While the Internet has changed the face of business as we know it, there is one thing it can’t do: decisively and professionally narrow a talent search to discover the right candidate for your business’s needs.
“As a HR leader I thought some years ago that the onset of the Internet would put recruiting firms out of business,” says Jerry Miller, vice president of marketing at Executive Career Services, whose human resources background includes extensive recruiting experience as well as executive search and contingency recruiting. “One could surmise that my original premise was correct and, with the increased popularity of social networking sites like LinkedIn, this percentage has nowhere to go but down. One would be wrong.”
It’s true that, according to the CareerXroads 9th Annual Source of Hire Study conducted in February 2010, only 2.3 percent of 2009 new hires came through third-party recruiters. But for specific talent acquisition for a niche position, a highly valued role, or a position that needs to be filled quickly and precisely, having a gatekeeper for selection and screening is invaluable.
Smart Business spoke to Miller about what a professional search firm can provide and how to choose the right firm for your business’s requirements.
Where is the value in using search firms?
Recruiting firms still have a place in the world of talent acquisition. It may not be as prominent a place as it used to be, but it is a place. Third-party recruiters are at their best when a position is hard to find, requires a very narrow or specialized skill set, or when a search is being conducted confidentially. They can also save their clients a great deal of time and effort by sourcing, interviewing and qualifying candidates and doing background investigations and reference checks. And because they are proactive rather than reactive in their methods, they provide access to passive candidates that the client would not otherwise have.
Are all search firms the same?
There are essentially two types of search firms, retained and contingency. Retained firms have an exclusive arrangement with the client and get paid whether the search is successfully completed or not. Usually, they get one-third of the agreed upon fee at the time the engagement commences, another third at a pre-determined milestone in the search, and the remainder upon successful completion of the search. Normally these engagements carry a six- or twelve-month unconditional guarantee whereby the search firm will replace the new hire at no cost if they should terminate employment for any reason during the guarantee period.
Contingency firms on the other hand don’t receive any payment until a candidate is successfully placed. They also have a guarantee, though usually not as robust as that of a retained firm. And the relationship with the client is generally not exclusive.
Companies will often engage multiple contingency firms on a search in hopes of covering more ground and reducing the time to fill the position.
How can a business best determine the right kind of search firm for its needs?
The level of the position is a determining factor. Retained firms will usually not take any engagements where the base salary is under six figures. Also, if the search is to be confidential, a retained firm, because it is an exclusive arrangement and because of the way they recruit, would be the best way to go. Contingency firms can be effective for mid-management and below positions. They are also a good choice if you have multiple openings in the same or various disciplines. They are generally willing to negotiate their fee downward for a multi-position engagement.
Once a business has determined what type of firm will fit its needs how does it go about finding and selecting the right firm?
Ideally, you want to work with a firm that is familiar with your industry and/or the type(s) of position(s) you need to fill. The best way to source such firms is by asking colleagues in your industry or discipline. Like in anything else, a referral from a person you trust is a great way to start. Alternatively you can use reference lists such as The Directory of Executive & Professional Recruiters, known as the ‘Redbook,’www.recruiterredbook.com, or simply do a Google search for recruiting firms using as key words your industry and/or discipline.
Once you have identified some relevant firms, then you proceed as if each firm were an employment candidate. You interview each one in detail and check references. You’ll want to find out specifically what searches they have done in your area of need, what is their success rate, whether they understand your industry or discipline, how they operate and their fee structure and guarantee. Once you’ve made your choice, get all of the parameters of the search down in a written agreement.
Search firms can be expensive, but they can also add tremendous value to your talent management process. The right firm will provide the expertise, experience and skill set required to design and deliver customized solutions that meet your needs, saving you valuable time.
Jerry Miller is vice president of marketing at Executive Career Services. Reach him at (949) 251-5600 or [email protected]