BEWARE: Most Common Malpractices in Executive Search

By: Patty Gallardo

January 2014

American Chamber of Commerce of the Philippines (AMCHAM)

I have been active in Executive Search Practice close to three decades. I am very glad to say the industry has grown so much which has benefited Client Firms as well as Executive Candidates through the years.

In the Philippines, I am still very much in the game, so to speak and I continue to derive a degree of satisfaction to see a level of professionalism and integrity in the industry accompany the growth the industry has experienced.

Sadly, it is also a present-day reality of Executive Search industry that malpractices exist.

Ethics vs. Malpractices

As a matter of fact, I am witness to common malpractices that co-exist with Ethical practices. These malpractices are blatantly committed by so-called search firms without regard for Ethics. Unethical and sometimes predatory so-called search firms conduct their business as though executive search service were a commodity that could be had for any price, on-demand and amateur professional experience.

Malpractices have managed to give the industry a black eye. Two major stakeholders of Executive Search firms are the Client Firm & the Executive Talent.

Victims of Malpractices

Many a paying Client Firm or unwitting Executive Talent has been “burned” at one time or another by “pretender” search firms. Toward Client Firms, such unethical search firms grossly abbreviate the proper way of handling a senior search assignment. Or, unnecessarily exposed a confidential Executive profile leaving the Executive Talent with one very bad experience in dealing with search firms. It is not a wonder why corporate executives are wary of responding to invitations to meet from Executive Search Consultants. The truly discriminating may agree to release resume to ethical search firms after much probing. Rightfully so.

Why Malpractices Exist

Below I offer several reasons behind some of the most common malpractices in Executive Search:

  1. The unethical search firm is not aware of Data Privacy Act; or more importantly, does not live this law in the conduct of business.

    Thus, these firms are content with “Resume Bashing”. All this means is that a senior search assignment that is unfortunately farmed out by Client Firms to more than one search firm so that these firms do work simultaneously, the expedient and unethical search firm will swiftly & merely e-mail raw resumes of seemingly suitable persons. This is not value adding service. The unethical or what I refer to as a “pretender” firm has not even contacted the persons involved to seek permission so their resumes may be released to a Client Firm. “Pretenders bash or flood” Client Firms with as many resumes; sometimes, even just the names of seeming candidates as its proverbial foot in the door technique.

  2. The unethical search firm has no science in its practice. It readily sacrifices process in the name of speed.

    The expedient goal is to be first to “own a talent”. Even without any other assessment post resume submission, this malpractice assures the unethical firm it could be credited for “introducing” the talent to the Client Firm & in the event the same person is hired, be paid the “referral fee”. This absence of integrity is especially true today due to the poor practice of Client Firms to allow more than one search firm to work on one & the same senior vacancy. This malpractice removes the very essence of confidentiality & value for process.

  3. The so-called search firm is not able to provide the Client Firm a track record of success by assigning consistently competent and seasoned Search Consultants.

    There is one such “pretender firm” whose practice is to have the Head meet with Client firm’s Principal contact in order to improve the probability of being given the mandate to search. But, actual conduct of what is supposed to be a comprehensive search process is passed on to a less experienced staff. This junior staff lacks the level of capability and steadfast professionalism to handle the sensitivities of senior search assignments. Without guidance or professional counsel of a Senior Partner, there is very little to prevent cutting corners just to deliver. Ultimately, both senior & junior staff are guilty of unprofessionalism.

  4. The unethical search firm does not believe in Ethics and Integrity.

    “Pretenders” have little regard for protecting Client Firms & Executive Talents. These firms find it common & easy to

    • re-cycle;

    • have no OFF-LIMITS policy.;

    • conduct search work with competitive companies without need for disclosure.

    The malpractices that result may include:

    • tapping the same executives they have successfully referred to a previous Client Firm & invite the same candidates to move to yet a different Client Firm;

    • not giving any “grace period” to a Client Firm with which it has only recently worked. Instead of protecting the Client Firm by not taking anyone of its other executives, it just liberally “raids” the company showing disrespect for the Ethics of OFF LIMITS Policy;

    • actively handling search assignments with Client Firms that are known to compete with one another. More often than not, when they make a pitch, so-called search firms do not have basic discipline to disclose to Client Firms on those companies they would be able to take from by virtue of OFF LIMITS Policy.

  5. Some Client Firms wittingly or unwittingly provide the type of engagements that encourage malpractice!

    Executive Search was created way back in the late ‘70s so that external consultants could offer dedicated focus, time & attention to the serious process of hunting experienced professionals who are not otherwise looking.

    Thus was born Retained & Exclusive Executive Search Firms that would collaborate with its Client Firms with total loyalty and professionalism. These ethical search firms do not handle competitor Client Firms at the same time; they certainly do not re-cycle placed executives just to make money; they observe necessary “grace period” before directly tapping talents from former or recent Client Firms; and, they consistently undertake thorough search processes which fully justifies their work-in-progress & final professional fees.

    At present, Success-based or Contingency model has emerged as commonplace model opposed to Retained & Exclusive model. Client Firms say they do not wish to pay up-front fees, thus, Contingency business has become the popular or even preferred model from junior manager recruiting all the way to senior-level executive appointments.

    Unfortunately, this scenario:

    X – no financial investment on the part of Client Firms;

    X – no assurance for “Pretender” search firms to be able to bill & collect fee

    = “Pretender” firms commit malpractices to create some business in any way possible

    I admit the fact that Executive Search Business has one of the lowest barriers to new entrants, so many more Tom, Dick & Harry have instead become “head-hunters” overnight. Some by merely having access to the internet, LinkedIn, etc. are suddenly experts. It is also true that long-time owners/ senior partners of so-called search firms recruit fresh college graduates to make but “instant Search consultants” after one or two years on-the-job. The same unethical firms hardly formally train their staff, by the way.

    Because Client Firms agree – if not, demand – to receive resumes from 3, 4 or even 5 firms “in a few days”, it will work with any of these “Pretenders” which can be had for lower fees. Little work, low fee. The malpractice cycle continues.

    It is as though pitting one against so many others in the name of speed improves the quality of filling up sensitive management-level requirements. Actually, the Client Firm has to referee which unethical firm raced to own which talent by e-mailing the resume first & ahead of the pack! The “Pretender” firm in the meantime agrees to be paid a referral fee as dictated by the Client Firm – in as much as the unethical search firm did not do anything else but shoot off a resume!

    For authentic executive search assignments, Client Firms are well-advised to work with one firm and both parties could negotiate on terms & conditions as well as timelines. If a Client Firm is by company policy disallowed to work with a Retained & Exclusive model, its Contingency Search firm partner must be held to ethical practices, at least be given limited exclusivity to be able to conduct its proven & time-tested search methods and earn its keep. Executive Search & Code of Ethics

    Bonafide Executive Search Firms operate by & uphold Code of Ethics. Definitely, these two go together.

    I dare say the Code of Ethics is at the very core of how I have been conducting the business and how I have stayed on in active practice as Executive Search Consultant.

    I use the word once more in this article – SADLY – there are individuals/businessmen who have spent as long as I in this business. Yet, some of them have not been earnest, dedicated & consistent in living the Code of Ethics. On the contrary, I refer to those who find it not an issue to commit malpractices or for their team to do so.

    True these persons have probably & oftentimes laughed their way to the bank with each “expedient successful placement”. No matter that they circumvent the Code of Ethics, they continue to be very much around & very much in business. More worrisome for the industry is the fact that these are the same persons who do not seem concerned about doing the right thing for as long as they make money.

    I believe their reasoning would always be “relative” i.e. that they are merely being “pragmatic business people” who seize opportunities as they arise; billing & collecting without need for tedious work or long processes; who do what they do “ because the Client Firm said so ”.

    I take comfort in the truth that Executive Search is my business and my advocacy. I live by the Code of Ethics. No matter that some people have been known to say of the Code and I quote, “too rigid”. For those who always tread the grey line, I suppose the Code of ethics is going to be tough to live by.

    Yet, it so rings true that for every hard-earned form of living, there is a price to pay be it hard work, long hours or even a bad back. Equally so, there is a priceless prize to behold in upholding integrity & ethics.

Executive Search: The professional and ethical way

It is at this point that I wish to define Executive Search. I define it as that external professional service I offer to Client firms that are in need of employment services of senior to top-level executives across various functions in a business organization and diverse industries.

To get the business partnership started, Client Firms will expect me to lay down the search strategy by which I could generate a qualified short-list of 3 executive candidates. Once this shortlist has been delivered to the Client Firm, and after a deliberate set of activities, the Firm could seriously consider the most suitable person from the shortlist for hiring & appointment to a very sensitive internal executive vacancy.

Client Firms are aware my task involves a focused & dedicated plan of action that basically requires time, experience & investment. Once again, because the seniority of the level it caters to, Executive Search requires all these ingredients for there is after all science in the service.

Client Firms realize ours would then be a serious partnership that will likewise require trust and collaboration.

Client Firms are fully aware it takes a seasoned Search Consultant to discreetly approach senior to top-level corporate professionals, get to know & interview them and even propose to these executives to explore a position with a different organization.

Client Firms are aware the ones who are not looking are usually the best talents. Thus by Executive Search or honest-to-goodness headhunting is meant use of time-tested processes involved in hunting without anyone else knowing about the Search except the Principals/ ultimate Decision-makers and the Search Partner to whom the Search has been formally and exclusively awarded. Headhunting, the colloquial expression, rightfully only pertains to the high level nature of Executive Search.

The Code of Ethics becomes the only way by which I am able to successfully partner with the hiring company and for Client Firms to appreciate the reasons why the Ethical Search Firm:

  • Requires face-to-face meeting at the first instance to comprehensively discuss the need, reasons for hiring & the profile of the most suitable senior executive

  • Submits to the Client Firm a summary document about its understanding of the requirement at the same time that it requests of any available Job Description on file

  • Requires Time – 3 to 4 weeks – to conduct Research of Talents in the market, contacting same talents, inviting talents to meet with the Ethical Search firm – all these intense , dedicated and focused activities in order to develop & submit to the Client Firm the formal shortlist of 3 to 4 suitably qualified candidates

The Ethical Executive Search Consultant does not and must not abbreviate this process if it means to do the right thing.

Ethical Search Firms can shorten processes

I submit on occasion there is a Client Firm that would nevertheless make serious appeal to cut down the processing time in order to meet its critical on-boarding deadline. If & when I do so, it is in the name of being agile, customer-sensitive but certainly does not mean abbreviating my proven & tested process. On a case-to-case basis, it means devising timelines that could include working longer hours, doing overtime, press harder to meet prospective executive talents. This step is normally a bit of a challenge given that gainfully employed executives are understandably busy with their own commitments i.e. not as readily available to meet. Most importantly, I need to actively involve & collaborate with my Client Firm every step of the way. I need to be an active Business Partner to my Client Firm Partner!

Removing days or even but one week from the process will not ever mean no longer meeting executive talents face-to-face for in-depth interviews. As I stated earlier in this article, doing so is one of the most common malpractice to beware of. I actually know of so-called search consultants who do not even know how their executive talent looks like because they never met. This, in a service that is highly collaborative, deliberate & demanding personal commitment.

To all Client Firms & Executive Talents, I say yes, beware of malpractices especially those so commonly committed they seem to be business-as-usual. More strongly though, I say BE AWARE of basic reasons why malpractices exist.