search firm is the best of all options when outside recruitment help is needed.

Engaging a Retained Search Firm

Let’s look at the recognized statistics in the global workforce. The majority of all workers – approximately 55%, are “C players”. They are literally just bodies taking up space.

They show up on time, can perform assigned tasks assigned such as software or QA engineer, customer service, inside sales, operations, manufacturing and production roles.  But the reality is that they don’t develop intellectual property or design anything new;

 

They are not problem solvers, entrepreneurial or creative and contribute virtually nothing to increasing market share or improving P&L ratios.  In addition, many “C players” are just not good employees. Often a lack of upwardly mobile skills, education, and more equates to lack of motivation outside of a repetitive paycheck.

Next are the “B players” who make up to 35% of the workforce, have real education and skills, contribute to developing IP, producing revenues, or some other vital contribution.  However, the cream of the crop is approximately 14% of the workforce known as “A players”.  From janitor to CEO every type of role has their “A players”.  What is so great about hiring them?  Leadership IQ and SHRM have developed studies and surveys that demonstrate that “A” players” produce 8 to 10 TIMES MORE than even “B players”.

 

Reasons for Engaging a Retained Search Firm

 

With over 30 years of experience in the executive search business, we have rarely seen contingency search firms or RPOs deliver “A players” and have no consistency in delivering “B players” for clients to consider. How do we know this?

  • In a less than a 5% unemployment rate environment, most exceptional professionals are happy where they are now in terms of their role, their employer, and compensation. If they were to become passive candidates and look to make a change due to desiring new challenges or relocation, they would simply network and reach out to hiring managers in their industry directly. They rarely look at job postings and have no need to post their resume to a job board.    They will not fill out an online application on any company career web site. They are bombarded with emails, InMail’s, and calls every day from corporate recruiters and contingency search firms who generally speaking fail to understand these professionals will likely only speak or reply to an actual executive hiring manager or a retained executive search consultant with a solid reputation among industry Board of Directors and CXOs.
  • Contingency and RPO firms rely heavily on job postings and job aggregators.  But many of those applicants are the unemployable, unemployed, or “C players”.
  • In large contingency search firms the recruiters are graded on the number of send outs (resumes that need to be sent daily to meet a quota).  And RPOs have a LOT of clients.  Ask yourself, as a client, how much of a priority are you to a recruiter working on 12 to 25 searches at a time?   What type of quality and search process would you expect?

I’m not knocking contingency recruiters.  I used to be one before I changed to retained almost 20 years ago.   Why did I make that move?  One, I realized to really have clients as a priority and deliver a superior service, I personally could only work on 3 to 4 searches at a time.  To do more than that means both the client and my reputation suffer.  Two, with using a search process that was very sound I knew the methodology would unearth those “A players” so I could assess and deliver proof that the shortlisted candidates I presented could meet or exceed the expectations and objectives of the role and client required of the new hire.

As for cost and benefit analysis, the benefits of using retained search is overwhelming while the costs are not much different than contingency search fees.

  1. When looking to engaging a retained search firm, you are assured that the vetting and development process are superior as you usually receive only 3-4 shortlisted candidates for each role.
  2. Retained Search provides detailed interview and assessments including current / prior KPIs, depth of industry relationships, and similar accomplishments relevant to the new role.
  3. Team fit analysis and Target Candidate Profile – by conducting brief online surveys of the stakeholders for each role (team the role will work within and key internal customers), a team profile allows the recruiter to use behavioral analysis and assessment to determine how the potential candidate will fit in and affect team dynamics. One-way behavioral testing of candidates never works as it fails to have anything to measure against.
  4. Much longer retention of new hires from retained search firms. For instance, 94% of our placements are still working for that client after 4.5 years.
  5. Superior Replacement guarantee – most contingency firms incorporate a 30 to 90 days refund or replacement. Retained search firms are often 6 to 12 months.  We believe in our process so much that we offer 24 to 36 months replacement guarantee depending on the assignment.
  6. Success based search fees – this is relatively new for retained search firms but a practice we have used for the last 5 years. With most large retained search firms, you pay 100% of the fee regardless if the outcome was successful.  Other search firms like NextGen Global Executive Search are performance based.  After the initial deposit, the remainder of the fees are paid based on deliverables, including the hire.
  7. Flat based fees – this is also a relatively new concept. This arose out of the obvious conflict of interest associated with compensation-based search fees.  If the recruiter negotiated a higher compensation that was agreed to by both client and candidate, the search fee increased.  While some retained search firms use the same fee for every search on a flat fee basis, at NextGen we realized we are being paid for our work.  Therefore the basis of the flat fee is appropriate to each role depending on factors such as limitations on relocation, the actual candidate pool size, the number of hours expected in research, search strategy, recruiting, and delivery.

For instance we have clients in the Bay area, NYC and Boston who funny as it sounds believe few exist outside their geography that are worthy of consideration as they often think of themselves as the center of the technology universe.  Additionally, for some roles the candidate pool overall is small such as AI architects and power electronics design engineers.

 

Engaging a Retained Search Firm for filling multiple roles

 

As retained search firms are like good lawyers and executive management consultants, we ask for a deposit,.  This means the client is a priority as they have “skin in the game”, knowing the search firm has a track record in longer retention and producing exceptional new hires.  So, the overall flat search fees mean that engaging a retained search firm is clearly the best choice.

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Articles Executive Recruiting

Ditching Recruiting Firms Contingency, RPOs, and Old-Fashioned Retained Search

Why are more and more forward-thinking employers ditching recruiting firms that produce, to put it bluntly crap. Most firms that have spent the time to really investigate the search marketplace have learned that Contingency, RPOs, and traditional retained search firms need to be ditched in favor of the 21st century success based recruitment?

In a 3.5% unemployment rate, most Hiring Managers know the undisciplined, inexperienced, and average “C players” are predominant on job boards.  In addition, with job aggregators, job openings get overexposure to the point the company suffers in public relations and branding.  same goes for RPOS and contingency search firms – the more they re-post the same job posting, the worst candidates are revealed.

Ditching Recruiting  Firms that Fail to Produce

You have certain objectives you want a new hire to meet, for most C-level executives there is not a cookie cutter template to be applied to their position.  Your target market are passive candidates, those that would never read job postings that have been picked over by every Tom, Dick and Harry, they simply are not actively looking,   What interests passive candidates?  A new challenge, a different product or service portfolio, location, company size, and more.   A typical job posting showcasing responsibilities and requirements is a no enthusiasm road map.  It is in reality a robotic drone of words strung together that entices only the unemployed or average active job seeker.

Ditching Recruiting Firms that Fail to DeliverEven the traditional retained search model, which does produce much better candidates, is going by the wayside.  More and more companies are ditching recruiting firms that are traditional retained search models.

While employers understand the deposit to initiate a search, they expect results.   Most have a 90 day to 6 month replacement guarantee.  But they collect all the fees within 90 days regardless of outcomes.

‘The new paradigm, which NextGen Global Executive Search has used for a decade, is a search should be success based in regards to the recruitment fees.  Also known as a performance based search, after the deposit (which is a very reasonable percentage of the overall cost) the 2nd invoice is due upon acceptance of the shortlist and in-person interviews are scheduled. The final invoice is due upon the hire being completed.

Ditching Recruiting Firms with Compensation Based Fees

In addition, success based search fees should be a flat fee and not based on compensation.  The reason is simple, in that compensation based fees can cause an increase in the overall recruitment fees during offer negotiations which is an inherent conflict of interest.  As stated earlier the 3rd and final invoice occurs on the hire and is backed by a  24 to 36 months replacement guarantee.

The end result is both the employer and recruiter have skin in the game and the employer is confident that the majority of the fee is based on the recruiting firm meeting the objectives and a solid new hire.  To read further on why companies are ditching recruiting firms and comparisons between contingency, RPO, traditional retained search, and success based retained search, download the PDF.

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Articles Candidate Assessments Executive Recruiting

Increasing New Hire Productivity Self Development & Mentoring

Increasing new hire productivity requires making sure the new employee can hit the ground and produce.  Behavioral assessment (sometimes referred to as “Psychometric Testing”) has become increasingly recognized as a valuable source of information when making hiring decision.

There is a wealth of data to demonstrate that using behavioral assessment in conjunction with sound, responsible recruitment methods reduces employee turnover, and it’s quickly becoming standard practice for many employers and recruiters.  But by and large behavioral assessments are not used properly.In addition, is it really worth the additional time and expense? In the current economic climate is behavioral assessment REALLY an essential for your next recruitment campaign?

The answer is:  YES with a CAVEAT. towards Increasing New Hire Productivity

Increasing New Hire ProductivityHere are three points why increasing new hire productivity works when behavioral assessments are used properly.  What is a general consensus among most companies is this usually involves a questionnaire that asks the candidate about their opinions, preferences and priorities.

Based on the results, and by comparing the answers against years and years of historical data and expert analysis, the individual’s attitudes and behaviors can be extrapolated.

Behavioral reports can include information such as preferred working environment, how they respond to tight deadlines, preferred management style, approach to selling, and much more.

If you’re skeptical, ask one of your employees – preferably one you’ve known for many years – to take an assessment. You’ll likely be surprised at just how inaccurate the results are.

1. Defining the Role Fit and Team Fit = Increasing New Hire Productivity

Figuring out exactly the kind of candidate you’re looking for and creating a job description to match can be a time-­‐consuming headache. But a simple survey of the stakeholders of the role (direct report, internal customers, the top employees already in that team the new hire will work within) can then be put into a Composite survey that will produce a detailed description of the ideal characteristics you’re looking for, many of which can be inserted straight into your job description.  There is virtually no scientific proof that performing a behavioral assessment of candidates alone will result in a “good hire”

To be successful in evaluating candidates and making the right hire so that increasing new hire productivity is the goal, once you know they fit the role in terms of tangible skills, education, and experience, but t,he fact that 46% of all new hires fail within the first 18 months, according to Leadership IQ, it is vitally important to measure the intangibles in the role fit and to assess the candidate’s impact on team dynamics.  And here is where so many Hiring Managers make a HUGE mistake.  The one-size-fits-all “corporate culture” is used to assess candidates across the board.  But the truth is that ALL teams are unique and EACH has their OWN CULTURE which may align in some ways with the corporate culture statement.  An accurate behavioral assessment of a potential candidate is when it is measured against  the team composite profile.  In particular, you need to measure

  • Values and Motivations and how the potential candidate’s views and needs impact  team dynamics
  • Relational Communications Traits – how the candidate is able to listen as well as sell his/her ideas to the team
  • Conflict Resolution Skills – many of post Baby Boomers were not taught this skills, so training is essential if hiring
  • Decision Making Traits –  can he/she make a valued fast decision or do they delay and waiver inconsistently?

2. Conducting Fewer Interviews

A resume or LinkedIn profile can somewhat tell you whether a person has the ideal qualifications and job history but usually it’s impossible to tell if a person has the right attitude and accomplishments until you interview them. Behavioral assessment done the right way, on the other hand, can provide you with that information in a fair and objective fashion. So if, for example, you have 7 candidates that look great on paper, a team fit and role fit scientifically based assessment can help you reduce that shortlist to a more manageable number, and leave you with a much faster interview process.

3. Customized Mentoring / Coaching = Increased New Hire Productivity

Quick assimilation – faster or rather increasing new hire productivity and longer retention.  It’s the goal for EVERY Hiring Manager.  An often overlooked feature of team fit and role fit profiles and behavioral assessments is its ability to tell you the training and management styles to use to get increased new hire productivity.  Getting your new recruit up to speed quickly and making them feel comfortable in the role is not only a time saver but it also reduces the expenses incurred through downtime.

We’ve already mentioned the fact that behavioral assessment reduces employee turnover, but have you ever stopped to consider just how expensive and time consuming it can be to  replace a bad hire?   Aside from the fact that you have to spend time and money, repeating the recruitment process all over again, you also have to repeat the expense of on-boarding and assimilation for the eventual replacement.

And it’s almost impossible to put a price on the potential for lost business and the reduced employee morale that occurs while the position remains vacant. Although prices vary quite a bit, the average cost of behavioral assessment is often far less than employers imagine. And any one of the above four points would more than justify the additional, modest investment.

But put these three elements together and you have a potential saving of time and money that represents tens of thousands of dollars.  Especially in consideration of reducing employee turnover.   So, the question is not whether you can afford to use behavioral assessment. The real question is…  Can you afford NOT to use behavioral assessment?

NextGen Global Executive Search – Increasing New Hire Productivity

Get an inside look at how NextGen uses this behavioral assessment with award winning Leadership Vault Recruiting process.  NextGen Executive search provides retained and engagement recruitment services for clients who build and service aerospace power systems, UAVs, drones, and stealth tech; artificial intelligence, machine learning, and augmented reality; cyber security and cyber defense; industrial automation, robotics, industrial power system, renewable energy, and fossil generation; medical devices and electronic health records; mobile networks, digital media, embedded wireless, IoT, and cellular  infrastructure.  Compare our search process and fees compared to other search firms by clicking the image below or contact us today.