Retained v. Contingency: When & Why?

Over the past 25 years,  David Magy – Principal at Abeln, Magy & Underberg and a member of the IACPR’s  Small Search Firm Planning Committee - has s earned the reputation as “expert” in the field of retained search, corporate recruitment and workforce consulting. His firm is recognized as a respected partner in recruiting key talent within a large array of businesses. Here he  looks at retained vs. contingency from the client viewpoint.  

A few times in the last three weeks, I have been asked by HR professionals and business people to explain the difference between Retained and Contingent search.   

It’s a common question – and one that deserves some attention

A retained recruiter does not have the same financial interest in a placement as does a contingent recruiter.  The best fit for the client and candidate is the goal.  Closing the deal, while important and the clear final objective, is not the focus of each and every action. 

A few clear differences – Retained Search Services

Retained search is always an exclusive arrangement.  As a result, search firms work on very few searches at any one time, assuring substantial effort is given to the search.

Intensive, focused research of related industries, organizations and individuals is undertaken for each search.

All candidates are thoroughly interviewed to the specific position competencies.

Educational credentials are verified and references are contacted.  (We have had three candidates ‘fail’ their education verification in the past few weeks.  While no longer as surprising as it once was, this reminds us of the importance in taking this step.)

Retained search, by its very nature means that the search process continues until a successful placement is achieved. 

This is not a ‘good vs. bad’ comparison

Retained and Contingent search business models are very different.  Contingent firms have to work in a different manner and must deal with a much higher volume in order to survive. This means that there is less time for original research for each opening and clients will received more resumes with less specific candidate information.

Retained search is structured to provide more of a consulting relationship with both the client (organization) and candidate.  As a consultant, there is an orientation toward partnering throughout the search.  

Keep asking us to articulate the difference

Retained search is often more of a mystery than it should be.  Candidates assume we are the ‘old’ employment agency of the past.  Clients are in some cases unsure of the differences in the models – and which model would best fit their situation-specific need. Keep asking – we enjoy the dialogue!

For more, go to www.abelnmagy.com

Equity & Growth Opportunities Best Way to Lure Executives

Kathy Freeman, founder of The Kathy Freeman Company is a long-time IACPR member, involved in many key prokects for the organization. Her firm, which focuses exclusively on assignments for the investment industry, has concluded its latest proprietary research designed to identify current trends among senior sales and marketing executives.
The trends identified in the paper can be leveraged by CEOs, their human resources partners or line executives to design a more effective and relevant approach to retaining or attracting this critical subset of talent.  

Reversal in Job Satisfaction Demands More Aggressive Hiring Strategy to Attract Top Executive Talent

Top executives in investment management and wealth management are more satisfied than they have been since the beginning of the financial crisis. In just four years, senior sales and marketing executives have gone from being mostly dissatisfied to being mostly satisfied with their current position. To attract talent, firms will need to offer equity more frequently and act more decisively than they have in the recent past when a compelling candidate has been identified. To retain talent, firms will need to link compensation more closely to performance and create opportunities.

 

for executives to develop new ideas, products and solutions. Contrary to what some believe, it is not a buyer’s market for talent. Executives will only move if they perceive the firm as a partner in their long-term future.

Post-Crisis, The Sentiment Changes Dramatically

What a difference just a few years can make.

 

In 2009, our research indicated that almost three-quarters of the senior executives working in the investment management and wealth management business were dissatisfied with their job and were looking for a new opportunity.

Four years later, there’s been a complete reversal. Today, more than 60% of the executives polled in our Fourth Annual Executive Survey are satisfied with their current position and aren’t looking for a new one. In fact, less than one half of the respondents in our 2012 survey were inclined to look for another job—the lowest percentage since we began our research.

 

Another surprising finding from the 2012 survey: Equity ownership is more important than ever. Executives say they are willing to stay put or even defer compensation if it means an opportunity to share in the upside of the firm’s success through equity. 

To learn more about the findings from the Fourth Annual Kathy Freeman Co Survey,  visit www.kathyfreemanco.com or call 800 883 3232.

Creating Successful Leadership Assignments in Asia

Michael Bekins, Founder and Managing Partner, CapitaPartners,  is a global thought-leader on leadership and human capital consulting. He advises clients on the pressing leadership and talent issues facing organizations in fast-evolving Asia. His passion, and the focus of the past ten years, is to understand what it takes to thrive as a leader amidst vast cross-cultural challenges, change, growth and volatility. He does this by applying more than 20 years of experience living and working in Tokyo, Hong Kong, Singapore, Malaysia, India and Australia as a partner with a top-tier global consulting firm. He has a further 10 years experience living in the US and UK.

Bart, a regional expatriate head of Asia for a fast-growing, mid-sized consumer technology company based in the US, spent two years trying to recruit a Country Manager for their largest business in Asia. This executive, young and high-potential, churned through more than twenty candidates over this two-year period, never quite satisfied enough to make an appointment. Meanwhile, Bart, always moving from sales pitch to sales pitch, drove the business in Asia until, after two years, he got the promotion he wanted back home and his assignment in Asia came to an end. He eventually left the company after a frustrating repatriation and called me with a request to assist him in his job search. “I love Asia,” he said. “I grew the business in Asia 30 percent during my two years.” I then asked him how the business is doing now. “Not good,” he said. ”After I left, the business fell apart. Weak leadership. They don’t have the talent” I wasn’t sure if he was bragging about his successes before the company’s fall, or admitting to a cardinal sin for a multinational expatriate leader in Asia: failure to build talent.

Could this peripatetic executive have achieved more by helping others be successful? Would this business be stronger today if Bart had built a stronger platform of high-potential local leaders? Bart, like many ‘heroic’ expatriate executives in bustling Asia, ended his career with this multinational with nothing to show for it. With his repatriation back to the US, the business was no better off, an also-ran in a sea of local competitors (like Alibaba).

All expats are tempted to demonstrate value immediately, to be the hero they were hired to be. Yet many expats conclude their assignments having erected castles in the sand. It doesn’t take long for waves of change to wash their achievements away, even as they get promoted for their great work.

So what’s the job of the regional multinational leader in Asia? Effective leaders define their value by setting the agenda, creating the space for others to be successful, building for tomorrow. They find ways to tap into the entrepreneurial value system in China described by Jack Ma. For some this may mean spending more time coaching talent, gaining alignment on a bigger vision, building infrastructure, or unlocking the potential of teams. Or defining a more liberating culture and creating opportunity for locals to create new ideas, business models, products or customers. Or making that long-awaited appointment in North Asia,even if not perfect. Great talent doesn’t need more heroic bosses. They need space to grow.

Tomorrow’s regional head of Asia is today’s unpolished gem. The message to Bart: take a risk on talent, give space. Talent is everything. By the time my 30 year-old associate becomes a gray-haired partner like me, two-thirds of the world’s middle class will be buying through Alibaba or through giant malls in the suburbs of Asia. Our businesses in Asia will have grown five to ten times in scale. For most companies, China will be a larger domestic market than the US. On a typical Friday afternoon, more of your suppliers, customers, outsourcers, and consultants will be connecting through Chengdu on their flights home than through Chicago, with fewer delays.

What does this mean for multinationals doing business in Asia? The Chinese consumer doesn’t know or care where your board members meet or on what stock exchange your shares trade. They want products on the shelves to meet their needs at the right price points. Jack Ma’s principles apply: Focus on the customer. Be entrepreneurial. Treat your employees well. Exploit local opportunities. Multinationals need to build talent on an unprecedented scale from the inside out. For you heads of Asia: what’s your legacy?

Visit Mike Bekins’ Executive Pipeline Blog  To Learn More.

IACPR Global Conference: Senior Executive Talent Strategies

Judy Boreham, Managing Director at Diversified Search, and Eileen Finn, Founder of Eileen Finn Associates, are Co-Vice Presidents of the IACPR’s Global Conference Planning Committee. Long-time members of the IACPR (each over ten years), they are in close touch with our membership – chief human resources officers, corporate talent acquisition executives and retained search partners – to understand the issues in acquiring, developing and retaining top leadership teams. Here they talk about how the IACPR delivers our content-rich conferences and the real value members receive. 

Eileen Finn:  I started attending the IACPR Global Conferences about 10 years ago, and still, each time, I come back with a deeper knowledge of building leadership teams. The Planning Committee spends many hours learning what the audience wants to discuss and who the best thought leaders are, so the conferences deliver major strategic thinking and practical execution tips.

 

Judy Boreham: This is a really unique organization. There is no other association where corporate decision makers and retained search heads share a common platform, in an environment of complete trust and sharing. With the strictest of non-solicitation policies that we enforce for all attendees and sponsors. 

In this market, C-level talent becomes exceptionally critical to help companies keep competitive and thrive. At the same time, executives are expecting more from employers – exacerbated by the generational shifts we are seeing throughout the corporate world.   

The IACPR Conferences are the best in their class. The people in the room are those who are making changes to the senior talent market – the people who are regularly quoted on cutting edge issues – and they have come together at the IACPR Conference to share their insights.  

This Conference is always at the top of the list; it  has the best content and the best attendees, and everybody gets so much out of it. 

Eileen Finn: One of the key areas we are focusing on is the frustration that many senior candidates feel throughout the recruitment process. There is too little feedback or communication between candidate and corporation – and in this environment, with talent shortages at the leadership levels at such a premium – companies can’t afford to alienate their sources of future leaders.  

Candidate dissatisfaction has a profound impact on an employer’s brand – and changes the perception of that company in the marketplace. Any company that doesn’t recognize that anything and everything is out there on the worldwide Web is fooling itself. 

Judy Boreham:  Both companies and candidates have become much more risk averse. For companies, this means they are looking for more consensus – and will invite a larger group of people to vet the candidates at the interview stage. This slows everything down. Then candidates are taking much longer to make critical career decisions.  All this adds to the tensions.

I have a client that knows there is an active blog out there about the company, and not a particularly favorable blog. They have responded proactively, using the information to make needed changes. But this has to happen quickly and honestly. The smart companies are addressing it head on. 

Eileen Finn: Diversity is an area in particular where “walking the talk” is critical. Candidates are looking for integrity and a sound history in diversity initiatives. It’s an area where too little too late is very hard to overcome – and without diversity at the executive level, a company can quickly become out of tune with what is really happening with its customer base. And then lose out to the competitor who has kept diversity initiatives at the fore front and ongoing as it builds its leadership team. 

Judy Boreham: These are just a few of the challenges that companies are struggling with today – and that the IACPR Spring Conference 2013 will be addressing. Believe me, the Conference never disappoints.  

Eileen Finn:  Not only do we have a content-rich agenda. but one of the major byproducts of getting all these outstanding senior people in the room is the collegiality and sharing among the attendees and the networking opportunities that occur. The friendships you forge here are for life – so many successful alliances have resulted from the IACPR. 

Find Out More at www.iacpr.org!

Preparing for the Boom, Adam Lloyd

IACPR Board member Adam Lloyd is Founder and President of Webber Kerr, a global retained executive search and leadership consulting firm headquartered in New York and Tampa. In a recent article for HRO Today (Vol. 11 No. 6 - July/August 2012), Preparing for the Boom, he focuses on how to proactively address the transition to the next generation of leaders as Baby Boomer executives retire from the workforce.

My father just turned 65 this April, has worked for one of the world’s largest aerospace and defense companies for the last 30 years, and refers to himself as “one of the last dinosaurs” left in his group. He joins 78 million baby boomers (born 1946–1964) who are currently reaching retirement age at the rate of 10,000 per day, which will continue over the next 19 years. This generation has had a tremendous impact on the current workforce and there is a need to squeeze every ounce of knowledge and experience from the soon-to-be retirees. With the figurative and literal clock ticking, there is an opportunity to develop younger and newer generations to have a similar effect. So who better to ask about this movement than a baby boomer?
Dad, why do you think you have been retained as long as you have?
That’s a great question (laughs). In an environment that defines success by profitability and works from contract to contract, it takes specialization and processes that have been put to test. My background is somewhat specialized. I guess I have been part of creating what works and what does not, 30 years of trial and error. Work ethic has always been instilled in me.
How are you working with younger generations in your organization today?
I am fortunate to be in an environment that hires students who have been at the top of their class and exceptional external employees. Because we are not overly supervised, it’s common to see very bright new hires get lost in meetings, not connect culturally, and make unsuccessful attempts to reinvent the wheel. I try to mentor and improve efficiency with younger generations. I can save them time by teaching process we’ve created over the years, help them make personal transitions into our culture, and serve as a safety net to rely on for questions and advice. Believe me, I gain a lot too—they teach me about new technology, tools, and communication.

What value do you think you are adding to the younger generations?
Our diversity, ethics, and mentorship committees could probably answer that better. I would like to think aside from the technical and process teachings, I am making their new career life an easier and more comfortable adjustment as they are to my exit. I believe I am a quick go-to, supplementing the more formal training and orientation sessions. They are more confident in meetings by relating to the culture, saving some time in project delivery, and hopefully will be better prepared as future leaders.
Hearing this directly from a baby boomer reiterates the point that organizations taking a proactive approach to planning for this generation’s retirement have a lot to gain. Well-planned knowledge transfer to new, external hires through mentoring and assimilation programs is proven effective. So now the key question is: How do you achieve success here? What’s the recipe? Having worked with public and private companies from start-ups to Fortune 100’s, I realized it’s no surprise that organizations operate uniquely.
However, there are fundamental principles to create a foundation for backfilling the positions of the transitioning baby boomers while leveraging their years of expertise. The most successful organizations accomplishing these initiatives have been proactive in their strategies, seamless in the execution of experience transfer and transition, and have earned internal buy-in through education. Companies that do it right have a sense of self and apply thoughtful consideration to the size and scope of their business and cultural needs. Once you understand your own corporate make-up and human capital objectives, a set of key steps can be applied to harness the generation shift with ease.
Getting Started
The first step in the formation of a transition or assimilation program for external talent succession planning is to determine if you have the internal infrastructure to execute the program. Is bringing in an external firm to guide and advise your teams necessary? An in-house team will know the organization and culture, understand the talent that currently exists, which areas of the organization are at risk to retire, and the current tactics to bring in outside talent. An outside firm offers an objective assessment of your organization and the best practices of previously leading similar initiatives.
Whether managing internally or via a third party, organizations must strategically develop a leadership bench through early preparation for knowledge transfer. More time equates to a smoother transition—especially for specialized roles—and results in greater success adapting new employees to a corporate culture that emphasizes mentorship.
Developing the next generation of your organization requires sourcing for talent, an acquisition plan, and a transition program. The talent may exist internally or may stem from recent graduates, competitors, or target companies. The hiring phase—whether done internally or through external sources—will require the incentive to attract talent into a mentorship program. The career value of exposure to various functional areas through business rotational programs is a unique opportunity for new hires to expand skill sets while gaining baby boomer perspective from multiple divisions. Upward mobility, whether on the front end or back end, may lead to a faster track to leadership or increased responsibility.
With incentives in place for building future talent, what’s the motivator for exiting baby boomers? I think back to the conversation with my dad. The value is seeing work done efficiently, the moral accomplishment of helping new hires, and continuing their dedication to a company they have been loyal to. Some companies even offer monetary incentives to stay on for a duration of time—basically a contract to mentor—to help develop an incoming class of new hires, to guide a project, or to formally join internal committees.
A strategic assimilation and training program must be developed and tailored to your company’s needs. If a rotational program is selected, it’s a matter of identifying the businesses and functions to deploy it. If direct mentorship is chosen, understanding where the most capable leaders in your organization sit is critical. Any approach starts with gaining buy-in and commitment throughout multiple tiers of the organization.
Getting Buy-in
Investment from the baby boomers to actively participate and train the next generation is a necessity to success. Some individuals will embrace the mentorship opportunity as a meaningful responsibility, while others—as they are nearing the end of their careers—may not be as fully committed. Incentive—whether its recognition or monetary—can be a differentiator. Internal education of a streamlined program will get everyone on the same page and increase the likelihood of both buy-in and successful participation.

Staffing and recruiting teams are the first impression external candidates will have so be sure they are knowledgeable, soft in approach, and committed to selling the program. HR teams need to educate recruiters on the assimilation and training program. Results-driven activity and seamless onboarding for new hires is key.
The hiring managers’ dedication to future leadership will result in the knowledge transfer from baby boomers to future generations while injecting diversity into the organization with a fresh wave of external experiences from new hires. There is still time to leverage all that the soon-to-be retirees have to offer. Although my father is a self-proclaimed “dinosaur,“ I feel he believes he has many contributions left. I imagine there are others—take advantage of it.

 

Executive Recruiting: "Best Possible" and "Whether or Not," Caroline McClure

Long-time IACPR member Caroline McClure, founder and Principal of ScoutRock, provides consulting and networking services to corporate executive recruiting and executive-talent management leaders. She also helps human resources professionals better understand and leverage the executive recruiting profession. Prior to founding ScoutRock, she was the Director, Executive Recruiting at Lockheed Martin. Here she defines what sets  executive recruiting apart.

The differences between executive and other types of recruiting include not only level, but the scope of the sourcing pool, the sourcing strategy, the client and candidate management, the visibility, and therefore, the risk. The objective of executive search is to partner with hiring executives to fill senior positions with the best possible talent whether or not that talent is seeking new opportunities.

Three aspects of this definition begin to differentiate executive recruiting from all other. The first is the exclusive focus on a narrow level of positions-- senior-level (I would argue that is within three steps of the organization’s head), and the second and third are the objectives of obtaining the best possible talent whether or not those individuals are currently seeking new opportunities. They are small phrases, but “best possible” and “whether or not,” change the game and differentiate executive recruiting from all other.

“Best possible” and” whether or not” suggest that the sourcing and vetting processes are both extensive and exhaustive. They change candidate sourcing from applying database search strings to talent prospecting through targeted-company and targeted-individual research strategies. They mean the recruiter doesn’t stop identifying and recruiting new prospects even though several qualified have been identified. “Whether or not” and “best possible” requires the recruiter to convince prospects to endure a thorough vetting process, to entertain risk, a new opportunity, a new company, new customers, and often a relocation even though they have no reason or initial desire to do so. Together, “best possible” and “whether or not” change the candidate relationship from an exchange to a courtship. These phrases change the employment conversation from a job opportunity to career development, the assessment from an interview to a dialog, and the client and candidate interaction from a transaction to a consulting engagement.

Executive differs from other types of recruiting, not only in level, but also in the approach to the search from a sourcing perspective as well as from a client and candidate management strategy.

Are Leaders Smarter Than Dogs?: Executive Suite Succession Planning, Tom Casey

Tom Casey, Managing Principal of Discussion Partner Collaborative, spoke last year at the IACPR Global Conference 2011 on talent readiness – and the top ten human capital challenges of the new decade. He is an expert on the development of organizational transformation strategies for rapidly growing multinational or transitioning organizations, consulting in over 20 countries and virtually every economic sector. He focuses on working with companies to conceptualize and execute enterprise strategy, organization design, change management and innovative human capital initiatives; on creating strategically aligned leadership development initiatives; and on developing human capital initiatives around workforce planning, employee engagement, sourcing, globalization, mergers and acquisitions.

Here he addresses the dysfunctional approach so many companies take to succession planning and leadership development. 

Anyone who is from the US has heard the adage “the dog is barking up the wrong tree”?

The luckless dog is presuming that there is a cat in the tree, deserving of their attention.  Yet we humans in our infinite wisdom realize the cat is either long gone, or is quite happy mocking the dog from a different tree?

We could take the view that the dog is stupid, yet as it relates to Succession Planning are we leaders not representative of this hapless dog?

If we look at the numbers from various sources it is not a leap of logic to believe so:

·        35% of companies have a Succession Plan with “integrity”(SHRM)

·        78% of companies have some form of Succession Planning “strategy”(Corporate Leadership Council)

·        50%+ of the Fortune 500 Board Directors for the Fortune 500 are “unhappy” with their companies Succession Plan(HBR November2011)

·        Average tenure of a Fortune 500 CEO is approximately 3.5 years(HBR November 2011)

·        Age 65 is usual and customary age for “executive retirement” directly contradicted by DPC research that indicates the age is more likely to be 62 “after a phase down period”(December 2012 Study The Art of Executive Boomer Management)

At a recent Discussion Partner’s strategy session like the dog who wanders away from the tree feeling embarrassment, we felt that we as consultants  needed to acknowledge “Succession Planning is a dysfunctional process the outcome of which is to provide little to no value to the enterprise.”

Yet metaphorically the cat was not imaginary and enterprises do need a replenishment process to promote sustainability.

Discussion Partners conducted an internal audit of our client experience on Leadership Succession since the firm was founded in 2007.

Our overarching conclusion was the fatal flaw is Succession Plans are too internally focused by limiting the question to “who do we have and when will they be ready”?

DPC suggests a modification of a Null Hypothesis (the process for challenging assumptions/strongly held beliefs by attempting to disprove) is more appropriate.

For example in the movie Moneyball the focus on On- Base Percentage vs. Individual Statistics was the null hypothesis theme expanding the analysis of proficiency beyond batting average.

This approach led the Boston Red Sox to 2 World Series Championships in the past decade after approximately 90 years of frustration (yes a number of DPC Principals live in Greater Boston).

DPC has begun promoting a new approach, Continuity Planning loosely defined as promoting enterprise growth through ongoing replenishment for critical roles accessing both internal and external labor market candidates. 

The key words in the above  are on-going, internal, external and critical!

Essentially our modality has the following steps:

1.      Identification of Mission Essential roles beyond those traditionally embodied in a Succession plan(for example Actuaries in and Insurance Company, Internal Controls in a Finance function)

2.      Identification of no more than 4 Critical Success factors for the aggressive development of high potential managers

3.      On-going “rack and stack” of managers for role suitability or ascension….focused initially on the question “are they the best the internal and external marketplace has to offer”

4.      Identification of external applicant sources inclusive of gathering competitive intelligence identifying suitable external candidates to “raid” if needed

5.      Creation of a Dashboard for quarterly updating regarding role identification, internal candidate status, and external labor market opportunities.

Discussion Partners perceives the benefits of this approach as having the following key elements:

1.      Broadening the discussion about internal readiness to encompass a broader dialogue on internal/external marketplace availability

2.      Ongoing vs. episodic review of leadership alignment with a broader number of roles essential to the enterprise

3.      Increasing the ability of the organization to be innovative in terms of role architecture, organization design, phase down of executives, through a broader definition of work to be accomplished and resources to accomplish same.

Our client experience to date using this new approach has been encouraging.  There is a possible added benefit according to one of my colleagues, “reduction of eye strain  reading  Succession Plans with the foreknowledge they are likely more fiction than fact.”