Myth #3: HR Orientation includes all the On-boarding Needed for New Hire Success
Many companies spend hundreds of thousands of dollars on complex onboarding plans that all too often require an unrealistic commitment of time and effort from several busy individuals. One of the foremost myths in recruiting is these “one-size-fits-all” plans ever actually work. The truth is they are rarely successful. All companies include orientation, but orientation is not actual on-boarding.
Retained executive search consultants are experts in this area as our reputation is dependent on new hire retention. An on-boarding plan must be simple and easy and require a minimum amount of time. As the executive recruiter has already defined the team profile and discovered how the new hire’s skills and behavioral traits will impact the team he/she will work within, it is a matter of producing two documents.
Good On-boarding Plans are Not Myths in Recruiting
The Personal Action Plan, used by the new hire, right at the start is based on conversations between the new hire and his/her immediate supervisor. After consultation, the new hire has an action plan to not only meet the objectives of the role he/she were hired into, but provides self-development that will allow for career growth, utilize the new hire’s strengths, and work on their weaknesses. A second document, the Mentoring and Coaching Plan, is used by the actual Hiring Manager. It was designed for that new hire, not a “one-size fits-all”.
What is the result of orientation that uses an expensive all-encompassing on-boarding? Waste of valuable time and little to show for it. The result of a retained executive search firm’s personalized on-boarding plan? Streamlined efficient means that results in fast assimilation, quick productivity, and longer retention.
Myth 4: HR and/or Hiring Managers Should Always Make the Offer
Another of the myths in recruiting is that HR makes the offer as that is part of their job function. Often, we see a hiring manager or HR extend an offer to a candidate who would have helped the manager’s company and career enormously – only to receive a turn down. In many instances, the offer fails to emphasize the specific elements of the opportunity which are of greatest interest as well as fail to address the aspirations and goals of the candidate. These quality performers are not actively looking and may need to be “sold.”
It is so frustrating to watch human resources and hiring managers think that THEIRS is the ideal company, opportunity, and offer and that passive candidates should be 100% sold into the opportunity. The fact is often HR low balls the offer or insist they be the sole negotiator. I’ve got news for you – great candidates don’t believe you; they are not going to work for you, and really it is rather insulting to them.
After all they are considering working for the actual hiring manager. While there are various reasons why good candidates are open to making a change, the fact is that virtually none would be comfortable sharing those concerns with an internal recruiter. It is extremely frustrating when an executive recruiter must come in to save the day on a turn down. It’s gotten to the point that at NextGen we simply will not accept a loss and insist in our contract that we make the offer and close.
Professional recruiters have great expertise in developing in-depth individual relationships with the candidates they present. As part of a professional recruiter’s service, they will provide the candidate’s primary motivators to making a move – and by advising the client on the compensation plan in the offer and making the offer verbally acting as the go-between thereby reduce or eliminate turn downs, and assure the manager of securing the best talent available.
Who Makes the Employment Offer – Myths in Recruiting
While companies do experienced turn downs, retained executive recruiters rarely do. We know what it will take to get the offer signed and when a candidate appears unreasonable, retained search forms have the experience and skill set to pull the offer when needed and get the candidate won over by addressing their concerns,
In the final part of this series, we’ll look at the biggest in the myths of recruiting, which is that executive search, specifically retained search fees are too expensive. In that article, we actually lay out why recruitment fees based on performance and delivery by the search firm, the hire, and the success of a hire that meets or exceeds the objectives of the role is far more cost effective than any other means with the rare exception of a great referral.
In the first and second articles of this three part series, we discussed the differences and utilization of HR, internal recruiters and executive search firms. In particular Part 1 reviewed unearthing passive candidates and vetting, while part 2 looked at onboarding and negotiating offers. In conclusion, we discuss how retained executive search actually provides affordability of retained search fees.
Myth #5: Retained Executive Search is too Expensive.
Retained executive recruiters report that many of the companies that can most benefit from their services employ internal recruiters. This may lead to the belief that utilizing retained search firms when internal recruiters or HR people are employed is not cost effective. A simple cost analysis will show otherwise. Consider the combined cost of salaries and benefits of HR personnel and internal “recruiters”, as well as the time that HR people spend doing non-productive interviews with unqualified candidates. These direct and indirect costs are substantially higher than paying out a one-time fee for an executive recruiter’s services.
Executive recruiters eliminate the time and expense required by a firm to find, hire and train a new internal “recruiter”. And any truly successful in-house recruiter will soon leave his salaried position to become a successful external executive search consultant. Additionally, your chances of securing a long-term contributor are much better if an experienced executive search consultant is involved. Studies have shown that a bad hire costs companies three times more than an employee’s annual salary.
many times, HR or internal recruiters will give the same search to several contingency search firms, in the hope that multiplying the quantity of resumes and applicants will result in something that sticks to the wall. What they fail to realize is that since the companies have no skin in the game, contingency recruiters research and send the same candidate resumes to everyone of your competitors at the same time. After all they only receive a fee if a candidate they present is hired, At the same time, the job posting is duplicated across the Internet on job boards and emails making it seem like their may be an issue with the quality of the opportunity and /or the company.
Retained search firms never use job boards. They unearth the best candidates, vet and assess and deliver a shortlist of 2 to 4 finalists to consider. With retained executive search firms, their work isn’t done once a candidate has been placed successfully. A guarantee covering the candidate is often one year; at NextGen we offer a 24 to 36 months replacement guarantee – far exceeding the probationary period. Seasoned recruiters make a point of periodically checking in with candidates that they have placed and will share any concerns with the hiring manager. This is invaluable information and directly contributes to a long-term successful employee, longer retention, and a highly productive staff.
Success Based Recruitment Affordability of Retained Executive Search Fees
Finally, many retained executive search firms have gone to a performance based (or rather success based) fee structure. While the initial deposit can range from ¼ to 1/3 depending on the role, usually the 2nd invoice occurs once the shortlisted candidates are delivered and scheduled for in-person interviews.
The final invoice occurs upon hiring one of those candidates. For the senior executive level succession bench, the final invoice can occur up to one year later dependent upon the new executive meeting their MBOs.
It’s a win-win for the company and a good retained search firm will not look at it as a gamble on money, rather confidence in the placement they have made.
Internal recruiting can be a good solution to filling l=lower toi mid-level non-critical positions. They can screen the candidates that apply via the company portal and can provide hiring managers with candidates for lower end roles. However, for critical and key roles, it is an excellent and necessary business decision to utilize the services of a highly skilled retained executive search firm, especially one that has expertise in your industry and knows your market.
Final Analysis on the Affordability of Retained Executive Search Fees
The cost of a bad hire is often 2 to 3 times the salary paid, and it doesn’t stop there. It’s not just the loss of time and the need to hire a replacement but other aspects of failure that occur
- Loss of momentum in a product or service launch into the marketplace which occurs in bad hires within R&D, product management, marketing, sales, and sales engineering
- Failure to meet customer needs and reduce customer acquisition costs when the wrong software, hardware, or R&D engineers are hired
- Failure to properly implement a strategy when a functional leader role is a bad hire.
- Failure to meet maximum goals or M&A or IPO when the wrong CFO or SVP is hired
- Failure to meet sales targets and expand market share when the wrong CMO or VP Sales is hired
- Failure to meet stockholder and investors ROI when a bad CPO< CDO, or CEO is hired
Whether it is a key sales, engineering, operations, functional leadership, or senior executive role, a quality retained executive search firm actually SAVES you money in the long run and brings forth shortlist of candidates that can meet and most often exceed the objectives of the role. Therefore the affordability of retained search fees is evident they pay off in the long run.
Executive hiring managers depend on the quality of their people to achieve goals and implement strategy. A better understanding of the skills and capabilities of executive recruiters can enable any hiring manager to make better hiring decisions by increasing the quality of their hiring decisions, and thereby enhance their own career!
Some executives are aware and take full advantage of the best possible means of identifying and selecting top quality candidates for critical staff openings. However, many do not. Frequently, this stems from myths regarding the merits of utilizing the services provided by topflight retained executive search firms. By a better understanding of these realities, hiring managers will dramatically improve their ability to secure the most qualified candidates in a timely manner.
In the first part of this series, we’ll explore the myths behind sourcing exceptional talent, the differences in the screening and assessments methods used by internal HR and talent acquisition groups, how that is done by experts in retained executive search, and the pros / cons of behavioral testing, and how they impact the ability to make better hiring decisions.
Make Better Hiring Decisions Start with Finding the Right Talent
Myth # 1: Companies Often Unearth the Same Talent that Executive Recruiters Do
With the rise in popularity among HR and internal talent acquisition in the use of online job boards, job aggregators, and networking platforms, many companies mistakenly believe that these sources contain the same talent that can be found through retained executive search firms.
This belief couldn’t be further from the truth. Good executive recruiters don’t post ads on job boards to find qualified applicants. Instead they focus on specific industries and even specialize by types of positions within those industries. The benefits of doing so are enormous. It allows them to invest tremendous time and energy forging relationships with high performing candidates within these niche markets, learning the types of positions in-demand people would see as advancing their careers.
Professionals who genuinely excel have neither the time nor desire to peruse online job ads or to respond to the dozens of email inquiries sent by internal recruiting staff. It is only when an executive search consultant personally approaches them that the best people take the step to becoming available to discuss an opportunity.
Retained executive search consultants invest countless hours establishing unique connections and building relationships with key performers. These connections allow access to talent pools built over many years…and which are available through no other sources.
This, along with the ability of these search consultants to carefully screen and evaluate the best candidates, is what allows them to bring the strongest talent to the table – those “A players” at any level who produce 8 to 10 times more than the next level of “B players”. Instead companies continue to rely on job boards, career sites, and networking platforms that will never find the outstanding quality of talent that retained executive recruiters can provide.
Myth #2: Internal Staff can Access and Vette Candidates as well as an Executive Search Firm
While this belief is prevalent within many companies, a thoughtful analysis will prove the opposite. Retained executive recruiters make a living by finding talent that companies cannot find on their own. While in-house resources may be effective for lower level and even some middle level roles, when it comes to functional leadership or key critical roles, retained search firms are not limited to C-levels. it makes sense for hiring managers to give themselves every opportunity to interview the very best candidates to make better hiring decisions.
Internal recruiters typically spend their time vetting applicants who apply or can be found through online portals. Think about it – in a less than 4% unemployment world we live in, the best candidates are simply not found that way. Retained search firms focus on finding superior candidates who are successful in their present situation and can show similar expertise, accomplishments, and skills relevant to the role you need to fill. This very different methodology results in a very different level of candidate.
A Solid Assessment Method Enables You to Make Better Hiring Decisions
Moreover, retained search firms look at many other factors, such as discovery and validation of candidates’ industry relationships – with internal customers, as well as suppliers and eternal customers. In addition, seasoned executive recruiters do not focus on “corporate culture”. Why is simple. Each team that a candidate will be hired within is unique.
Therefore using psychometrics to discover and measure this team members as stakeholders of the role allows the executive recruiter to measure values and motivations, real and situational communications skills as well as the traits within conflict resolution, problem solving, and decision making. This Team Profile allows executive recruiters to then conduct behavioral interviews and scientific testing of potential candidates to make sure they are only a role fit, but a team fit as well.
Finally, the ability to call proven performers with direct competitors to discuss career options is a significant factor in what sets external professional recruiters apart from internal recruiters or HR people. Having the ability to reach out to these peak performers offers hiring managers access to highly-sought-after candidates they would never see otherwise in order to make better hiring decisions
In part 2, we will discuss HR Orientation including onboarding process that do and do not work, as well as pros and cons of having human resources and/or hiring managers making employment offers.
Why are more and more forward-thinking employers ditching recruiting firms that produce, to put it bluntly crap. Most firms that have spent the time to really investigate the search marketplace have learned that Contingency, RPOs, and traditional retained search firms need to be ditched in favor of the 21st century success based recruitment?
In a 3.5% unemployment rate, most Hiring Managers know the undisciplined, inexperienced, and average “C players” are predominant on job boards. In addition, with job aggregators, job openings get overexposure to the point the company suffers in public relations and branding. same goes for RPOS and contingency search firms – the more they re-post the same job posting, the worst candidates are revealed.
Ditching Recruiting Firms that Fail to Produce
You have certain objectives you want a new hire to meet, for most C-level executives there is not a cookie cutter template to be applied to their position. Your target market are passive candidates, those that would never read job postings that have been picked over by every Tom, Dick and Harry, they simply are not actively looking, What interests passive candidates? A new challenge, a different product or service portfolio, location, company size, and more. A typical job posting showcasing responsibilities and requirements is a no enthusiasm road map. It is in reality a robotic drone of words strung together that entices only the unemployed or average active job seeker.
Even the traditional retained search model, which does produce much better candidates, is going by the wayside. More and more companies are ditching recruiting firms that are traditional retained search models.
While employers understand the deposit to initiate a search, they expect results. Most have a 90 day to 6 month replacement guarantee. But they collect all the fees within 90 days regardless of outcomes.
‘The new paradigm, which NextGen Global Executive Search has used for a decade, is a search should be success based in regards to the recruitment fees. Also known as a performance based search, after the deposit (which is a very reasonable percentage of the overall cost) the 2nd invoice is due upon acceptance of the shortlist and in-person interviews are scheduled. The final invoice is due upon the hire being completed.
Ditching Recruiting Firms with Compensation Based Fees
In addition, success based search fees should be a flat fee and not based on compensation. The reason is simple, in that compensation based fees can cause an increase in the overall recruitment fees during offer negotiations which is an inherent conflict of interest. As stated earlier the 3rd and final invoice occurs on the hire and is backed by a 24 to 36 months replacement guarantee.
The end result is both the employer and recruiter have skin in the game and the employer is confident that the majority of the fee is based on the recruiting firm meeting the objectives and a solid new hire. To read further on why companies are ditching recruiting firms and comparisons between contingency, RPO, traditional retained search, and success based retained search, download the PDF.
Choosing the best type of search firm makes all the difference in getting the best possible hire for your team. According to Leadership IQ, 46% of new hires will fail within 18 months. The statistics only get worse. Take a hard look at the expanded facts as presented by Dr. John Sullivan on ERE. About the 6 Ugly Numbers Revealing Recruiting’s Dirty Little Secret. Choosing the type of search firm to work with is not an easy choice. It is astonishing but not surprising. When the agenda is how cheap can recruiting be done, the results are obvious.
Instead of looking deeply at the process a recruitment firm uses to identify, assess, and deliver potential candidates. When filling a key role, the cost of the fees is the first mindset. What you should be thinking about is the end game – the services offering differentiation and the results.
Does the search firm accept verbatim the job spec verbatim?
- brief overview of the company culture, benefits, and market position. Rather than on the opportunity (USPs) of what this role will do to elevate one’s career. As well as the challenge being offered to entice interest
- Job specs focus on responsibilities when the focus should be on short- and long-term objectives with timelines.
- Too much emphasis on boiler plate requirements including skills and experience. The focus should be on prior directly related accomplishments & key performance indicators. What the new hire has done and will do with those skills and experiences. Not simply the number of years he/she has had them.
Simple economics is that the supply of good candidates is low while the demand to fill key roles is high. As such, using job boards or career websites means that only active job seekers. Sadly in today’s market that is most often the underemployed and unemployable. Because with low unemployment rates, good candidates are very passive.
They don’t look at job postings and they rarely respond to recruiter type emails. Those who are happy with their role, current employer, compensation; as such they are rarely ever looking for a job. They are open to a challenge, the opportunity (unique selling points), possibly location, product or service, and company size.
Does the search firm have a verifiable track record of new hire retention?
It seems odd to me that one would not ask for proof of this. Case in point is I have a direct competitor who is larger than my firm with more offices. We both have done retained search for the same client. We have each placed 3 at the C suite and VP levels. All three of my competitor’s placements departed within 2 years while the three we placed are not only still there at 3.5 years but have been promoted and are meeting or exceeding the objectives for their respective roles.
What makes the difference? The search process, assessments methodology, using psychometrics and the type of relationship. My competitor interfaces with and is managed by the client’s HR group while we work directly with Executive Hiring Managers. One more thing – look at the firm’s replacement guarantee clause. If it is ranges from 90 days to one year, that tells you they don’t stand behind their work. At NextGen Global, we stand behind our work with a 24 to 36 months replacement guarantee.
Does the search firm use science based methods and AI to identify team dynamics?
Let’s go back to that Leadership IQ study where it found that not only do 46% of new hires will fail within 18 months, but at the executive level it is for lack of interpersonal communications skills. The truth is EACH team is unique. By creating a composite of the team profile measuring values, motivations, decision-making traits, conflict resolution skills, relational communications traits, leadership and people skills, the recruiter can then compare the potential candidates’ capabilities to make sure they are either a strong or potential match. Choosing the type of search firm as you can see is part science, part experienced based skill set.
Choosing the type of search firm based on niche specialty
We pride ourselves on being startup experts. While we do perform retained and succession bench search for one role at a time, over the years we have partnered with an outsourced HR and payroll services firm to offer Team Building talent acquisition management services for startups with less than 25 employees in the initial startup phase.
We save clients hundreds of thousands of dollars while filling key roles they need to meet customer or product/service design and roll-outs. Our work is primarily with startups, mid-cap, and spin-offs. We rarely recruit for publicly traded companies or companies large than 5k employees. The reason is simple.
As entrepreneurs ourselves, we understand how VC and PE forms work, we work often with board members in recruiting entrepreneurs, risk-takers, movers and shakers who focus more on the value proposition of equity and generous stock options based on meeting performance objectives. For large companies the latter are generally limited to a select few senior executives.
The larger the company, the less effective we can be as they tend to want their HR or TA group “manage the recruiter” demanding we adapt our search process to conform to theirs. This is what we call “tying one hand behind my back” syndrome. We turn down companies asking us to do that. If you are a large conglomerate or have more than 5k employees, it is best to go with a very large firm for most positions. However, if you are looking for a senior executive or functional leader who is a change agent, a turnaround expert, a solid risk-taking decision maker or motivator, for those roles your best bet is the smaller boutique search firm.
Two neat tricks to ensure your choosing the best type of search firm
- Look at the Linkedin connections of the recruiters you are considering. If you need to recruit a senior executive, does the recruiter have those connections with both your industry and with C-levels? If the need is to recruit a VP of Sales of a Director of Engineering, do they have those relevant connections”? You’ll be surprised to find most recruiters’ connections are with Human Resources and other recruiters which means they have few relationships with the type of people you seek.
- Does the recruiter have intimate knowledge and experience in your industry? Look at articles and posts they’ve written. If they are all about just recruiting or job seekers instead of Artificial Intelligence, Wireless, or whatever your industry is, how well do you suppose they understand your products, services, marketplace, or customers>
When you consider the cost of retained search look past the initial fee. Look at the results of the person hired via the firm. If the new hire assimilates quickly, is immediately productive, and meets or exceeds the objectives of the role, the cost of the search fee is irrelevant. And remember, good search firm ONLY recruit “A players” who by definition produce 8 to 10 times more than “B players”. It’s really a no-brainer in the value.