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A Headhunter That Knows How To Build A Company
By Anna BernasekFinding top-level talent can be tough, and sometimes requires hiring an executive search firm.
Here's our guide to working with a professional headhunter.
- Contingency Firms.Contingency firms are transaction-oriented -- they are paid only if you hire a candidate they present to you, and generally focus on mid- to lower-level positions. Contingency firms work on a percentage (typically 20-30 percent) of the candidate’s first year total cash compensation. “Hiring managers must provide timely feedback to contingency firms, thus illustrating your firm’s commitment to hire a candidate,” says Harwood. “As with any service-based business, contingency firms will focus their efforts based on the real potential to generate revenue and will prioritize their time and energy on realistic opportunities.”
- Retained Firms.A retained search firm typically has an exclusive relationship with the employer and is hired for a specific period of time to find a candidate. Retained firms are paid a higher percentage (typically 30–35 percent) of the estimated first year compensation regardless of whether a candidate is hired. “Most assignments are paid in three installments, typically one-third of the total fee to initiate the search, one-third when quality candidates are presented and interviewed, and one-third when the position is filled,” Harwood says. “Retained search firms are often more focused on a consultative relationship, and invest the appropriate time to learn about your company, the details of the position and the characteristics of the right candidate, and provide a research team with various resources to assist you with the search.” Retained firms are best-suited for senior-level management positions where there are fewer qualified candidates.
- Container Firm. A container firm blends the fee structure of contingent and retained services. Container firms are paid an upfront fee, typically $5,000 - $8,000 to initiate the search and require a percentage (typically 20-25 percent) of the candidate’s first year compensation once the position is filled, Harwood says.
“You should use a firm that has experience placing candidates in positions similar to your open position in your industry,” Harwood says. “As you interview different firms, look for industry experience, recruitment strategies, network and reach. In addition, find a firm that will represent you and your firm’s culture in an ethical and honest way.”
Harwood adds that it’s important to find a firm that understands your business or the position you are seeking to fill. Some firms specialize in placing chief executive officers or chief marketing officers or chief financial officers. Ask the company what relevant searches they have conducted in the past two years for similar positions and see how that matches the job you are seeking to fill. Another factor to consider is the chemistry you have with the person who will be conducting the search, Harwood says.
Here are other factors to consider:
Check References
After you find firms, it’s important to check their references. “Contact corporate clients to understand the quality of candidates presented, integrity, competency, timely feedback and representation that the recruiter provided to the market,” ne Harwood says. “Contact a few candidates that were placed by the search firm to better understand the candidates’ perception, how the opportunity was presented, the representation of the firm and offer, and the recruiter’s business acumen and honesty.”
Understand Efficiency Metrics
Recruitment firms use various metrics for benchmarking purposes. Harwood recommends the following as some of the best recruiting metrics to use:
Make Sure the Recruiter Understands Your Needs
Ensure the recruiter clearly understands the position you are trying to fill. “The recruiter must clearly understand the role, responsibilities, qualifications and appropriate experience needed for the position,” Harwood says. In demonstrating this, the recruiter should dedicate time to gather information about your company, and understand the key selling features of the employer, business culture, and employees. The recruiter should be willing to spend time discussing with you the problem that the company faces, the culture, and develop an understanding of the specific personality, skills, knowledge, and education desired in a potential candidate, Harwood says.
How to Work with an Executive Search Firm: Getting Started with the Search Process
The first order of business when you decide to hire an executive search firm is to get in writing a report that shows your consultant understands the level and type of experience you need in a job candidates, the background and technical skills necessary, responsibilities of the job, and any interpersonal skills you seek, Harwood says. The consultant should help you take this information and write a formal job description that both helps market your firm to potential candidates and is honest about what the job entails. The recruiter will also help you determine salary and other compensation you need to attract the right candidate.
Understanding How the Search Firm Works
Different recruiters may find their candidates in different locations or screen them in different ways. You need to understand these differences and make sure that they meet your company’s criteria in vetting job candidates. Here are factors to consider:
Before making an offer to a candidate, the search firm can help you conduct background checks, checking educational and employment references although many will farm out criminal and civil background checks to third parties that specialize in this work, Harwood says. If you have narrowed the list down, you should participate in some of the reference checks, he adds. “Work with the recruiter to determine who will present and close the offer,”. “This process should include notes from the interviews and a solid closing strategy to address financial questions and expectations, opportunities within the firm and the outlook of their career growth.”
The most fruitful search firm partnerships are founded on trust, open communication, and a commitment from each party. Cultivating a true partnership with a recruiter will enable you to attract, hire, and retain the best people in your industry. “Remember to realize that these are consultants in human capital and strategic issues as well as being recruiters for a particular position,” Harwood says.