Human Resources Marketing and Recruiting: Essentials of Executive Search

Abstract

The chapter provides a fundamental introduction into the executive search industry. Starting by the big picture, the industry with its origin, its economic dependencies, and youngest developments will be presented. Followed by a deep dive into the daily work, the direct search process with its most crucial phases is described. This process is one of the most important core success factors of professional executive search agencies. The depth level of each phase in this chapter varies based on its complexity and importance. For the case of hiring and working together with an executive search consultancy, the need of understanding some further connections and insights is crucial. Therefore, four different perspectives on the industry are provided, including the cultural, economic, risk, and operational point of view. The following section summarizes tips for the daily work with external executive search consultants in the form of do’s and don’ts. Finally, selected trends such as the war for talents, gender diversity, and big data allow a discussion about the impact of such external changes and in which direction it might change the industry over the years.

Introduction and Overview

Compared to many of the decisions, which need to be made on the highest level in a corporation, the task of hiring the ideal executive for the current and upcoming challenges is probably one of the most crucial, critical, and difficult ones. Therefore, providing systematic, structured, and professional solutions for this major challenge, executive search consultancies belong to the most important strategic senior-level management consulting services provided. This chapter will give you an overview over the industry, its history, and the current economic development followed by a detailed description of the heart of this professional service: the direct search process. Furthermore, the four different perspectives (people, economic, risk, and operational) will provide a diversified view on executive search. In the end of the chapter on experience-based hands-on, do’s and don’ts give valuable hints for working together with an executive search consultancy successfully.

The Executive Search Industry

What Is Executive Search

Executive search, also known as informal “headhunting, ” stands for a specific and well-structured process named direct search. This on a mandate-based service includes an in-depth vacancy analysis so as wanted the defined profile can be systematically sourced, contacted, invited to interviews, and finally placed. Due to the intensity in resources and time, executive search is mainly applied at highly relevant/rare expert positions and executives such as board member, C-levels, vice presidents (VPs), and managing directors (MDs). A direct search process is always initiated to find a specific candidate for a certain position with a very detailed profile in which conventional recruiting methods such as job advertisements do not induce. The intensification of the war for talent through more globalization, lowering retention rates, and increasing expectations of top employees makes it even more important to win out over other employers. Therefore, the direct search, which includes preselecting and also proactively addressing suitable candidates, which are not visibly looking for a new opportunity, is known as the most effective approach to find and hire the best candidates available in the market. Participants involved in an executive search process are the client, the candidates, and the consultancy as mediator or market maker in between. The nature of the vacancy, either executive or specialist, implies the importance of this hire to the organization so there is a substantial interest in lowering the risk of hiring a “miscast” for this position. Therefore, especially such “mission critical” vacancies are often outsourced to specialized external direct search agencies. Other reasons for the outsourcing are the following:

• The organization does not have the resources such as know-how, time, or manpower to process a direct search in-house.

• The organization has been unsuccessful in direct searching the right candidate with its internal resources.

• The organization needs the search to be undercover to assure that certain stakeholder like employees or competitors stays uninformed about the vacancy.

• The desired candidate is already known or identified but cannot be addressed directly so needs to be converted with the help of a third party.

The Rise of the Executive Search Industry

The executive search service, as we know it today, has its roots in North America. In 1926, Thorndike Deland founded the first executive search company called Thorndike Deland Associates in New York. Due to the shortcoming of high-profile politicians after the First World War, he developed the process of actively researching and contacting potentially interesting candidates for top positions in politics rather than waiting for them to react and apply on advertisements (Barmash 1991).

About 15 years later, during the blistering industrialization in the USA in the 1940s, the rapidly increasing demand of top managers in corporations led to the emergence and rise of executive search agencies. In 1942, George Fry founded the recruitment agency George Fry and Associates in Chicago, followed by newly founded direct search agencies from notable personalities like Sidney Boyden (Boyden International) and Spencer Stuart. These early market participants have shaped this newly evolving industry after the Second World War in the USA intensively. They also strongly participated in the rapid expansion to international markets such as Europe just a few years later in the 1950s (AESC 2009).

Despite different national laws, which prohibited nongovernmental job placement services (such as the German job placement monopoly, which was established in 1931 and was finally overruled in 1991 through the European jurisdiction), several developments in Europe and around the industrial world led to a fast rise of executive search consultancies in the late 1950s (Winterhager et al. 2006):

• The increasing competition through the emergence and establishment of international companies (especially in Europe).

• The increasing difficulty of developing and promoting executives internally fast enough.

• The rapidly moving markets and the new emerging challenges to executives (increasing internationalization of business, increasing complexity and specialization, increasing fluctuation on all management levels, etc.) have led to an intense shortcoming of managers and executives in many industries.

• The realization that job advertisements only reach a small percentage (only the active job seekers) of all relevant candidates for a certain “mission critical position.”

• The fact that the ideal candidate often works for competitors and is not easy or even forbidden to address directly.

Spencer Stuart , today representing itself in 55 offices in 30 countries worldwide, was one of the first executive search consultancies launching in Europe. At Spencer Stuart, the next generation of rising executive search consultants were educated and qualified, among others Jürgen Mülder, the founder of Mülder & Partner. He helped the European executive search industry not only to establish a new standard of discretion and reliability. He was also truly engaged in politics and thereby gained relevant reputation for his guild to become more accepted as relevant and common part of the “executive game.” Mülder & Partner was acquired from Heidrick and Struggles in 1997 for $27 million. Mülder left Heidrick and Struggles just 7 years later due to internal differences. Another game changer, which Spencer Stuart has produced, is Egon Zehnder . In 1964, he founded Egon Zehnder International in Zurich and since then built up the worldwide second largest international executive search firm with over 68 offices and $650 million revenue in 2012. The number one executive search consultancy in revenue, employees, and offices worldwide is Korn/Ferry International. Korn/Ferry was founded by Richard Ferry and Lester Korn in 1968 in LA. Korn/Ferry employs 2,400 people in 80 offices around the world and reported a revenue of $783 million in 2012 (Fig. 1).

Fig. 1

Revenue of the biggest executive search firms worldwide in 2012 (in $ million) (Source: CESifo-Group)

Understanding the Executive Search Economy

Today, the executive search and hiring market has grown to an industry of about $10 billion revenue worldwide. Not only because this pivotal form of management consulting has its roots in the USA but also due to their competitive free market economy and the dense landscape of international market leaders and players in all relevant industries like pharmacy, technology, consumer goods, financial services, and science, the majority of all search mandates are executed in North America (Fig. 2).

Fig. 2

Dispensation of executive search assignments worldwide in Q1 2013 (in %) (Source: AESC State of the Executive Search Industry Report Quarter 1, 2013, p. 5)

As many other professional service industries, the executive search market is strongly fragmented. In terms of size, the market is dominated by only a few globally represented and market-leading corporations. Alongside, regional and sectorial specialized direct search boutiques and uncountable well-networked and independent sole traders characterize the industry. In order to stay competitive to the international network effects and knowledge synergies the big international players profit from, many boutiques and individuals are organized in global networks and operate under the same brand name.

Another type of fragmentation in this market is the specialization of consultancies or individuals on selected sectors like financial services or the consumer goods industry. Having already mentioned two of the major sectors, the manufacturing industry is responsible for one quarter of the worldwide revenues of the executive search industry (Fig. 3).

Fig. 3

Segmentation of search mandates to executive search consultancies worldwide until Q1 2013 (in %) (Source: AESC State of the Executive Search Industry Report 2013)

Other service providers do not focus only on a sector but on selected divisions such as digital marketing or product management in the e-commerce businesses.

Analyzing the revenue of some selected years back to the year 2000, the chart below demonstrates several important insights about the executive search industry.

Firstly, the immediate dependency of the executive search industry on the world’s economic situation becomes self-evident. Taking the economic crunch in 2009 as an example, it involved the most intense decline of this industry ever. The interest but also the financial ability of investing in cost intense searches for managers and executives dropped in many economic sectors to a minimum. Even though many positions became vacant through layoffs during the economic crunch, unstable forecasts for many sectors led to a mentality of cost cutting on human resources and recruiting, including expensive executives searches.

Secondly, the strong dependency is valid in both directions. As soon as sectors such as the automotive industry and financial services had found new trust in their markets such as in 2010, new search mandates for relevant vacancies have been assigned quickly. The executive search industry had some losses in terms of insolvencies but quickly found its way back on track and grew by about 29 % (Fig. 4).

Fig. 4

Worldwide revenue of the executive search industry (in billion US dollar) vs. business climate index (Source: AESC State of the Executive Search Industry Report 2013)

The economic crisis in 2009 had a significant impact on the industry: especially small boutiques and stand-alone consultants were affected. Consultancies needed to lay off employees, some even ran out of business. Based on this dramatic experience, many executive search consultancies, including the market leaders, started to broaden and accelerate their revenue streams through services such as succession management, management auditing, leadership development, outplacement, recruiting outsourcing services (ROS), etc. Korn/Ferry, for instance, bought the leadership consultancy PDI Ninth House in order to increase its revenues from non-search sources up to 40 %. Despite these acquisitions, direct search remains to be the core service as illustrated on the graph below on the example of the German market (Fig. 5).

Fig. 5

Segmentation of the German executive search consultancies performed services in 2012 (in %) (Source: Bundesverband Deutscher Unternehmensberater e.V)

Taking a closer look at the youngest market feedback around the world, gathered by AIMS International, a global Executive Search and Talent Management organization, the upholding stagnation of the industry in 2012/2013 seems to have come to an end in 2014. Companies are hiring on all levels, and the war for talents, experts, and innovation driving executives is already in full swing again. The order books of the executive search firms are filling up again, and the industry is regaining its self-confidence (Fig. 6).

Fig. 6

Quarterly revenue development from April 2011 till April 2014 (Source: AIMS International)

The Direct Search Process

One can describe executive search or direct search as a consultative process since the business model is based on advising clients to understand, analyze, and solve a leadership or staff management challenge. Search consultants strive to first understand the needs and dynamics of an organization by getting to know as many stakeholders as possible. This may include talking to past and present board members, key staff people, or members of the community. A search consultant continually gives feedback during the finding process, and at some point, a new understanding emerges regarding the scope and nature of the position and the requirements for a successful candidate.

The search consultant also recommends a research approach to identifying sources and qualified prospects and develops a road map for identifying the talent needed by the hiring organization. Throughout the whole process, the consultant offers the client feedback and advice.

The consultant can help the client prepare questions to set up a key skill set that is essential in the decision process. In case that questions regarding a presented candidate arise, the consultant recommends an approach to reference checking and testing before making an offer or ideally starts with further background information checks already throughout the search.

The search consultant also typically plays an important role in offer negotiations with the most suitable candidate and advises on what the client needs to consider in making a successful offer beyond compensation.

In the end an executive search consultant can be thought of as an advisor who is responsible for advising the client in keeping the search on track, focused, and on schedule. Having a timetable with specific deliverables and clear expectations and roles for the client and the consultant helps to ensure a successful outcome.

Detailed Briefing

Basic Information

A search always starts with a detailed briefing, a discussion between the consultant or recruiter responsible for the search and the responsible person on the side of the client or department for whom the recruiting is being executed. From an external perspective, there might be exceptions, for instance, if the consultant and client have been working together for a couple of years, he or she may already be considered a trusted partner – that, by the way, should always be the goal!

One might think that this part of the process shouldn’t take that much time. Especially as the company being recruited for (in case the consultant is external) is most likely not planning to spend 2 or 3 h to explain their needs. In the case that the consultant is an HR professional handling internal recruiting using the direct search method , his or her contact partner probably won’t bother to define what they want or need – they will, in most cases, expect that the consultant or recruiter already understands what is needed if she/he is provided with the name of the position.

But professional search consultants or recruiters in general, either within a company or from an external recruiting agency, don’t accept an assignment without understanding the position they are looking to fill – they explore different perspectives in order to fully understand the profile.

Preparation and Gathering Information

In the first place, the aim is to truly understand the client or department and their working processes in the best possible way.

The consultant should imagine himself or herself working in the company being recruited for and trying to understand the organization; she/he should define the company structures as well as their current situation (marketwise, competitor-wise, etc.), objectives, vision, and, last but not least, their culture (Fig. 7).

Relevant Information: Market and Company

• Company details

• Founder and management, number of employees and international offices, revenue, financial situation, product, vision, strategy, and culture

• Market share/positioning

• Business model

• Partner

• Ranking, reputation, etc.

Relevant Information: Position

• Level

• Requirements

  Fig. 7

  

  Preparation and structure research

Understanding the requirements of a position is vital, but at the same time, the level of the position is crucial for the identification of potential candidates at a later stage, which means i.e.: to whom the candidate will be reporting, how big the team will be, and what prospects the candidate will have (Fig. 8).

Fig. 8

Classic company hierarchy structure

Executive (Leader), Manager, and Specialist

To quickly summarize the different levels, the executive (board and C-level, including vice president) is most likely responsible for the overall future strategy within a company, whereas a manager takes care of resources and planning. The specialists are usually very close to the operational part. Understanding the level of the position will help when looking at different profiles and determining if they will be interested in the position that is going to be offered.

Tip: The consultant or recruiter should use or collect different job titles for the same level. A bigger variety will bring more results when identifying relevant candidates. Keep in mind that every company has its own structure and its own way to describe a position – position titles nowadays tend to be very volatile.

Example: Head of Sales = Director of Sales = Team Leader of Sales = Sales Executives, etc.

Every single detail will help the person responsible for the search to understand why they need to fill the position. A helpful tool to make sure to get all the basics together is a scorecard or fact sheet. Using a scorecard in the conversation will definitely help to guide through the briefing and ensures that nothing important is missed.

Scorecard

A scorecard describes the mission for the position, outcomes that must be accomplished, and competencies that fit with both the culture of the company and the role. A scorecard is the blueprint for success.

The following structure of the scorecard can help to structure the information:

• (A) Job’s mission

• (B) Outcomes

• (C) Competencies

Scorecard Example Sales Position

• (A) Job’s mission

  Task: Describe the essence of the job and why the role exists.

  • What exactly is the candidate going to do in this role?

  Example: Support of direct sales team with the overall goal of growing revenue through effective marketing materials and online campaigns.

  It should be kept in mind that the best salesperson in the team is not going to make the team happy if she/he doesn’t fit into the culture (see competencies). If it is already doubtful that a person (typical one-man juggernaut) will not be found in the market, the consultant or recruiter should mention that already and explain why. A discussion in the beginning will definitely help to successfully place a candidate at the end of the project.

• (B) Outcomes

  Task: Develop at least three to five objective outcomes that a person must accomplish.

  • What exactly needs to be accomplished in the first 3/6/12 months?

  • How much revenue shall be achieved by the end of the year?

  Example: Develop a 12-month marketing plan to achieve revenue goals within budget of $500.000. Launch campaigns to drive new customer leads from current 10 per month to 30 per month within the first 9 months.

  The responsible party should make sure to have a definition of what exactly must get done (at least three to eight outcomes – these outcomes need to be objective and observable) and in what time frame. It’s very important to have the right people in the right spot at the right time, which means that the consultant or recruiter should not be hiring a generalist but rather a specialist.

• (C) Competencies

  Task: Identify as many role-based competencies as are appropriate to describe the behavior someone must demonstrate to achieve the outcomes.

  • Which competencies are critical and job related for the role?

  • What values (company culture) are essential for a long-term relationship regardless of the role?

  Example: Job-related competencies – persistent, proactive and analytical, hardworking, and influential. Cultural competencies – open minded, fast paced, and results oriented.

At the end, it all comes down to:

Competencies define how they expect the candidate to operate in the fulfillment of the job and the achievement of the outcomes.

The consultant or recruiter should always be looking for narrow but deep competencies. It should be kept in mind that certain criteria are connected not only to the position but to the company culture to ensure the behavioral fit – it is not only about their professional qualifications. People who don’t fit culturally fail at the job, even when they are perfectly talented in all other aspects.

The search consultant or recruiter should understand the company culture (which values are important and what exactly defines the culture) and should translate the culture into a series of competencies. Sometimes successful hiring means having the discipline to pass on talented people who are not a cultural fit.

The scorecard not only helps to understand what exactly to look for but is also a guardian of the culture. It encapsulates on paper the unwritten dynamics that make a company what it is and ensures those elements are taken into consideration in hiring decisions.

Along with the gathered information and after making sure that every question is answered, the person responsible for the search can determine the requirements the candidate has to meet and prepare a detailed job description that will be sent out to candidates who are interested in the position.

Job Description

After collecting the relevant information, the search consultant can, together with the client, develop a differentiated job profile. This will include a clear definition of the role within the company, the ideal background, and required skills and experiences.

Job descriptions can also be of great value to the client or head of the department. Creating a job description often results in a process that helps determine how critical the job is and how this particular job relates to others and identifies the characteristics needed by a new employee filling the role.

Once a job description is prepared, it can also serve as a basis for interviewing candidates, orienting the future employee, and in the evaluation of job performance later on the job – using the job description for future evaluation should be part of good management.

Components of a Job Description

• 1. Short company description and background.

• 2. Functions of the position. Usually this section is the lengthiest and contains details of what the job actually entails and can be quite specific. It should detail any supervisory functions in addition to being as specific as possible describing tasks the employee will face every day. This is also the best place to indicate whether the person will deal with customers, the public, or only internal employees. This section should also be used to place priorities on the activities.

• 3. Competencies needed for the position. This section should detail any technical or educational requirements that may be critical or desired. This is also the place to provide some insights into the type of work environment the company is attempting to maintain and should mention at least a couple of competencies that define a suitable profile.

• 4. Reporting. This section provides details on the reporting and organizational structure. This will help the future employee to better understand how his or her activities fit into the overall organization.

• 5. Evaluation criteria. The more specific this can be, the better. Writing this section will probably help to define what is most important for the organization as well as for the employee. The consultant or recruiter should try to make sure the evaluation criteria of the position will promote the type of activities which enhance the success of the business.

• 6. Compensation. From a recruiting agency perspective, it is probably better to work with a short statement: e.g., depending on work experience. Internal recruiters could include a range instead of a specific figure – that will ensure more flexibility. It is usually better to have a specific amount, especially if the job description is being given to the employee. If the organization uses salary grades, use that.

• 7. Physical location and surroundings.

Keep in mind:

• The description should be short and simple and easy to understand and should try to create a bigger picture.

• It should start with a description of the company and its history as well as the current situation and future strategy.

• The job description should explain why the position is open and what exactly needs to be done in the role.

• Last but not least, it should differentiate between crucial and cultural competencies.

The document should be well structured and not longer than three pages. One of the key differences in direct search is that the search consultant or recruiter is actively contacting candidates in positions where the majority is not actively looking for a new job – so she/he has to convince them from the very first moment.

Tip: The final version of the job description can be used as another touching point with the client or department. They should have a look at the summary and give their final go that the information can be sent to potential candidates making sure that it does not include any confidential aspects. Nobody wants the market to gossip around!

One of the last bits that need to be done before the job description can be sent is to prepare a target company list – a well-structured list of companies in which suitable candidates are most likely to be found.

Target List

Since these lists are growing through the whole search, there is a difference between a so-called long list and a short list. With the short list, the client or department will get an overview in the beginning of first ideas and where the recruiter is going to look for candidates. Handing it over gives another chance to check if there are any blacklist companies on the list – companies where she/he should not be hunting because it is a business partner or a close business relationship.

Depending on the company and the position being filled, it makes sense to structure the list into different segments:

• Business models

• Size of the companies

• Competitors

• Countries/cities or areas they are operating in

• Revenue

• etc.

As can be seen, although the search hasn’t started, it feels like a week or two has already passed. Accuracy will help quite a lot in the overall process. To be efficient, the search consultant or recruiter had better do his or her homework in the beginning of the search. But with the overall understanding, finding the right candidate and starting with the identification are closer than ever.

Identification and Approach

How to Identify “Mr./Mrs. Right”?

After having a closer look in his or her own network, the responsible party should always start with the screening of the companies on the target company list to identify potential candidates. The consultant or recruiter should not forget to write down where she/he has been looking already. The list can be used as a management tool and a certain control tool. When reporting to the client or department, it gives them an idea of what has been done and what they can expect (market perspective).

Other very important sources that might be useful to identify potential candidates (always depending on which industry/sector being looked at):

• Network or companies’ network

• Multipliers

• Internal or external databases

• Social networks (XING, LinkedIn, etc.)

• Specialist forums, networks, and organizations

• Recommendations

It is important to keep in mind that people (naturally) are always looking for the next step in their professional career. Candidates to whom the same or a similar position is being offered (which would mean a side step) most likely won’t be interested in learning more about the position.

How to Screen Profiles and What to Look for?

One of the most challenging parts is to figure out which profile might be the best and most suitable. While screening hundreds of different profiles, it is super important to be very selective in the beginning of the search. Efficiency is truly key! Over the years, after the consultant or recruiter has probably screened thousands of profiles, she/he will develop an eye for every single detail and will be able to read profiles within only seconds.

The consultant or recruiter should make sure to be checking that all relevant criteria from the briefing are fulfilled and in the beginning only concentrate on those profiles that fulfill every single detail. The client or department, especially in the beginning, won’t compromise right away when a candidate does not have one of the requirements that she/he is looking for.

Try to keep in mind the following aspects and criteria:

• Professionalism

• Educational background

• Industry expertise

• Job-hopper or unexplained gaps in the CV

• Current position

• Extracurricular activities

• Keywords

Depending on the position/role being filled, the person responsible should always make sure to have a certain amount of identified profiles to choose from.

Tip: A rule of thumb should always be: It’s better to have fewer than a hundred profiles that fulfill every single requirement rather than 200 which don’t. It’s quality, not quantity, that counts.

There might be situations in which it is unclear if the profiles the consultant or recruiter has found are the right ones; it’s more cost and time efficient for both sides to take an extra 10 min to speak about the first profiles and get even more input.

With a variety of different profiles (various backgrounds and experiences but still within the criteria from the briefing – it is best to find a more junior and a more senior version) suiting the position, the consultant or recruiter also has the chance to see what profiles are preferred.

After double-checking a certain amount of profiles (to make sure that the consultant and client are on the same page regarding the expectations) and when the search consultant or recruiter has identified a solid number of candidates, she/he can finally start contacting the candidates.

Approaching Candidates

Candidates should always be approached discreetly, individually, and directly while treating them with the utmost care. Before starting, the search consultant or recruiter needs to decide what the fastest and most effective way will probably be of contacting candidates. Having the position as well as the profile in mind, there can be differences depending on the industry they are working in. In the case that the position is a sales manager, the consultant or recruiter can probably just ring the candidate and quickly ask if the offered position could be a relevant next step. Sales managers tend to be very extroverted and communicative, whereas an IT expert might prefer an e-mail. The consultant or recruiter should make sure that the candidate is feeling comfortable with the approach and should try to anticipate! In addition to keeping the message short and simple, it should contain three to five key aspects that causes a certain stir of interest and convinces the candidate a certain stir of interest to talk further about the position.

When contacting a candidate for the very first time via e-mail, the person responsible should not simply copy and paste – the candidate will probably notice and just delete the message. They need to feel that they are special and therefore the only ones who have been contacted for the position. It is very important to personalize the messages in stead of simply changing change the name of the addressee (one of the worst cases of copying and pasting if sending an e-mail to a potential candidate is to still have the last name of the former candidate in the salutation). The consultant or recruiter should be sure to include information that she/he already found out, e.g., if the candidate has been in the same position for more than 3 years, use the info as a teaser. “As I see that you have already been with the company for the last couple of years, I thought you might be interested in a new challenge.”

• Via telephone (fastest way to contact the candidates is to directly call them – be careful while calling them at work, always try to find a slot before or after working hours)

• Via e-mail

• Directly via social networks (Twitter and Facebook are not suitable for every position!)

• Scenario 1. The candidate will respond and be interested in more information. Then the consultant or recruiter can directly give him or her more details – even send the job description if it is not confidential – and ask for his or her curriculum vitae (CV) to have a closer look at the profile and get a better understanding of their experiences.

• Scenario 2. The candidate gets back to the consultant or recruiter but is not interested (common reasons: relocation, position, company, happy in the current position, etc.). If a candidate hasn’t mentioned any details regarding family and relocation, the consultant or recruiter should give it another try and see if she/he can convince him/her – it won’t work out every time, but one out of ten might take the bait.

• Scenario 3. The candidate does not get back within the first three to five working days. It should be taken into consideration that there is always a slight chance that he or she is on vacation or a business trip. If they were contacted via e-mail, the consultant or recruiter can definitely try to reach them via phone after the fifth day, telling them that she/he already tried to reach them via e-mail. In that case, she/he should have a short pitch/summary ready to quickly give them an overview on the phone.

• Scenario 4. The candidate does not respond and it’s impossible to reach him or her via phone. Then the consultant or recruiter still has the chance to ask his or her network if somebody might know the person or can make an introduction. If the position is for a PR and communication manager, channels on social networks such as Twitter or Facebook are also possibilities; those ways of contacting are not always the most suitable, but depending on the position, they will not be offended.

But the consultant or recruiter should not spend too much time convincing people – concentrate on the ones who show interest from the early beginning.

There should not be more than five working days from the day the candidate is first contacted until an initial interview is arranged. It is important to keep them in the loop – the faster the process, the better it feels on the candidate’s side.

Before scheduling an interview, the consultant should ideally have their CV at hand. It can be used to gain a better understanding of what exactly they have been doing so far and to check if they fulfill most of the professional or technical criteria. Some of the candidates will not have an updated version ready because the majority is not actively looking. For the initial interview, it is a good idea to check if they have a relevant profile on one of the common professional networks such as XING or LinkedIn.

Note: The process can be considered as a give-take situation. If the consultant or recruiter is providing more details, she/he can also ask for an updated CV to already have a closer look at their background; it’s best to make sure that it’s worth it to do a first interview. Checking details beforehand enables the consultant or recruiter to decide whether it makes sense to further concentrate on the candidate or to decide against him or her. The more efficiently the work is done, the faster the position can be filled.

Interviews

Preparation

All suitable candidates should be evaluated thoroughly during a minimum of at least two interviews (via telephone and ideally in a personal interview involving at least two people) and should be reviewed under special consideration of relevant qualifications and competencies. As mentioned before, the job description or the scorecard can now be used to structure the interview and make sure that the most relevant requirements are being focused on.

To be a great interviewer, one must get out of the habit of passively witnessing how somebody acts during an interview – decisions shouldn’t be based on how somebody acts during a few minutes of a certain day. The consultant or recruiter should use at least two interviews (plus a reference interview) to collect facts and data about the candidate’s performance track record.

Once a potential candidate has been found, the search consultant or recruiter should prepare a well-structured guideline to use in every single interview for the position, making sure that there is an objective basis to compare the candidates and to evaluate their skills. There are hundreds of different ways to interview and techniques to use. The technique is not the most important aspect but rather making sure that the same structure and questions are constantly used for every single candidate that is going to be interviewed. This is to try to ensure a comparable starting situation.

Note: The consultant or recruiter should try to spend at least 10–15 min in preparation before picking up the phone or meeting the potential candidate, and she/he should show interest! Looking at the candidate’s CV or profile, what they are currently doing, and where they are working are good ideas. These provide a starting point to trigger the discussion.

First Interview (Phone-Based or Personal Interview)

Guideline for the first interview (minimum of 45–60 min):

• Overview of the interview – How long it’s going to take and what you are going to talk about: it is important to give a road map!

• Short introduction of himself or herself and the company she/he is working for (this helps to establish some kind of relationship from the early beginning throughout the interview)

• Basic checkup of the requirements (background and education, professional career steps, salary, availability, etc.)

• Evaluation of relevant experience – Get curious (What? How? Tell me more)

• Motivation and value system

• Expectations

• Short overview of the position and first questions

• Outlook and next steps

The interviewer shouldn’t just ask about all the information that is important for the position – she/he should engage the candidate to take part in the dialog! That is the only way to find out if she/he can be considered as Mr. or Ms. Right. But it should be kept in mind that for 80–90 % of the conversation, the candidate should be speaking.

In the unfortunate case that the candidate is not convincing or lacks experience, the consultant should already point that out during the conversation. This will help later on if he or she must be rejected later in the process.

In the case that the candidate fulfills the requirements and has convinced the consultant or recruiter to talk a bit more about the position, the next step is to set up another interview to talk about more details (again, the faster, the better. Do not lose too much time in between the interviews – the more time in between, the more difficult it is to remember details). Now it is time to send out the job description if that has not already been done. This gives the candidate a chance to further research the company and investigate a bit more to see whether the opportunity could be a possible next step.

Tip: It’s best to try to arrange either a personal meeting or at least a video call for the second interview. A personal interview will give the consultant another chance to not only hear what the candidate says but also see how she/he acts.

Second Interview (Personal Interview)

The second interview can be considered even more important because it allows the consultant or recruiter to gather additional, specific information about the candidate. They can focus, for example, on the outcomes and competencies of the scorecard and be curious after every answer by using the What? How? Tell me more framework. She/he should keep asking until it is clear what the person did and how she/he did it.

Guideline for the second interview (minimum of 60–90 min):

• Details of position and Q&A

• Evaluation of the job-related interest of the candidate

• Review of necessary competencies: What? How? Tell me more

• Strength analysis and attitude

• Evaluating and double-checking cultural fit

The data gathered about the candidate now ideally match es up perfectly with the job and the culture of the company, and in the consultant’s or recruiter’s mind, the person already works for the company. When the two interviews are over and the consultant or recruiter feels totally excited about the potential candidate, a third interview should be considered – the reference interview.

Reference Interview

The reference interview can help grow even more understanding about the candidate and might point out a couple of important aspects. There are three things to keep in mind to have a successful reference interview:

• Pick the right reference (boss, peer, subordinate. Do not just use the reference list the candidate provides).

• Ask the candidate to contact the references to set up the calls or at least to inform them.

• Conduct the right number of reference interviews (minimum of three).

The consultant or recruiter should try to verify the candidate’s answers by using a couple of questions from the previous interviews; asking for multiple examples helps to put strengths and development areas into context. It is good to keep in mind that people probably don’t change that much when it comes to certain criteria – past performance really is an indicator of future performance.

Candidate Short Profiles, Interviews, and Feedback

After interviewing the candidates, the consultant or recruiter should compose a brief and precise short profile that offers a representative overview of the collected information including a personal recommendation. On the basis of these short profiles, the client or the internal person responsible should be able to get an overview of the candidate and decide whether she/he would like to interview the candidates or not.

Tip: The person responsible should use the job description to point out certain competencies and prepare a single fact sheet using a scale (1–5) to make sure that she/he, as well as the client, is able to validate on the basis of the same criteria.

Short profiles usually contain:

• Criteria (background, professional experience, availability, salary, etc.)

  • Career insights (challenges, personal development, and achievements)

• Competencies, especially cultural fit

  • Attitude, personality, and strengths

  • Motivation, value system, and goals

• Personal evaluation and recommendation of the interviewer

If the client is not turning down any recommendations from the search consultant, that is a good indicator that she/he understands what the client is looking for.

After presenting the candidate to the client or the internal person responsible and helping to schedule interviews, the consultant or recruiter should always try to take part in the interviews. That can help a lot to even better understand exactly what they are looking for. The consultant or recruiter should try to make sure that she/he still owns the process and shouldn’t leave them alone. The search consultant should be managing the process!

If the consultant or recruiter won’t be able to take part in the interview, it is best to schedule a feedback meeting/call to get detailed feedback. If possible, she/he should do this right afterward to get first impressions, no matter if they are positive or negative. The feedback helps to better understand what is most important for the client and what they are focusing on.

Tip: The consultant or recruiter shouldn’t be offended if the other party is coming back with negative feedback; that feedback can be used for future interviews to ensure that the following candidates fulfill the missing aspects.

Selection of Candidates and Negotiation

If the client or internal person responsible shares the same opinion regarding the candidate, the consultant or recruiter should make sure that she/he will be kept in the information loop. It’s not a good idea to turn them loose and try to coordinate with the candidate as well as with the client. At this stage of the process, it is even more important the consultant stays up to date in case there might be room for further support, e.g., during the contract negotiation phase.

The search consultant or recruiter should always be aware of possible changes and therefore try to mediate between the client and the candidate. Until the ink on the contract is dry, she/he should try to stay very close to both sides.

Successful Placement of a Candidate

After the candidate was successfully placed, the consultant should definitely stay in touch with the client. It makes sense to get feedback at the end of the first 90 days after the candidate started working for the client. The consultant shouldn’t hesitate to meet up with them and get feedback on how things are going. It’s a good idea to try to stay in touch even longer than the most critical time period of 6 months – always keep in mind that this placement could be a future client.

Tip: The consultant should let somebody else from his or her company do a quality call right after the placement and after a certain amount of time to verify what the client was thinking during the process and if there is room for improvement.

People Perspective

People live and work in an age of transformation. Companies are challenged by continuous change due to a more globalized and fast-moving environment. On top of it, demography is affecting company growth or even a stable balance within the workforce. Today, most industries are only confronted with the tip of the iceberg. The so-called war for talent has just started. Soon, the next generation will impact the economic developments since fewer skilled workers (professionals, managers, and executives) will be available on the job market. This forecast results in a fundamental change within the workforce. There is a shift of power between the employer and the employee, which has a substantial impact on all parties involved. As a result, there is a high demand for executive search, which influences both company and employees (candidates) on different levels. In the following, the motivational and cultural changes will be stressed.

Partnership Between Candidate and Executive Search Consultant

Over the last years, employees have gradually changed their focus when deciding on new job offers. On the one hand, they have realized that companies can no longer promise stability and security of employment since some jobs become obsolete, new skills are urgently needed, and structural changes are becoming the norm. On the other hand, skilled workers have also understood that they can benefit from the war for talent in making greater demands. Hence, job changes are more and more corporately accepted due to the growth of skill shortage and increasing competition between employers. As a result, around majority of the workforce is generally open for discussing new job opportunities.

Working with a trustworthy executive search consultant has great advantages for any employee that is interested in an ongoing career development. Not only knows the consultant about the competencies of his or her protégé but also about the hidden motives. Does the employee care about a pay rise, or is he or she more interested in flexible working hours to spend more time with the family? All these questions won’t be the center of attention during a typical job interview between a company and a job applicant but drastically influence the candidate’s decision.

A well-trained consultant will always be an advisor and won’t be seen solely as a service. The communication between candidate and consultant will not only focus on current job offers but also involves information about a career development strategy as well as salary negotiations. Of course, the position of power also shifts toward the employee once directly approached for an open position, which influences the candidate on an emotional level and gives him or her an advantage for further negotiations.

Partnership Between Company and Executive Search Consultancy

After evaluating the current situation, it becomes apparent that businesses have to fight a high turnover due to increasing employee fluctuation or restructuring. In both cases, executive search consultancies supply companies with the needed resources but also poach employees from their positions. This two-sided scenario puts businesses on the spot to change their usual patterns and focus on the changing employee needs. Recent developments have shown that human resources are concentrating on the development of strong company cultures to retain their talents and develop a unique DNA. Since it is becoming more and more difficult for companies to differentiate themselves in a highly competitive war for talent, the new trigger point is called culture (Papa et al. 2008; Hartnell et al. 2011).

Due to these changes, executive search consultancies have a new mission, not only understanding the business model and job specification but also the identity of the firm. It becomes their primary task to identify candidates that match the company’s DNA. When contracting an executive search agency, it is of importance to choose wisely the right partner. Especially with senior placements, the risk of a cultural mismatch can negatively influence the company’s culture, employee retention, and motivation. Therefore, human resources should focus on an equal fit between their company, their culture, and their agent. It is beneficial for both sides to seek a long-lasting business relationship. Having a sparring partner on recruitment matters that has in-depth understanding of soft factors such as company culture is vital for the survival on an increasingly dynamic labor market.

Economic Perspective

People are the most important asset and resource for successful and sustainable businesses. Therefore, it is fascinating that often no or very small budgets are planned for strategic personnel growth. Quite often, executive search consultancies are contacted when there is no other option left and the vacancy became a pressing matter for the company. Often the required resources and time frame for a new placement are underestimated. The process of searching, interviewing, and actually winning over a candidate can take months. Therefore, outsourcing this task to an executive search agency is an expensive investment, which will be further examined in this section.

The Pricing of Executive Search Services

One of the reasons for avoiding external professional services is that there are plenty less costly recruiting options available (in-house efforts, posting job advertisements, etc.) before considering the support of an executive search agency. Hiring with the help of an established and professional executive search agency costs 25–33 % of the estimated total annual compensation of the candidate, usually plus expenses. Talking about a senior executive compensation package, which normally includes the fixed salary and bonuses, the search fee is easily above 50.000 €. Some consultancies also agree on a flat fee in order to be unbiased, avoiding a conflict of interest during the negotiations of the compensation package.

First, it is very important to understand the economic drivers behind the two major models, retained-based consultancies and contingency-based agencies.

The Retained-Based and Contingency-Based Model

Retained executive search firms ask for an upfront payment, which is often one third of the whole fee. In general, they receive another third of the whole fee after a certain amount of time (e.g., 6 weeks) or having presented at least three relevant candidates, which the client wants to get to know personally. The last portion of the total fee is due, when a candidate is hired and the employment contract is signed. Furthermore, often travel expenses are charged back.

Contingency-based agencies only get paid when a candidate has signed the employment contract. They charge for a placement around 20–25 % of the total annual compensation package. Comparing both payment models from the client’s economic and financial point of view, the contingency model seems much more attractive because the agency is bearing all the financial risks. In addition, if there is no exclusivity agreement, the client is able to assign the vacancy to two or even more competing contingency-based agencies, without carrying any financial risk.

Taking on the perspective of an executive search consultancy, it is apparent that economically the contingency-based model does not suit to perform an elaborated direct search process as described in section “The Rise of the Executive Search Industry.” If an agency is only rewarded, when a placement is done, it is self-evident that the amount of resources (time, money, workforce, tools, process accuracy, etc.) invested in the process of finding a suitable candidate is kept as low as possible in order to diminish the own sunk costs and risk level.

Additionally, staying in competition with other contingency-based agencies automatically increases the time pressure to present suitable candidates in order to succeed first. Therefore, contingency-based consultancies have to work with smart shortcuts. For instance, it is practice to have easily more than ten mandates at the same time in order to create synergies between similar vacancies. In other words, a great candidate will be presented to several clients in order to increase the possibility of a successful placement. This also indicates that relevant candidate selection criteria such as cultural fit, role, etc., cannot be taken fully into consideration. In a nutshell, if a service provider is not paid for having time and resources to set up an individual direct search process, then neither the expectations should be held to receive such a process, nor the promise should be made that such a process will be executed.

But why is the contingency model widely spread and seems to work? First, because it is often forgotten to differentiate between those positions suitable for a contingency model and those more appropriate for retained-based models. The contingency concept works perfect for sectors or fields in which many vacancies of the same kind exist and the candidates’ profiles in terms of skill sets are comparable. This is mainly applicable for junior, midlevel, and generic positions. Of course, the attractive compensation packages of senior and executive positions attract contingency-based agencies to aim for higher positions as well. Second, their pricing model makes it very easy for them to acquire new clients and vacancies in the executive field.

Lately, the contingency model becomes less applicable for executive search consultancies. The profiles become more and more complex, and the missing expertise for the direct search process as well as the huge amount of time and resources, which need to be invested at this point to find great candidates, leads to a withdrawal from the job. Only independent and self-employed executive search experts, who work mostly alone and do not have high fixed costs such as salaries and office rent, can offer a good service and process without retainer – exclusivity preconditioned.

Pricing of In-House Executive Search

In order to obviate the fees described above, some companies have insourced the service of executive search and built up an in-house direct search department. This works out in many companies, especially in the blue chips and fortune 500 companies. They do always have a continuous need for skilled workers, just alone because of natural fluctuation.

But before a decision can be made on “make or buy” executive search, a transparent evaluation of all needed requirements and fixed and potentially emerging expenses needs to be done. Finding, convincing, and hiring the right executives are neither cheap nor easy. The most crucial element for a successful and cost-efficient in-house executive search department is having an up-to-date, highly efficient, and experienced former executive search consultant or headhunter, who will lead and manage the department. Experienced headhunters, switching from an agency to an in-house HR department, certainly know well what they are worth. Therefore, a competitive annual salary needs to be taken into consideration.

Bearing this in mind, the question occurs if there are enough open vacancies, which in fact need to be directly searched. Companies should count with at least 40 positions per year that cannot be staffed easily via job advertisements in order to fully occupy a direct search expert, ideally supported by one researcher.

In order to provide a long-term perspective for your in-house direct search employees, a sustainable job profile or at least a Plan B should be prepared for times when recruiting is not needed. As the economy, markets, and individual companies are swaying, so is the need for new heads. On the other side, it will be a challenge to keep a passionate direct search expert in your company if he is only doing administration and laying off people in phases of low or no recruiting needs.

Besides fixed costs like salaries, offices, communication expenses, etc., variable costs like job advertisements and travel expenses need to be taken into consideration.

Risk Perspective

Risks During the Executive Search Process

Even though a company has found an experienced and professional executive search consultancy, which understands the market, has placed the vacant profile a dozen times, and last but not least gives a good gut feeling, there are many risks along the way of the search process the client can and should keep in mind:

• Risk of losing time by searching for a wrong profile. The consultancy can only find accurate candidates if the briefing was accurate and precise. Often, the awareness of being on the wrong track becomes obvious, when wrong profiles are presented to the client, so relatively late. Resources and especially time have been wasted. In order to reduce this risk, it is recommended to be extremely clear what you want from the beginning on. A great consultant will insist on a precise briefing and will not start searching without it. Still, the best way to reduce this risk is communication, before and during the search process.

• Risk of expecting a unicorn because of having contracted a consultancy. Just because a professional consultancy is contracted, the quality of the candidates cannot be better than the market allows. They will only find what truly exists and will present only those who are interested in the job, location, and company.

• Risk of losing candidates during the process because of being too slow. The clients’ bureaucracy, keeping candidates on hold, no time for short-dated personal interviews or several postponements, or vacations of the decision maker without having a decisively holiday replacement are classic reasons for consultancies losing great and at the beginning interested candidates during the process. The better and more attractive the candidates are to the job market, the smaller is the window of opportunity to win them over. Letting them wait and feel unappreciated will drive them away fast.

• Risk of falling in love with one candidate and having no eyes for others anymore. Having seen the “perfect” candidate often makes other candidates look gray and uninteresting, even though the “perfect” one might have been a level too high and too expensive or was not interested in the job anyway and the other candidates may fit even better. It is recommended to stay objective and realistic.

• Risk of being paralyzed by too many options. Often, clients want to see more candidates, because they have the feeling that there might be another great candidate out there, even if they have four or five great candidates they could decide between. Describes by the paradox of choice, presenting further candidates will not help the client to make a decision. “Even if the paralysis has been overtaken and a choice was made, we end up less satisfied with the result of the choice then we would be if we had fewer options to choose from” (Schwartz 2005). So to overrule this paradox of choice, it is recommended not presenting more than three candidates to the client to choose from at the same time. If the right candidate is not one of the three presented, one or two candidates need to be rejected first before introducing new candidates. Through this strategy, the client is never confronted with more than three candidates at the same time.

Risk of Hiring the Wrong Candidate

Costs of Mis-hires

“Between 5 and 25 percent of the executive personnel decisions are corrected within the first two years” (Bierwirth and Nagengast 2005). Another 5–10 % are bad hires, which are kept in their positions due to internal politics and for keeping the fluctuation low. Summing up, about 80 % of all top-level hires are considered as successful and valuable for the company. This part will examine what it costs to hire the wrong candidate and how the risk of making with each fifth hire as wrong decision can be reduced.

As rule of thumb, taking all direct and indirect costs and expenses of hiring and severance into consideration, a bad hire causes costs of a total amount of at least 1.5–3 times of the annual salary. This does not include intangible costs such as financial damages emerged though mistakes and missed business opportunities nor cultural and motivational damages left behind at the employees though insufficient management and missing leadership. Furthermore, lawsuits, bad press, and resigned top employees are also potential long-term damages which can occur if a mis-hire occurs on the top level.

Cost of hiring process

• External or in-house direct search fees

• Job advertisement expenses

• HR administration and recruiting expenses

• Complete time invested in interviews, discussions, and negotiations with candidates

• Travel expenses for all personal interviews

• Relocation package

• Onboarding and trainings

Cost of separation

• Exemption costs (compensations during absence)

• Outplacement counseling and/or mediator fees

• Complete time invested in negotiating the separation

• HR administration costs of separation (generating termination agreement or cancelation, authoring recommendation letter, reference calls of new potential employees, etc.)

• Costs of potential lawsuits

Potential intangible costs

• Losses in productivity through bad management and leadership

• Losses though procedural stagnancy during separation phase

• Losses in customer relations and reputation though bad press

• Losses in employees’ morale and motivation through instable leadership structure

• Losses of knowledge, personal information about certain processes, clients, suppliers, employees, outcomes

Reducing the Risk of Mis-hires

First of all, we are all human and humans are making mistakes; therefore, misplacements are part of the game, and there is no way or strategy for a zero percentage mis-hire rate, especially because visions, companies, structures, teams, people, and roles are changing continuously along the way and ideal setups can change into unpleasant constellations just through a few changes within the company. Still it should be tried to evaluate all known corner marks of an existing vacancy and the future direction and goals in order to reduce the risk of a wrong hire to a minimum.

Knowing exactly what character is needed and wanted. Sounds easy and banal but it is not. On the executive level, it is not only about track record and capabilities. It is far more about the personality, intentions, and values. If they do not fit, the best skilled and with experiences equipped candidate can be the wrong hire. An excellent executive search consultancy will check on the character traits and personal motives as intense as on the capabilities, experiences, and former successes. Often, psychometric testing is applied to get objective and comparable character profiles.

Finding out how and why a candidate left. Making background and reference checks is a basic part of a professional executive search process. It is crucial to find out why and how the former employers have been left. This as well gives interesting insights about the character the new employer might want to know.

Not hiring out of desperation. Sometimes, it just cannot be obviated that a management or executive position is vacant and there is no potential candidate at hand. But being forced to fill a high position vacuum ASAP is not a position of strength and deliberation. If this situation should occur, desperation by taking the next best candidate has to be averted. Alternatively, hiring an interim manager and letting people accompany the recruiting process which are not directly affected by the vacancy so they can contribute a more objective and cool-headed opinion to candidates in the recruiting process is recommended.

Not letting hiring be a side project. Often enough, recruiting, interviews, and debriefing sessions are not understood as priority but as at the same time extremely time consuming for all people involved. Therefore, the recruiting process is often experienced as a bothering necessity, which takes away focus from the actual job and other love projects. As a consequence, shortcuts in the process as well as quick decisions are the result to find a fast end. If this should be the case, either everyone needs to pull oneself together or a specialist should be contracted so the quality of the process is not at risk.

Operational Perspective

Selection Process of a Consultancy

The operative perspective on recruiting mainly focuses on the process conducted by the executive search consultancy as explained in detail in section “The Direct Search Process” of this chapter. In the following, the question about the main criteria of choosing the right external partner for the hiring process will be stressed.

• Industry know-how. First, human resources should identify executive search consultancies that operate in their branch. There are various specialists concentrating on specific industries as already mentioned in Chap. 1, “Human Resources Marketing and Recruiting: Introduction and Overview.” For the identification of a suitable candidate, the executive search consultant is required to have an in-depth industry know-how. Clients can reassure themselves by requesting references of the consultancy or asking about the latest placements of the responsible consultant.

• The process. Second, when deciding on a suitable executive search consultancy, HR should always be informed about the research process and conditions. Especially the pricing varies between different providers, which is explained in section “The Pricing of Executive Search Services.” Often consultants are chosen due to their large network in the industry, which is clearly a benefit for the client since the consultant might be able to contact a few trusted candidates with a successful track record and present those candidates only within days to the client. Nevertheless, the art of executive search is not taking a lucky shot but finding the right match for the position on all levels previously discussed with the client (experience, skills, culture, goals, etc.). The key to a successful placement usually rests in an efficient and well-structured process. Due to a strictly determined workflow, the consultancy is able to properly represent the client and identify a great amount of potential candidates within a predecided time frame. Experience shows; the more complex the positions get, the more focus should be on a highly professional research process. The detailed structure of a search process always benefits the time schedule and supports transparency for the client.

• The consultant and team. Third, recruitment or executive search is a labor-intensive and time-consuming task. With respect to the research process, human resources should always inform themselves about the capacity of the consultant (often self-employed) or the executive search consultancy. How many research projects is this person taken care of at once? Who is supporting the consultant with the search process? With complex or C-level positions, it might be advisable to consider an executive search agency that is employing a team of researchers. Often, consultants are focusing on the client relationships, but a research team performs the operative part. A researcher is responsible for the identification of potential candidates and acquisition of new candidates via direct search and active sourcing. According to the complexity of the project, there might be one to three researchers working on one vacancy. They are specifically trained to call their way into the target department to attract the attention of a candidate and make the first contact. In addition, modern researchers have excellent social networking skills and use digital search techniques to identify talents. Researchers provide the consultant with a talent pool and only the best candidates will be presented to the client. Usually, a research team will have screened over 1,000 profiles, contacted over 300 people, interviewed up to 20 potential candidates, and presented a selection of 3–5 candidates to the client.

• Placement and onboarding. It is common practice that human resources stop frequent communication with their executive search consultants after successfully placing the right candidate in his or her new role. Nevertheless, the consultant is responsible for the “well-being” of the client as well as the candidate for the candidate’s time of probation. According to most recruitment contracts, the business relationship between company and consultancy ends once the time of probation has passed and the company as well as candidate is pleased with their choice. Therefore, human resources should use this as an advantage, keeping in touch with the consultant to prevent an early drop out on behalf of the newly contracted employee. Professional consultants will always have insight knowledge of the current situation and level of job satisfaction of their candidates and will be able to advise human resources on the matter.

Tip: Communication is king for all executive search projects. The most successful placements can be achieved by developing a professional communication flow between the client and the consultant. It is beneficial to implement regular (weekly) feedback loops with HR to navigate the search into the right direction. Communication and clear expectations will always speed up the placement period and increase mutual satisfaction.

Dos and Don’ts

Do build a reliable and long-lasting relationship to direct search consultants, who understand your company as well as your wants and needs. Such a trustworthy relationship will pay off especially in the quality of candidates in terms of cultural and personal fit.

Do not expect an individual direct search process if you do not pay for one. The difference between the processes of retained executive search firms and contingency-based agencies is sometimes difficult to see from the outside but cannot be ignored – especially if the vacancy is crucial to the company. See section “The Pricing of Executive Search Services.”

Do not underestimate the importance of the search consultant during the negotiation phase. The consultant has earned trust of both sides during the process and normally has an advantage of information, which are not shared between the parties. This mediator role of the search consultant should be used by both, the employee and employer, to find common ground in negotiations and further points of discussion.

Be aware that the client is sometimes the biggest risk in the process of successfully hiring a great candidate. Of course, the client is not doing it on purpose, but sometimes a consultant needs to make the client aware of his misinterpretations of a certain situation. A consultant should not be an opportunist but rather an honest adviser and respected process owner. See section “Risks During the Executive Search Process.”

Try to reduce the risk of hiring the wrong executive to the lowest level possible. Hiring the wrong executive is not only a huge loss in momentum, motivation, and time. It is also very expensive, on average three times the annual salary of the hire. Of course, nobody hires the wrong person on purpose, but there are possibilities to reduce the risk of doing so. See section “Risk of Hiring the Wrong Candidate.”

Don’t forfeit your image at your candidates. If time pressures filling a certain position, sometimes several contingency-based search firms are asked to screen the market. This might speed up the process but also includes the risk of addressing valuable candidates several times. Being contacted by several agencies for the same job lowers the attractiveness of the offer. Organize the agencies wisely so they do not hunt on the same grounds.

Final Comments and Outlook

This last section of the chapter “Executive Search” will contain some selected trends, which will give an idea in which direction the industry is developing. Nevertheless, a decent economic outlook on the direct search industry cannot and should not be made because the ruling instance, which predetermines the direct search industry, is the economy.

Starting with the war for talents, the sudden drop in birthrates in the 1960s, caused by the introduction of the birth control pill, has led to a disproportion between the retiring baby boomers and the following generations X and Y. Until 2020, thousands of baby boomer executives and experienced managers will retire, and only a few companies feel prepared, e.g., through already installed and sophisticated succession plans. This scarcity of experienced executives, managers, and experts will lead to an intensification of the so-called war for talents.

The scarcity of executives, of course, also influences the average age of executives. If there is no CEO with 20 years of experience available on the job market , the next best one with just 15 years has to do the job. But not only a shortage of candidates leads to younger C-levels, also the perceived importance of age for certain positions has dropped. The CEOs of international global players and market leaders like Google (Larry Page, 40), Facebook (Mark Zuckerberg, 29), Yahoo! (Marissa Mayer, 38), and Burger King (Daniel Schwartz, 33) demonstrate this perfectly.

Also, the trend to gender diversity, which started around the 1980s, will continue. Probably, this trend will even gain in pace, because of many supporting developments such as new expectations on corporate culture and modern leadership, legal quota for women (e.g., for supervisory boards in Germany), initiatives, and engagements on gender diversity on the executive level (e.g., The Enhanced Voluntary Code of Conduct for Executive Search Firms).

The information age hit the direct search industry with an uncomfortable new level of transparency years ago. Employees are able to identify their most wanted candidates over social media platforms such as LinkedIn themselves and do not depend on the in-house data banks of the executive search firms anymore. Even though this trend is not new, it has not reached its full potential in all industries yet. Especially less internet-oriented executives and experts of traditional industries and SMEs did not join such platforms yet. Despite that, in 2012, already over two thirds of all North American executives used online platforms to increase their digital visibility so they can be found easily when their profile fits to an interesting job opportunity.

A much younger trend coming out of the information age corner is called data-driven hiring. Already widely implemented in many other areas of corporations, data-driven decision making is nothing new. But for recruiting purposes, especially on the executive level, only the most innovative companies apply such methods, in particular the big-data-flagship Google. Executive search consultancies have good arguments that computers and data will never replace the personal interview, but data-driven decisions will infiltrate the industry in other areas, for instance, how candidate backgrounds and referrals are checked.

Drawing a conclusion, the importance of finding the right executives, managers, and specialist will most certainly never fade, especially in such a competitive and fast-moving environment, which we are building around us. Also the process of taking external advice on finding a new face for a certain position is human and will never be fully replaced by computers and data systems. Horse sense and experience are elements in this process, which are simply irreplaceable for finding the best candidate (Cifolelli 2014).