13th February 2015
Lessons from the G.O.D.S – The New Balance in Executive Search
I can remember the ‘good old days’ (g.o.d.s) when the Companies I worked for didn’t feel equipped or prepared to go to market themselves for the ‘big jobs’ so these roles would nearly always go to external Executive Search providers. It was a time when Executive’s career paths and progression was more often assisted through the large search companies and less by the Executives themselves (or their companies). On this basis, it was very important for Executives to maintain their contact with the large search firms in what ultimately became something of a very effective closed loop.
Often this cycle was repeated through multiple search companies, spreading the joy and connections (and addressing the ‘off-limits’ restrictions!!). It was not overt manipulation as much as damned good labour market management. If the supply of the roles you are seeking is controlled through a small group of suppliers it is in you and your organisation’s interests to stay well connected with those suppliers.
As a result costs of executive search remained relatively high, some might suggest they reflected what the market would bear rather than the fair value of the service offered. Some clients even whispered the ‘cartel’ word complaining about the levels of pricing for search from the big, international firms.
Back in the g.o.d.s, a core capability of effective Executive Search was the research resources and skill of the search firm. Often there were teams of skilled people developing and leveraging large databases that the garden variety HR or business person didn’t have and couldn’t access. Not only was access to the database a key differentiator, but also the particular skill of approaching and engaging the ‘passive’ candidate, that person who is not actively contemplating a move from their current role. This a real skill, perhaps the core skill, of effective search.
The Impact of Disruptive Technology – The Pendulum Swings
And then along comes a disruptive technology application; one that threatens the very existence of external recruitment agencies and Executive Search….LinkedIn. Along with a myriad of other technologies and applications that have empowered their users, LinkedIn places the ability to conduct research in the hands of anyone (who is prepared to pay an appropriate fee to access the database and learn how to use it). The skill of engaging with the passive candidate remains critical but it is a skill that can be developed, right?
This disruption has led to a significant shift in approach. Organisations can now see and take the opportunity to move from paying fees to external recruiters and search providers to an alternative approach that leverages the technology and builds the capability to manage recruitment and Executive Search internally, all on the basis that it will achieve cost savings to their business. I suggest there isn’t a HR person on the planet that doesn’t love to deliver a positive bottom line impact to their business – “We’re making a true commercial contribution” – yoohoo!!)
Too Much of a Good Thing – The Pendulum Swings Back?
So the trend of doing more ‘in–house’ suggests that Executive Search, if not terminal is looking pretty wobbly, but, I suggest the reports of the demise of External Search may be somewhat premature.
There is increasing empirical evidence to support the view that internal recruitment (and search) functions can be a victim of their own success. Back in the g.o.d.s organisations:
- Could leverage multiple providers (often driving improved competitive fees!)
- Get the right search people to manage the tougher, specialised search roles
- Keep costs variable (you only incur a cost when the work is performed),
All combining to often drive improved outcomes in quality, cost and time to fill.
Now, organisations that have moved to build the internal capability have a more fixed internal cost and are looking to leverage that cost by ensuring all (or most) recruitment (and often search) is done internally. Often the internal team (or In-sourced Recruitment provider) does a great job which may lead to limiting any 3rd party involvement and driving as much volume as possible through the internal Recruitment/Search team to leverage these overheads. Higher volumes may lead to either greater time-to-fill or potential impacts on the quality of delivery as fixed teams are stretched (or the need for more and more resourcing with consequent cost impacts)
The Pendulum Settles – A New Balance
What we are seeing is the development of a new balance. Many organisations are finding that they may need to still have external specialist providers do recruitment or search for certain hard to fill roles, overflow work or time-sensitive appointments. As with all change perhaps the pendulum may be moving to a point of equilibrium where there is a balance between the efficiencies of internal recruitment teams, and the focused expertise of the external search expert. Perhaps a good analogy is DIY maintenance and repairs. The large hardware mega stores provide access to tools and knowledge to do many things ourselves, but yet there is still plenty of scope for the skilled tradesman to step in and help when we either don’t have the expertise, knowledge (or even inclination). There is room for both.
So is Executive Search dying? I say no!, In fact I don’t even think it is unwell, but it is evolving to be more responsive, adaptive and reflective of the needs of clients who are continuing to grow their expertise to find talent. There will always be a need to bring in the tradesman to fix that thing that you can’t, so it will be with Search.
As a Search business we’re pretty happy with this new equilibrium and think it makes sense. So if you think you might need to get the tradesman in the fix that leaking talent pipeline – feel free to give us a call.