CEO Guide: Making the most of executive search services ethically

Dionisio R. Gil

Mapping the Future
September 9, 2013

Executive Search or headhunting is often described as “searching and matching” executive talents with requirements of Client firms. In the Philippines, it is typically associated not only with senior executive positions but down to mid-level positions as well. It is a relatively young industry & the pioneers are still active. Over the past 10 years though, there has been a surge of new players including Internet services.

Here are some developments in the Philippines search industry today:

  • Proliferation of search firms: There are now more than 70 bona fide and fly-by-night search firms. Most are the fly-by-night types that operate without SEC registration.

  • Emergence of malpractices: Because of competitive pressures, ethical practices have been thrown out the window, giving rise to   many malpractices that have victimized clients and candidates alike.

  • Peddling of resumes: The most common practice of unethical search firms is the unauthorized release or “peddling” of confidential resumes, even on a prospective basis i.e. client has no search requirement.

  • Race to claim ownership of candidates: When two or more search firms are tasked by a Client firm to simultaneously conduct a search for the same position, these firms try to outwit one another by quickly e-mailing as many resumes as possible in order to be first & be acknowledged as “owners of the candidates”. The resumes as well as the candidates are usually not properly screened to win the race to claim ownership.

  • Unauthorized release of confidential resumes: Because of this race to own candidates, their resumes are usually released without candidate authorization.

  • A major & timely milestone: The newly-signed Privacy Act (R.A. No.10173) prohibits the above malpractice. Specifically, it cites the “unauthorized processing of personal sensitive information” with a penalty ranging from three(3) years imprisonment to six (6) years and a fine not less than PHP500,000.00 but not more than PHP2,000,000.00.

    As the Privacy Act gains traction, client firms must ensure they do not entertain unauthorized resumes from unethical search firms. Any executive whose privacy is infringed in this way could opt to hail to court both the search firm & client firm for violation of the Privacy Act.

  • PAESPI, advocate of ethical practices and professionalism: 3years ago, a group of like-minded search firms founded PAESPI – Philippine Association of Executive search Professionals Inc. – to promote ethical search practices & professionalism by exposing malpractices. A continuing educational program has been mounted via breakfast forums, feature articles in broadsheets and business journals as well as dialogues with columnists.

Through these 4-Point suggestions, Client firms can avoid litigation while getting their money’s worth through ethically-driven search practices.

  1. Treat your Search Firm of choice as a business partner. Provide your partner with a comprehensive briefing of your requirement:

    As the client, you must provide a complete set of specifications. Help the search firm gain a clear understanding of the profile of the ideal candidate, scope, responsibilities and challenges of the job, management expectations, organization and company culture, reporting relationships, key result areas, rewards, career path, etc.

    In other words, treat the search firm as a business partner. He should be knowledgeable and therefore credible so that he can do a better job in “selling” the career opportunities that your company offers.

    Some Client firms immediately provide search firms with a formal document or Position Description. It is advisable to comprehensively discuss the requirement whether or not there is a formal document to share.

    If the specifications are conveyed verbally & particularly in the absence of a formal Position Description from you as Client, ask the search firm to draft, in writing, its understanding of specifications of your requirement. Feel free to approve, modify, or delete the draft. This will ensure that you are on the same page with your search firm.

    Once finalized, this document will be the all-important & approved Search Specifications that would serve as road map for the search process to be on-target & efficient.

  2. You must be presented only a short list of highly suitable and genuinely interested candidates:

    You must require the search firm to conduct face-to-face or video/telephone interviews (for overseas or provincial candidates) so that the candidates can be assessed professionally and certainly, the assessment has to be in writing!

    A bona fide search firm will endorse only those candidates who fit the specifications and are genuinely interested in building a career with your firm.

    One common malpractice in the industry is what we call the “horse race”. When two or more search firms are simultaneously signed up for the same requirement, these so-called search firms will quickly send the client as many raw (unprocessed) resumes to beat the other search firms and get to “own” the candidates. The more candidates, the better their chances!

    By agreeing to throw out proven search processes, the benefits to the Client is supposedly from the speed of the Referral of Candidates (“we needed to fill this position yesterday”) have no clue as to the suitability or interest level of the candidates.

    This malpractice, in actual fact, is counterproductive. Domain tasks of the search firms such as screening, interviewing and assessment are off-loaded to you/your HR team who are likely attending to other myriad projects.

    Worst of all, if you hire any of the raw referrals, you will end up paying the so-called search firm the hugely undeserved fee for services that have no value add!

  3. You must be provided with full executive search services, no less:

    To earn their professional fees, search firms must provide all the services that go with professional search services. These include:

    • Meeting with clients to gain a full understanding of the client’s requirements.
    • Thorough research work via data bank and industry scan to unearth potential candidates.
    • In depth interviews of candidates leading to professional assessments of short-listed candidates.
    • Logistical support in arranging interview schedules with client.
    • Due diligence and reference checks to ensure integrity of the credentials & resume details of the chosen candidate as well as personal integrity. Reference Checks with peers, superiors and subordinates – present or former – are important to obtain with confidential timing.
    • Disengaging unsuccessful candidates. This means providing final results of the search & other appropriate feedback to those not hired. It closes the loop as well as projects the professionalism of the Client & search firm. Candidates do remember positive experiences when it comes to being invited to explore career opportunities & likely to be more receptive to future invitations.

  4. You must include in your Accreditation Process a Code of Ethics similar to that of PAESPI’s (Philippine Association of Executive Search Professionals):

    Accredit only those search firms willing to uphold a Code of Ethics as part of the Search Contract.

    This will help ensure that:

    • The Privacy Act is complied with. Do not be an unwitting accomplice to a violation of this new law.
    • None of your executives are poached by the same search firm that you are currently working with. One very aggressive search firm that advertises in business journals, has just been blacklisted by several conglomerates for repeatedly poaching from his own clients.
    • Your search firm has no conflict-of-interest issue with any of your competitors. This is another malpractice. Search Firm X purposely avoids divulging that he has an ongoing engagement search with his client’s bitter competitor. Imagine all the confidential information that potentially can be leaked to your competitor.
    • Your search assignment will be handled with utmost discretion and confidentiality. This will likely not be honored whenever you award a search to two or more firms simultaneously.
    • You have a guarantee period. This will oblige the search firm to replace, without any further fees, their candidate if he/she resigns within 6 months.

    In summary, no one party can effect significant improvements in the practice of headhunting. There are, and always will be, three stakeholders who can help promote ethical practices, eliminate malpractices and avoid costly litigations with respect to the Privacy Act.

    1. The Search Firm: must adhere to a Code of Ethics at all times. They must always provide a process-driven and competent service to justify their fees.

    2. The Client Firm: must deal only with ethical search firms. Through their Accreditation process, Client firms should add commitment to a Code of Ethics as a condition to being accredited.

    3. The Candidates: must be vigilant of their rights as protected by the Data Privacy Act. If they find out that their resumes are being peddled without their authorization they should seek legal redress.

    Equally, they should not allow themselves to be “recycled”, a malpractice whereby Search Firm X places an executive in Company A and after a year, entices that same executive to move to Company B. Search Firm X makes money twice on the same candidate while betraying client Company A.

    Mr. Gil is the President and Co-Founder of PAESPI. He is also the Chairman of Amrop Philippines.