The Recruitment Process for Better or Worse, a new series – Why is a retained search firm hired? Why does a company pay the high fees and is the firm worth the expense? (Part 1)

Judith Cushman All Posts by Date, Recruitment Tips 0 Comments

judith cushman associates exceutive recruiting analsyis career consulting hr human resources professionalsAnswer:  Recruitment and Retained Search: “It’s Like High School Dating…Remember that when they want you, they’ll be all over you like a cheap suit,” says a former head of communications and recruiter at one of the largest retained search firms worldwide. Or is it? Or should it be? Here’s a new series on how, for better or worse, the process works for recruiting Comms VPs.

The bare bones of the process are simple. A retained search firm (guaranteed fee paid under a contract) representing the hiring organization that pays the fee, proactively contacts professionals to fill a senior role. The search firm is looking for specific experience and intangibles in the expectation that one of these candidates will be hired. All of this is activity is conducted in strict confidence so that the potential candidate does not put his/her current job at risk. The search firm is well paid for this work.

When a for-profit company (for the most part these are the organizations that hire search firms) is faced with a VP Comms vacancy there are usually no qualified in-house HR staffers to conduct a search. They also the lack the availability, specific knowledge and skills to research, identify and evaluate candidates. These VP roles are critical and after some internal discussion, including a stab at a job description, a decision is made to hire experts. The choice may be either a search firm the company knows (where there is some knowledge of the comms function) or a firm with a specific expertise in filling comms posts.

The fees are high, guaranteed, and for the most part, calculated on a percentage of the total compensation package. For example, if the total compensation for a VP role were $500,000, the fee could be in the $175K-$200K range.  With fees at these levels, the search business is lucrative and attracts top performers who are essentially sales oriented and transactional. To make the most money they move quickly and get results. The recruiting field is highly competitive, and the profit model is focused on being fully and efficiently engaged (or sometimes overloaded.)  Successful searches are based upon what the client says is needed, which is frequently incorporated into the job description the company has created. The search firm has minimal input.

Is the search firm worth the fees it collects? It is a moot question because these fees reflect industry-wide practices. The argument made to justify the fees is that there is an expertise and skill set needed gained from years of experience that is required to succeed. In any case, it is the cost of doing business. The justification also is, “The job is now filled, and the search firm has provided the services required under the terms of the agreement.” Has the search firm provided all the services that could add value to the process? Are they asked to do that? Does that matter since the job was filled and that was the most important objective? I’ll be addressing those questions later.

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