Retained Search State of The Union

Executive Search 2013: State of the Industry Report

(U.S./Americas)A look inside today’s talent acquisition & leadership solutions business

Executive search consultants are facing a host of pressures – from weak hiring markets and burgeoning social

media technologies to direct competition from their clients. These destabilizing forces are creating one of the

most significant paradigm shifts in the history of executive recruiting.

Special FeatureInside the Recruiting Industry’s Hottest New Initiative: Finding Digital Leaders leadership intelligence

A View on Improving the Client Relationship Steve Hayes, Senior Partner The Human Capital Group . . . . . . . . . . . . . . . . . . . 61

The Critical Impact of CEO Succession Karena Strella, Partner Egon Zehnder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Recruiting for Boards of Directors Howard Fischer, President & CEO & Adam Fischer, Managing Partner Howard Fischer Associates . . . . . . . . . . . . . . . . . . 76

The Importance of Recruiting the Right Chief Financial Officer Peter D. Crist, Chairman Crist|Kolder Associates . . . . . . . . . . . . . . . . . . . . . 83

The Emergence of In-House Recruiting Jason Hanold, Managing Partner Hanold Associates . . . . . . . . . . . . . . . . . . . . . . . . . 90

Strategies for Cross-Border Recruiting: CEOs & Boards John S. Wood, Vice Chairman & Anne Lim O’Brien, Vice Chairman Heidrick & Struggles . . . . . . . . . . . . . . . . . . . . . . . 95

Looking North: Canada’s Top Search Firm Charts Path to Success John Wallace, CEO & Elan Pratzer, Managing Director The Caldwell Partners International . . . . . . . . . . . 100

Recruiting Pioneer Discusses Trends for Women in Business Judith M. von Seldeneck, Chairman and CEO Diversified Search . . . . . . . . . . . . . . . . . . . . . . . . 108

VIEWPOINT CONTENTS

leadership intelligence

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There is almost nothing more critical or sacrosanct in the business world than the relationship one client has with another. Issues of trust, reliability and quality are just some of the key elements that make relationships between business partners viable and successful. A primary example of this

carefully balanced union of professionals can be found between executive search consultants and talent acquisition executives whose collected efforts are designed to identify and recruit candidates to fill some of the most important positions in the global corporate landscape today. To make that partnership work successfully, human resource professionals need to retain a search partner who will become an extension of their organization. In this capacity the recruiter has to understand the functional discipline, inside and out, and he or she has to become expert in the industry space they are requested to work within. Understanding the delicate intricacies of a client company’s organization is paramount for search consultants whose top candidate might look ideal on paper but might not be a viable fit due to cultural nuances. Having a keen eye to tap the best possible professional candidate is why thousands of companies turn to their external search partners to build management teams every day.

Within the executive search industry there is an array of players, from large generalists to small specialist boutiques. Each serves a purpose for their client. While many larger firms offer a wider slate of services and maintain, in many cases, a larger reach geographically, smaller and more specialized firms address other talent needs. “I like the intimacy that you can develop with a smaller firm,” said Kevin Henry, chief HR officer with Snyder’s-Lance in Charlotte, NC and a client of The Human Capital Group. “In our case in particular, because we are able to create this level of intimacy with a smaller firm, I think it tends to lend itself more favorably to a better ebb and flow of communication and, in turn, to the success of a search assignment.” But do smaller firms constitute a better choice for their corporate talent acquisition partners overall? In HSZ Media’s survey of HR executives for this study, 55 percent said that they prefer to work with a smaller recruiting specialist.

If developing an intimate or one-to-one relationship with your search partners is critical to the outcome of an assignment do smaller firms have the ability to work more closely and understand a company’s culture better than their larger rivals? That question may be difficult to discern but, clearly, smaller firms are gaining ground. “Understanding our culture might be the most important part of the relationship between me and my search partner,” said Scott Washburn, vice president of human resources for Tree Top which is based in Saleh, WA. Mr. Washburn says that a smaller firm like The Human Capital Group has been just as effective at understanding and working inside his company and spends significant quality time with key executives to make certain all bases are covered. “Human Capital Group’s team has spent a great deal of quality time with our executive team including our CEO, CFO, VP of operations and VP of Sales and each of the firm’s search consultants spends internal time to insure that we are going to hit the nail on the head right from the beginning,” Mr. Washburn added.

In the following interview, Steve Hayes, senior partner with The Human Capital Group, discusses the unique relationship that exists between the search consultant and their corporate counterpart today. Included in Mr. Hayes’ examination is the controversial issue of fees which, Mr. Hayes concludes, should be at the more favorable rate of 25 percent for clients -- less than the standard one-third model currently used by most firms. Mr. Hayes, who is a former human resource executive, also addresses some of the key elements of the search process itself, including assignment turnaround time which his firm has compressed into a more accelerated cycle time. He concludes the interview addressing issues paramount to corporate clients such as off-limits concerns, understanding the uniqueness and nuances of corporate cultures and how they fit with the client and candidate, and the approach to assessing internal talent - a key benchmarking approach.

In 2000 Mr. Hayes founded The Human Capital Group and, since that time, he has assisted executives in acquiring leadership talent within virtually every function and industry sector. He is a sought-after consultant and executive coach to leaders facing a myriad of organizational and cultural challenges and opportunities. Prior to his career in executive

A View on improVing the Client relAtionshipA conversation with Steve Hayes, Senior Partner – The Human Capital Group


VIEWPOINT: A VIEW ON IMPROVING THE CLIENT RELATIONSHIP

What is the most and consistent concern clients have with the executive search business today?

The length of time to complete an assignment, the quality of outcome and the cost of the experience. I don’t think the level of frustration/concern has changed over the years because the executive search industry, quite frankly, hasn’t changed. But the concerns of speed, quality and value continue to be at the forefront of our client’s needs. And it is because our client’s customers (and their businesses) demand speed, quality and value. CEOs, COOs, CHROs etc, and their customers (Wall Street/the consumer) are all focused on speed…without sacrificing quality and value. So there is no difference in that relative to what the executive search industry should provide. We pieced this puzzle together 12 years ago and created a model that would repeatedly and consistently deliver those three components. In the end, that is what our clients continue to talk about…speed, quality and value.

Users of search tend to be the most accurate barometers for what services they would like to see added or changed. What might those be and how would you alter your own business based upon what your clients are relating to you? What have you specifically done that’s different from what other

firms have done and what have you employed that’s really working based on their feedback?

Keeping the value proposition of speed, quality and value in mind we created a process that would deliver speed in a repeatable and replicate-able way without sacrificing quality. This allowed us to bring value by reducing costs to the customer while still blessing us with great margins. I am not trying to be a broken record here, but the service of executive search it not rocket science. We connect leaders to opportunities and we facilitate relationships with and for our clients. So we are fooling ourselves if we make it out to be something so mysterious and complex. We add value through a focused approach by bridging the connection between opportunities and relationships for the mutual benefit of both parties. As a firm, we have created a client feedback process that allows us to consistently measure if we are delivering what we have committed to. It’s a 12-point survey and one of the first questions is: “Did the Human Capital Group deliver candidates that you could interview within 20 business days?” Our goal is to get a five (on a scale of one to five) because anything below that is not a “wow” factor. We want to “wow” the client and that is what results in repeatable and reference-able business.

When you started your firm, and based upon where you are now, how much have you changed your structure or improved the business? Was this sort of an evolutionary process or is this this something that happened from the start?

It was evolutionary but with only one evolution. When we started 12 years ago we actually committed to delivering finalists in 15 businesses days. But soon thereafter - following my first completed assignments - I realized that this was an unrealistic timeframe. So we evolved into guaranteeing finalists in 20 business days…and we have not looked back. This is our “secret sauce!”

The turnaround time that you mention is far more accelerated than the average in the industry.

The one thing that most retained search firms do that we do not, except in rare cases when a client demands it, is that we are not traveling every night, going to airports, flying all over the country and spending our clients’ money to meet candidates in person. Instead, we leverage technology and meet most candidates through video. Short of shaking the candidate’s hand, video interviews allow us to obtain almost everything we need in terms of how the candidate presents themselves, the passion with which they communicate, body language, etc. We pass the financial and time savings on to our clients by being

search, Mr. Hayes served as the chief human resources officer for Client-Logic, a 17,000-employee global services company. Earlier, Mr. Hayes was vice president of human resources for Russell (Athletic) Corporation and Magnetek, a

NASDAQ global market listed company. He also held various human resource positions with Frito-Lay and Amoco. Mr. Hayes earned a BS in Psychology and Management from Louisiana State University.



efficient with our time and their money. We could not meet that 20-business day guarantee if we were flying all over the country…and we rarely have a client disagree with this approach.

But don’t most of the other search firms have the same technologies at their disposal? Wouldn’t they then be able to cut times like you do? Are you doing something unique?

Our uniqueness is reflected in simplicity and results: we leverage technology and place guarantees tied to results. I think there is an expectation of travel and in-person interviews especially given the high fee structure that most search firms charge. Personally I have five children and I want to be home at night. At our firm we need and want balance in our lives…which benefits our clients in the end through the quality of our work. Therefore, I am willing to trade off the higher fee and pass that savings to the customer by allowing us to leverage technology to screen candidates. In the end, it’s all about sustainable results…and we are blessed with a model that delivers results for our clients time and time again.

So you feel you can really maintain as good a client relationship by working through these mediums than having to constantly go out and meet them?

Our clients appreciate the fact that we are doing things differently…for them! We do all the front-end work to bring them a short stack of vetted finalists in a short period of time. After all, the client is going to fly the candidates

in to meet with them anyway, so why duplicate the costs? Consumers are demanding greater value and Wall Street is demanding greater value in the form of stock appreciation, so our customers expect their service partners to think that way! We make a difference in our clients business by doing things differently in ours.

In the search business, fees have been an important criteria in negotiating an assignment. Your firm has moved to a pricing model of 25 percent. Why did you settle on a percentage that was less than the one-third industry norm?

It’s a great question but I want to actually clarify or correct one point in your question. We didn’t move to a pricing model of 25 percent. We started our firm at that pricing level 12 years ago and we are blessed with great margins because of the efficiency of the model and the resulting repeat clients. It is a 32 percent discount from what most retained firms are typically charging -- and we don’t charge the add-on fees. So our clients, on average, are saving 35 percent versus what our competitors charge, and they get the benefit of speed & quality - where they are reviewing candidates within 20 business days with a one-year guarantee. It’s a compelling model.

So you started at 25 percent. Why did you think that pricing structure was going to work from the start?

I have over 20 years of HR leadership experience with several progressive companies (i.e. Frito-Lay/PepsiCo).

My last two roles were CHRO of global organizations and we used retained search often. The 33 and 1/3 percent fee, plus all of the administrative add-ons that most search firms charge, is something that made stomachs turn in our executive suite. We felt taken advantage of. Therefore, I saw an opportunity to change the perception of value with regard to retained search. That is why we settled on 25 percent and, thankfully, built a model with great efficiency and therefore great profitability and sustainability.

Not to play devil’s advocate but I talk to a lot of clients who say the fee isn’t really the most important thing to them. What’s most important to them is getting the right candidate, and they don’t mind paying the 33 percent. You are sort of saying the opposite and that is that the lower fee is important to the client.

Quality (getting the right candidate) will and should always be the top priority when it comes to finding and acquiring leadership talent. However, there is no need for a client to sacrifice quality to get speed and value. We have built a three-way win with our model. We want to deliver results and therefore earn our fee which, in the end, helps the client feel that they got real value in the whole package.

Certainly 25 percent does feel better if you’re not losing the quality so it’s a good point. It’s an interesting concept.

We are not going to sacrifice quality for speed because we have a vested interest for one year after that hire



has been made; that’s our guarantee. We would be cutting our own throat if we didn’t think about that. Then you have the value (25% fee) component. That’s why a lot of our clients, who had previously been clients the larger firms and who have heard about of our approach like to give us a search and see how it works. It is up to us to earn their trust for the long term.

Do you think the industry might be moving towards the type of model you have developed, particularly given the downturn period we went through recently which forced some fees downward?

I don’t know when the industry will wake up and embrace this type of change. It’s yet to be seen. You are correct: the search industry was in an awful downturn from 2008 to 2010. I heard that a lot of firms were making fee concessions because they were really struggling for business. But we have not had to do this; it was already part of what we offered. The proof, therefore, is in the results. We’ve been at capacity, non-stop, since the second half of 2009. I don’t know if the industry is going to embrace change. We tried to join AESC but we were turned down because our model was, in the end, a threat to the historical approach and pricing of the business. The fact that we weren’t embraced by AESC tells me that the industry leaders are not ready for substantive and quantifiable change in favor of the client. I do think it’s time for the industry to think about making a change. Selfishly, I’m thankful they haven’t.

Advancements in technology are going to play a part in helping bring fees and costs down. Certainly it’s cutting down travel time, as you mentioned, and it’s helping to get candidates to the table quicker. I would think that it would help drive fees down instead of maintaining them at one-third of first year’s compensation.

For me, personally, the main thing was balance in my life. I’m much more effective with my clients when I’ve got balance in my life and leveraging technologies allows us to do that and pass the savings back to the customer.

Many firms today are taking longer to fill positions. How do you effectively structure and manage turnaround times without affecting the quality of the assignment; and I was really shocked to hear that you have such a quick turnaround time.

The process is the key. It’s like applying six sigma or lean principles to the search business. It starts when the search begins and we plan forward on our clients calendars. So, No. 1, we commit to the delivery date in 20 business days, we book it on their calendar so they then can be focused on their business while we are eating, breathing and sleeping their search. There is a deliverable. Secondly, we also book dates in week five for the first phase of candidate interviews. So we are pre-booking their calendars a month out to maximize the chance of us being very efficient with scheduling interviews. Because those dates are nailed down in advance we are able to prepare the candidates with the dates

that the client has already reserved for interviews. So, in retrospect, the candidates can plan their calendar and block a vacation day or plan to take the time off, assuming they are invited in; and it sends a huge message to the candidate that our client is serious about this search. That efficiency of the process benefits all three parties, our client, the candidate and our firm. That’s what allows us to move the process so efficiently and keep things on track. Results matter and, on average, our client has a candidate who has accepted the job in 51 business days. We present finalists in 20 business days and by the 51st day they finalist has been through two rounds of interviews, maybe even a visit with their spouse or family, and negotiated the offer and accepted.

That’s at least a month quicker than the average in the industry. Why do you think the process is taking potentially longer with some of the larger firms?

What I hear from our clients and, also, from my experience from the days I was an HR executive, is that some of the larger firms treat clients as if they are a “number.” The client feels like a “number,” and that personal touch, personal accountability, and personal connection is not as strong as it might be with a boutique firm. Typically within the large, for-profit retained search structure there are many different people that have their hands in the pot who are trying to nurse the process along. Whereas, in a smaller boutique organization, you’ve got one, maybe two dedicated



resources who eat, breathe, sleep and own that search from beginning to end. In our firm, the senior consultants (myself included) are the direct link to the client and we own each and every step of the process. So it’s a very different outcome for the client. When prospective clients are considering engaging our firm, they want to know who is going to “own” this search. They want to know who is going to be involved in this search. They understand there is a research team and understand there are behind-the-scenes people who are helping. But they want to know who is on that team and who are they going to hold accountable if anything goes wrong. Clearly the larger firms have the advantage of brand strength and name recognition – and many times they are called in because there is perceived safety in the decision to engage them. But I believe more and more executives and boards are going to be demanding much more transparency and that is why you see more boutique firms being brought in for a different approach.

Clearly clients today are increasingly concerned about the quality and depth of candidates who are being sourced for assignments; some are even the result of parallel processing. What measures do you take to insure that the best possible candidates are being identified and the widest possible net is being cast -- and discuss the issue of off limits constraints?

As far as parallel processing is concerned we don’t play that game.

I can think of one instance in the last 12 years where we had that as a unique circumstance. This is out of 450-plus search assignments. This issue concerns me because it reflects on our industry’s ethics and integrity. To your other question, we present to the client a four-tab booklet with detailed information on every candidate we networked with and/or spoke to throughout the search: name, contact information, title, company and notes from our conversations with the candidate. That’s one thing that I never got from the four big firms when I sat on the other side of the table in HR. Their comment was: “That is our proprietary information and here are the four or five resumes for the candidate interviews.” But I never knew what was behind those resumes. We believe that is precisely what our client is paying us for. Obviously, if they hire more than one person we are going to get a double fee so it’s almost silly not to show them the data. The data shows the value being provided on behalf of the client…in other words, what they are paying us for.

Why hold back data or intelligence that is going to be valuable to them.

Correct. If I show them the 150 to 200 candidates we spoke to for that particular assignment that gives them the validity: these four or five finalists presented are the best of the pool contacted. The information we share provides details like: this candidate is not willing to move because they have a son or daughter who is a junior in high school; this candidate has an ailing parent and they can’t

leave right now. It also gives the client data about what the market is saying about their brand, their price point, the geographic location, perception in the marketplace, etc. so it’s valuable insight that our clients soak up. It quickly helps them transition from the broad net we cast throughout the 20 business days and focus on the four or five finalists who are qualified, interested, possess a strong fit culturally, the price point is right and they are willing to move. All of those things have been bundled in a three-step interview process with our firm; and now they’re ready to interview with the client.

I think it underscores the fact you’ve actually gone out and done the work.

We owe this to our clients. They can pick up the phone and call any one of those 150 to 200 people that we reached out to and say, “Did The Human Capital Group contact you about our search?” We’re not pulling out resumes from a dusty folder or dated database. It’s fresh, current market data about what the market is saying about our client and the opportunity at hand.

Human Capital Group is smaller but also not a niche player by function or industry.

Our niche is leadership regardless of the function or the industry. My belief is once someone has hit the six figure price point in compensation they are typically strong technically in their field. What will separate and sustain their success is “how” they do what they do…their leadership capabilities.



Therefore, whether it’s a finance, HR, marketing, sales, or operations role… or it’s in an industry like manufacturing, healthcare, consumer goods - you name it - leaders are what our clients need and demand. So we start each search from scratch - intentionally. And we leverage current data to reach out to all possible candidates on behalf of our client. Given the fact that we are a generalist firm focused on leaders we have very minimal hands-off limitations. It does happen at times and in those cases we will disclose to our client in the due-diligence interview with them before we start the search. We ask them: “Where would you like to pull candidates from?” Alternatively, “Where would you not want to pull candidates from?” And if any of those companies mentioned were recent clients – we disclose this as a client company we have done work with in the last year and so, respectfully, we’re not going to pull from them. If that causes a client not to want to engage us, we want to let them know that at the start. They can be assured that this is how we are going to protect them if we are asked by a prospective client to recruit from an existing or recent client. So that’s how we handle it. This goes back to what I said earlier. What we do is not rocket science. We are just trying to live by the golden rule and that is to treat people the way we want to be treated. That’s really all we are trying to do in our speed, quality and value model. It’s what I wanted when I was a customer. It reflects in how transparent we are with our people, our clients and with candidates. So we are just trying to treat the client and the candidates

with respect…each step of the way. I know we have to give candidates tough news at times and have to tell them that they are not qualified or they didn’t get the job. But we try to extend them the same respect that we wish we had if the role was reversed.

Discuss your post-audit process. How did you develop this and how do you use it?

We implemented the post-audit process six years ago. It is an electronic survey that we send to our clients right after the candidate starts. It’s a 12-point questionnaire; nine of those are on a “one to five scale” and then three of them are open ended. The nine that are on a “one to five scale” have a comment section, so if the client wants to give us a rating of five, four, three, or whatever the number is, they can also add comments as to why. And we have a 70 percent return rate on the survey. That data is so powerful for us because we want to make sure that the client receives everything we committed to them. If it turns out that we did not deliver, we want that constructive feedback as to how we can improve, not only for that client, but for future clients.

I assume that you are continually tweaking that vehicle as well.

No question about it. It allows us to give feedback to the consultants and we look at that data again on a quarterly basis. We pull all of the data together and we look at where we are getting consistently high scores and where are we are getting scores that

we are not pleased with. This allows us to identify any consistent patterns. It causes us to do internal reflection and the opportunity to adjust and adapt. We have also created a separate survey process for our leadership consulting. And what we are trying to measure there is not the same as what we are trying to measure in the retained search side of our business because it’s a different value proposition, a different offering.

How does this help with the eventual stick rate of a candidate because it’s not just recruiting a candidate but also making sure that candidate stays?

I believe the stick rate is reinforced, not only by the search process, but by a lot of things that a retained search consultant can influence. For example, how the manager deals with the new hire and how the new hire starts to build relationships early in their new company. What we do is to coach the candidate before they start. We spend about 30 to 45 minutes with the candidate as part of our overall fee, or value proposition, on the best methods of insuring success for their on boarding. We also recommend a few books to read before they start. And then it’s really up to the candidate as to how they begin building relationships before they even start working. This is where we have the greatest impact on improving the stick rate. We also conduct a three month and a six month check point, not only with the candidate individually, but with the hiring manager/leader individually, to calibrate how the transition is going.



If there are sensitivity points from the candidate’s perspective, we will talk with and coach them on how to approach their leader. We then follow up with the leader and say, “Did John or Sally come speak with you about anything that they might be struggling with?” So we are not trying to just go behind the candidate’s back; we’re trying to coach the candidate to go to their leader and then we are validating that they did.

How does an external provider like Human Capital Group maintain a good working knowledge and understanding of the client’s culture? Even though you work from the outside, how critical is understanding culture to the success of the search?

I would say culture is the most important piece of any search. When we are conducting an executive level search, we are vetting technical skills, past results, and “how” a candidate has delivered value in their past jobs; that’s the best predictor of future success on a quantifiable scale…the “how.” Although it is not easily quantifiable, those leadership traits - that gooey piece of the human being - are what define and predict sustainable success. So understanding the culture from the client’s perspective is the “glue” that’s going to sustain success and candidates either have it or they don’t.

Does learning a culture from the recruiter’s standpoint require you to spend a lot of time with the client?

Yes. Before the 20-day “clock” begins, we have spent hours with the client, either in person or by phone/Skype. Our objective is to gain a full understanding of their culture so we can lay a solid foundation upon which we are going to build the search. Now, we usually are not meeting with just one person in the company. We want to talk to two or three leaders/influencers to ensure we gain multiple perspectives. We attempt to speak with anybody who will be involved in the interview process, so we want to get their input before the search begins.

What types of questions do you ask to get to the heart of a company’s culture?

It comes down to some real intentional questions that we ask of the client to get at the core of the culture. For example, we identify a small group of high potential performers. Tell me what makes them different or tell me about a few that are really struggling. That’s just an example of some of the questions we are going to ask to start understanding what’s a predictor of success or failure in this culture. Then we start digging into the values of the culture. What are the values? Are they just words, or are they lived out daily…and how? Where do you see them not lived? We then start interviewing candidates on how they have done certain things in the past which will be predictive of how they are going to interact in this culture in the future. So I’m giving you a very top-line answer. But that due diligence, up front, and before the 20-day clock begins is the deciding factor in how successful we

are going to be as a firm in meeting our client’s needs…to ultimately find a candidate who is going to stick.

How do some of the culture issues change particularly with a client that you’ve dealt with for years? Do you still have to go through the same amount of due diligence or is it somewhat streamlined?

It’s streamlined. But you use that opportunity to validate what your assumptions are based on the past experiences – if there’s a new CEO or a new senior executive that’s going to bring a change to the culture. And you have to understand those dynamics. The same thing occurs in a division. The leader of that division is going to have a different set of traits in terms of how they lead, how they communicate, how they deal with conflict, how they analyze information. So understanding those components is critical for us to find a win or match.

What are the biggest challenges firms face as they identify consultants to bring into their own firm? Is there a talent shortage of available consultants? Do search firms effectively build and promote consultants from within and offer the necessary training? How do you approach bringing in a new consultant to the firm and what sort of benchmarks do you have for bringing somebody on?

Well, we go through a very thorough vetting process. And our model is unique enough that it’s not right for all people…and that’s okay. I’m totally cool with that. But I guess



what I would say is we go through multiple interviews, not only with me but with other members of our team, because it’s like a family, if you will, and although we’re not related we spend so much time together. We have to practice what we preach for our clients, internally. If we are not modeling how we select talent for ourselves, how can we expect a client to trust us to help them do it? If there is a candidate who is married, I strongly want their spouse to be part of the sermon because they’re going to have good days and bad days. How the consultants are supported at home will be critical.

Do you tend to hire from within the industry of do you hire from the corporate side?

Most of our hires come from the corporate side. Again, what we do is not rocket science. I’m looking for the caliber of the person - the heart of the person - the work ethic of the person, not someone who is just trying to climb a ladder. That is very important to us. I also believe it lends credibility to our clients when they are across the table from someone who has been in their seat.

As you know, a lot of firms hire consultants from within the industry because they bring up a certain book of business. But you’re not really doing this.

This has not been our focus and quite frankly it hasn’t been a pain point for us. We all wear business development hats, yet none of us are career business developers. But they have

credibility in sitting across the table, if you will, with a prospective client and creating an understanding of what they’re looking for.

Human Capital Group boasts a very high rate of return business. Aside from just doing great work, what additional measures do you employ to improve the overall client relationship which helps foster a higher repeat business rate?

I think there are many factors. First, insure they have a great experience; that’s job No. 1. If they have a good experience, then future business and references will follow. Second, stay close to your client partner (but don’t be a pest), because we really are partners focused on driving business results. They appreciate the fact that we are not beating on the door waiting for the next piece of business. And quite frankly we don’t need to be doing this. It is a delicate balance of respectfully being close, but not too close. Last, don’t be afraid to ask for referrals.

Today search firms are considered more partners versus just an organization that fills positions. Describe the difference between the two?

For myself, having been in an HR executive role in the past and having been on the other side of the table, I realize that when someone engages a firm like ours or our competitors, the person making that decision is taking a huge political risk. If they don’t engage the right partner and really have a partnership versus a transaction, it could reflect negatively

on them internally because of their decision-making ability and how they are using the shareholders assets. What we do for our clients should say, “We are not just trying to get the next check.” In other words, we should really be concerned about the longevity of the business, not a transaction and that is what forms great partnerships: when the client believes that you were thinking more about their benefits than your own. If we help our clients be successful they are going to help us be successful, not only with repeat business, but more formally with referenceable business.

Assessing internal candidates through a management audit process has become almost a required part of the process today. How does Human Capital Group approach these types of assignments and how valuable is it to benchmarking against external candidates?

Well it starts early in the process with verifying that there are, in fact, internal candidates in play. It’s all about understanding, from the client’s perspective, if they are really considering internal candidates or is the client doing it more as an exercise. If that is the case, we would coach the client to have the courage to have the tough conversation with the internal candidate. Don’t lead them through an internal screening process if you already know they are not being considered. We think it is important not to lead somebody on. But some of our clients have engaged us with full knowledge



that they have a very strong internal candidate, but as good stewards to shareholders and investors and, even with the internal candidate, they still engage a search partner like us to conduct the national or sometimes global look to present a slate of candidates. At the same time we are also looking at the internal candidate. We then give our recommendation to the client. We are being compensated either way so we are not hired to push the candidate we are bringing to the table. We want the best solution for the company. One client, in particular, has engaged us on three searches: a COO, a CIO and a CFO with a strong internal candidate in play. Our objective was to validate for the CEO and the board who is the best long term candidate so they

can make an informed decision. They want the best thing for the company overall. And it takes an insightful CEO to make that investment.

Is there always an internal candidate on the short list today?

We go through the exact same process with internal candidates as we do with external candidates. But the beauty for the client is they have first-hand knowledge of their internal candidate. It’s hard to put a price on that.

We see many more search firms today involved in complementary services like compensation consulting, management audit or online recruitment. Do you think this adds to the overall relationship?

I think any company, in order to be successful, must have a few core

competencies. I think anything else is going to lead to a loss of focus on those core competencies and dilute focus and results. Our core competencies are retained search and leadership consulting, but we have strategic partners that we also introduce our clients to for services like compensation analysis or outplacement assistance. We get close to the process but we need to be sure that our clients know that the other firm we are recommending is a valued and trusted partner. They are not employees of ours, or part of our firm, but a firm that we trust to assist our client and we make sure that the outcome that partner provides is a high quality outcome. Otherwise we obviously won’t bring them to the table in the future.

Excerpted with permission from Executive Search 2013: State of the Industry Report (U.S./Americas).

To order a full copy of this nearly 150-page talent acquisition study please contact Christopher W. Hunt via email at [email protected] or by telephoning 203-252-7302.

Digital reprint for humancapitalgroupinc.com website is provided with permission of HSZ Media, LLC. © 2013 Copyright HSZ Media, LLC. All rights reserved.


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Retained Search State of The Union