How the recession inspired a new model for executive search.
By Adam Lloyd
There are many motivators and circumstances that breed innovation. The HR space is one of many business functions that has innovated practices and solutions in the last five years out of a basic need to survive. Take talent acquisition and executive recruitment for instance. Both have benefited from recent circumstance: the recession. Created in a down economy out of necessity, alternative models to acquiring executive talent are becoming the norm today.
My first taste of the recession was the late summer 2008 when a client from a Wall Street investment firm called in anticipation of things to come. I did not realize it immediately at first, but our business model was about to transform drastically and result in what I like to call “innovation out of survival.”
From Wall Street to Main Street, the United States economy to the global economy, almost all organizations were forced to react quickly and scale their businesses. Spending habits changed, waste was cut, and people and organizations alike did without. There becomes a separation of wants and needs, roles expand, and work days increase for those fortunate enough to have been retained. As corporations take initial drastic, preventative measures, eventually a new agenda and revised set of business initiatives exist.
Being in executive search, there was a major concern regarding the need and the budget for our services in this new set of business initiatives. Besides, how and why would we have been preparing for a recession? Search revenues and growth in our business were at a high and competition for executive talent was fierce. The whole landscape had changed quickly and we began crafting our plan for survival not knowing if organizations could financially justify retaining firms to hire talent, let alone even hiring at all. The business model had to change. The traditional fee structure was no longer possible but what clients really couldn’t afford was not getting the talent they needed. The revised model allowed organizations to control their budget and support in real time, with the capabilities of a retained executive search firm.
It did not take long to generate interest in the general concept from other organizations; an organic demand was built for an executive talent service model that thought outside the traditional search process. As a result, an executive talent bridge model was formed, and it’s not pipelining, sourcing, or a research model. It’s a hybrid model designed to attract and acquire mid-senior level executive talent, while gathering data from the process to use in the future.
In addition to the vetted talent required for the search volume (five at any given time), market intelligence reports from the data collected during the process are delivered. These reports are custom and the client owns all the information.
Such intelligence may include:
• Prospective talent pipelines. These compiled lists of potential candidates in the designated market include information on the individuals such as contact information, title/company, career progression, interest and motivators for pursuing or not pursuing new opportunities, salary range, relocation/commute/travel flexibility, perception of client, etc.
• Regional data. This includes motivators and cultural drivers of the talent pool (work-life balance, financial reward, commute distance), local competitors, and sources of talent. This type of information has been used by clients to make decisions on selecting new office locations, making acquisitions, etc.
• Industry trends and competitive intelligence. This information is gathered as it relates to trends within the client’s industry, including new product launch, lay-offs/downsizing/salary reductions, and new advancement opportunities for employees within competitors. It helps clients stay competitive to attract talent in the market.
Because the clients own this information, they have the ability to access it any time and use it to make new hires and other critical decisions long after our “recruitment” engagement has ended. That is where the long-term value lies.
The technology services organization that first implemented the initial concept had an opportunity to leverage the recruiting strengths of an executive search professional and visibility to the process for the duration of a time period that met their immediate needs in real time. In a traditional executive search process, the client waits for a short-list of candidates that they will end up selecting from. In a talent bridge model, a dedicated search associate does not wait to compile a short-list but delivers it in real-time. The client controls the ability to ramp-up, down or pause their level of support as needed. The client pays a monthly flat fee for dedicated support to manage up to five searches at any given time. The client earns two advantages: time—getting the talent as candidates are vetted and ready for client engagement—and efficiency—having the ability to have the search partner focus on attracting talent, rather than paying a retainer to wait on a short-list and then manage the interview process.
Imagine having three critical director level openings and being able to reduce your costs by 50 percent or greater while avoiding three separate agreements and potentially three different points of contact to manage. From the additional market and talent research, they made an additional hire at no extra cost a month later.
Cost savings was the initial driver to engage in a new form of search partnership. But why has it increasingly become preferred by organizations with talent demand as the economy recovers? It’s twofold. First, organizations are preparing better now and have had a wake-up call in terms of controlling their financial resources. Executives are engaged in future planning: scaling and creating not just cost, but time and value efficiencies.
Like many companies, conservative spending habits have replaced wasteful ones, but we don’t know how long spending habits will remain conservative, which addresses the second point. The ability to control service as you need it and achieve the same outcome is an efficiency adjustment. A recent trend in executive hiring has been for corporations to build in-house search capabilities. Trending to the future, organizations that should experience the most success in acquiring exceptional leadership talent will apply a blended approach of in-house and external recruiting capabilities. The technology services company that applied a unique model in 2008 has rebuilt their internal capabilities, experiencing some level of recovery. They additionally leverage external support when needed to complement their own efforts. Experiencing the best of both worlds and having the ability to avoid growing their internal team too quickly while maintaining quality of hiring capabilities has provided a sense of control. They have blended their corporate know-how and knowledge of business and culture with a fresh market perspective and an entry point to top executives.
An added injection of this new model is talent diversity and quality. An executive talent bridge model was designed to “partner with” rather than “take over.” The ability to control the timeframe of support, gain visibility, customize market research and metrics, and receive vetted talent is a supplement in times of need. The attraction today stems from being accommodated and the ability to stretch in-house infrastructure as needed. Traditional executive search processes and models for the highest, one-off, executive talent needs still applies when retaining an outside firm for C-level and board appointments. With that being said, there are many scenarios today, aside from cost, that are resulting in organizations benefiting from unique recruitment models to meet mid-senior level human capital initiatives.
History has proven to be cyclical. Economic conditions will continue to rebound. We will continue to innovate. But have operating and spending behaviors been affected for the long term? Time will tell. Today, there are innovative, non-traditional, models that exist to help bridge the gaps.
Adam Lloyd is president of Webber Kerr Associates, the former executive search division of WilsonHCG.