Shortcuts in Executive Search are Costly

By: Cesar Ginete

March 2015

Amcham Philippines

Let me tell you a story. Company A suddenly had a requirement for a Finance Director when the jobholder moved to competitor. Since no one inside was prepared to move up, the only recourse was to hire externally. The Head of HR farmed out the requirement to three headhunters advising them that the search was confidential and the company expects to shortlist candidates in a weeks time. Also, whoever sent the candidate that gets hired gets paid. In other words, recruiting for the role will be on success basis or contingency.

The three headhunters soon got to work scrambling and sending as many profiles as they could in the hope of hitting the right candidate. The Head of HR sifted through the huge number of CVs, talked to a long list of candidates and in the end was able to pinpoint someone to endorse to the CEO. End of story.

Was it a happy ending? Probably. From the stacks of CVs, Company A must have found the right person. From the long list, the Head of HR spent time to check each CV, contact candidates, gather information from the most fundamental data as how they would lead Finance, etc. Company A must have found the right person.

But, if you were this Head of HR, would you have the time for this process? Say, each of the three search companies sent 10 CVs (and that’s being conservative), would you still have time for other HR functions? It would either be that you will miss your time-to-fill standard for this role, or you would be overly busy with this requirement several weeks.

On top of that, when you’ve hired the candidate, you paid the search firm 100% of its asking fees. Do you think there’s something amiss here?

Now, if you were the CEO, and presented with a shortlist of candidates, would’nt you look for a modicum of assessment of the candidate’s suitability to the role, an assurance that there has been some initial vetting done and, at the minimum, these candidates are truly motivated to join your company?

So, let’s assume you went ahead and hired the right person. Two weeks into the job, the Finance Director was discovered to have business connections that could prove to be disadvantageous to your firm. While the decision to cut ties is clear, the question that comes to your mind is: How on earth did this happen?

This is an all-too-real scenario: the realization that you have not been served well by your recruiting partners, and that their poor service has cost your business.

Lets go back to the top. When your search firm (partner) abbreviates the process and sends raw CVs, it not only neglects its responsibility; it essentially takes unearned money from your company. Your Head of HR and anyone in the selection process will obviously spend considerable time going through profiles that could have been eliminated at the outset. Valuable executive time is therefore lost.

It can even backfire on your business by leading you to hire an unstable candidate. As in our story, you may find that your company’s brand and market reputation may have been compromised. You now begin to count the actual impact of a wrong hire to your business: missed sales, frayed customer relationships, delayed projects, low staff morale, sliding market reputation, etc.

In their desire to be the first to place candidates, some search firms do cut corners. They forward raw CVs with merely under their companies letterheads or they email you summaries of candidates background without any commentary on whether their skills sets even fit your requirements. By sending a multitude of CVs, these companies show utter lack of understanding of their role to support your business. They pass on to your HR and hiring managers the task of screening profiles and therefore let you bear the cost.

Worse, some send profiles of candidates they have not even met. So when your HR Head calls, the senior executive candidate gets the surprise of his life, not because he was being considered for the role but because he wasn’t even aware your company has his profile. In which case, your company might be an unwitting party to a potential lawsuit under the Data Privacy Act of 2012 which provides that personal information requires consent from the data subject before it can be disclosed to the public or third party, violation of which carries penalties for both individuals and corporations.

There are also search firms that endorse candidates with unchecked backgrounds, let alone deliberately sidestepping issues that you believe are critical to the role. There include those involving health, mobility, compensation expectations, and even integrity.

In our story above, Company A unfortunately discovered all this after it has already invested in the candidate and shared crucial business information. In other words, if the search company (partner) does not actively clarify with your organization the correct profile of the candidates you want, simply because it wants to be the first to endorse candidate (and thus get the credit), it cuts short the process and your company pays the price, in more ways than one.

The effects therefore of a wrong hiring decision borne out of shortcuts in the selection process are significantly more than just the obvious. Through all of this, your search firm has the temerity to demand payment; all 100% of it.

So what to do? As head of HR, sometimes you might tend to look for search firms endorsed by industry colleagues or those with easy recall. However, these reasons may not be a real gauge of their ability to provide good service.

Instead, check the selection method used by your search partners. Ask how they source candidates, present the opportunity, handle confidentiality and qualify candidates. Does their process follow a coherent and methodical pattern? Can you bind them to this? If so, you can be at assured that, at the minimum, quality work can be expected and your team will be spared the work and cost of having to go through all the CVs.

In addition, to ensure that your search firms comply with the Data Privacy Act, you can perhaps make them sign to a Code of Ethics that obliges them to interview candidates and secure their permission before any personal or work information is transmitted to your company.

Be clear about your expectations. While there may be instances when clarity is seemingly a special gift, ask your search partner to sit down with the hiring manager and together thresh out the parameters of the search, and document all this. While this may take time, it can certainly pay off by improving efficiencies in identifying potential candidates.

Be cost-effective, not stingy. There’s always that saying that if you pay peanuts, you get ! While you may have saved your company some money by engaging a cheap headhunter, you are in fact spending more with the haphazard ways it qualifies candidates.

What if you’re a CEO? Elevate talent management to be a critical pillar of your business. Let everyone know that finding talent is not a reactive but more forward-looking exercise that everyone in the leadership team, HR included, should share. Challenge your operating managers to adopt a selection process that ensures careful winnowing of potential talents and active engagement of headhunters. That way, you clearly lay down role expectations and are assured that candidates who progress in the selection stages are products of a tried and tested talent identification process.