15th May 2023

A Better Alternative to Executive Search

The rapid growth of LinkedIn and the democratisation of candidate research has been one of the most disruptive forces in search and recruiting that we’ve seen. With far easier access to a large global pool of passive talent (the people not actively looking or too busy to be looking for their next role) you’d expect that executive search business would be withering on the vine.

Yet, retained executive search has remained relatively resilient and somewhat unchanged in the face of what could have been a revolution. But how long will this last? We believe that the retained search industry will come under increasing pressure and see several forces that are disrupting the existence of the traditional players.

Four Major Forces working against retained Executive Search:

  1. Cost: Starting with the obvious, there has been a gradual erosion of the fees clients are will to pay over the last five or more years. What used to be a fee of 30%+ dropped to 25%, and in some cases 20%; we’ve even pitched against a well-known international firm who were willing to complete a senior retained search at less than 18%. That said, many clients still remark to us how expensive they believe search is. Influenced by the growth in executive salaries, how does a client see value in a search fee of $150k+ for a functional leader in an ASX 200 size company?
  2. Capable internal TA teams: We’re now seeing more capable internal Talent Acquisition (TA) teams emerge, with experienced search staff setting up an ‘in-house’ research and search capability. While they can lack independence (critical for some assignments) and are often juggling multiple assignments, at times ineffectively, these teams have been able to replicate search capability and erode the value proposition of search firms. Working ‘along with’ rather than ‘instead of’ internal TA teams is necessary a growing trend.
  3. Inflexibility: A hallmark of the so called ‘leading’ international executive search firms has been their inflexibility around their process. What can seem to be mysterious, closed and slow, many of these firms still cling to a process that may not suit the needs of their clients. Unbundling the search process and providing more agile, flexible solutions is what a lot of our clients are asking for now. Being unwilling to provide what a customer wants doesn’t seem like smart business to us.
  4. Complacency: There is a shared view among many clients we talk with that the retained search process can be, opaque and often unresolved in terms of a solution. Fees are often paid whether a placement is made or not, and an overreliance on a small cadre of known local candidates is at times substituted for a comprehensive and broad review of local and global markets – for example our success at connecting with expats, has given our clients access to some very interesting and talented candidates. A better alternative: Talent Pipelining and Talent Intelligence

We now believe that in many cases, we can best support our clients through a series of more flexible and appropriate talent solutions, shaped around their specific needs – in many cases they will not need an end-to-end executive search. In effect, we’ve changed our delivery model to empower internal TA teams and give them more control.

While there are still times where we are asked to run a project right through to placement (in effect a retained executive search), we’re frequently responding to an array of needs that a client may have, such as:

  • Mapping and testing a market and/or role before committing to a retained search
  • Gaining deeper insight into targeted geographies, sectors or roles to gain talent market intelligence
  • Building ready to activate talent pools for succession
  • Using talent pipelining for multiple hire roles, leveraging value from a single project fee
  • Augmenting their internal TA team with extra research and passive candidate engagement capability and capacity

To meet these client needs requires an agile, research-dependent and value-sharing approach on the part of a service providing firm. In effect it’s transferring (for a lower fee than a full retained search) the research insights and a pool of engaged, passive candidates, to the client earlier on, giving them ownership of the data and people and allowing them to engage and manage their future talent in a more proactive and personal way.

We believe this can result in better selection decisions, with greater value for the client and candidate as they make earlier assessments of each other in the process. And where our clients do this well it allows them to build their own talent pools, reducing their future reliance on third parties like us.

A Case in Point

For the last few years, we’ve worked with an ASX 10 industrial company to solve a multitude of recruitment problems that would have either overloaded their internal TA team or would have been placed with a traditional executive search firm at a much greater cost. By creating a close and seamless relationship with their internal TA leaders, we’ve provided cost-effective solutions to challenging and highly technical executive openings, by flexing our approach and to meet their needs both in Australia and a number of overseas jurisdictions.

They view us as an extension of their team, better meeting their internal hiring manager needs while lowering their costs. And the data and insights that we’ve gathered and provide to them on job functions, remuneration and competitors allows them to better understand how they can operate in the presently tight talent market. Conclusion

Increasingly, our search engagements have been Market Maps, Talent Pools and Talent Intelligence projects for clients, and we see the trend growing as the four forces disrupting retained search become more intense. While we still assist clients in placing candidates into immediate openings, we believe that for many of our clients the shift to flexibility, value, speed and transparency may become a better alternative to traditional executive search.

You can find out more about what we do in Acquiring Talent here

Glen Petersen

Glen Petersen

CEO at Generator Talent
With more than 35 years in business, working in large global businesses and consulting, Glen has a wise head set firmly on experienced shoulders – a good thing to have as Generator Talent’s founder and CEO. He is in demand by clients who value his pragmatic advice and ability to positively influence people and improve business outcomes.
Glen Petersen

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