Small Firm Forum

Moderators:
Susan Chadick — CEO, Gould, McCoy, Chadick, Ellig
David Friedman — Principal, Bridgewell Partners

Lively discussions took place at the Small Firm Forum on Wednesday morning. The forum received an outstanding turnout and key topics addressed during this session included the Overall Executive Search Market, Client Expectations, Accountability, Growth Strategy and What Keeps Search Consultants Up at Night — all from a small firm's perspective.

Thoughts that were shared among participants included:

Topic 1: Market — What is different from a year ago in the market? What is most challenging today in the market, as compared to a year ago?

• Market Easing — opportunities for search are not necessarily in the most senior-level searches, but director-level searches are increasing steadily.
• Clients appear to be pushing back on retainers, increased competition among search firms.
• A limited supply in talent is resulting in an increase in compensation, higher salary expectations from candidates leading to an increased prevalence in counter-offers.
• Pressure from clients to move toward contingency pricing and/or to add contingency elements, particularly in Asia-Pacific.
• Clients are building better relationships with search consultants — wanting to talk in a different way — covering the full scope of talent, search consultants are being brought in earlier to help retain their best talent and also to talk about succession planning earlier in the process.
• Candidates are raising work/lifestyle balance issues.
• Clients are increasingly presenting strategic growth plans which add depth, more considerations and higher difficulty to the search.
• Overall, this year is definitely better than last year; however, higher demands from the client and candidate have made the work more difficult.

Topic 2: Client Expectations — How are you adjusting your business or business model to deal with changing expectations? Are clients asking you to go into the "gray area" on professional practices, before or after winning the mandate? If they are, what have you found that works best to resist (or do you comply)? How are you bridging the gap between your view of "partnership" and your client's view of "partnership"?

• Reference to AESC's Code of Ethics and Professional Practice Guidelines.
• Competitive pressure to present a slate of candidates before a search begins.
• Clients consistently requiring higher speed of delivery (search firms may want to assess where in the process the most delays occur) and constant oral and written reporting (quality of life issues also become a factor for search consultants who often offer their mobile numbers to clients and who are in constant contact with them).
• Clients often question "how much internal information should be shared with the search consultant."
• How to bridge the gap to create a true "partnership" => put all of your cards on the table and be honest with expectations.
• Think about your firm's "process" (particularly regarding client reporting and speed of delivery); do consultants have a process because of the "process" alone or are there reasons why certain things are done the way that they are?

Topic 3: Accountability — When meeting with clients about potential new searches, they are increasingly asking for your performance on metrics. How are you responding to the need to have the metrics they ask for, when they may each ask for slightly different ones? How are you working to improve your performance on the most important metrics? While working on a search, what kind of performance measures are you being asked to report on, and with what kind of frequency? Is this more intense than you have experienced in the past? How are you responding? What role do you play in retention once a placement is made? What role would you like to play?

• Generally, when a search is going well, there seems to be less of a demand for metrics.
• Some metrics that are used include fail rate, retention rate, completion rate, repeat business, funnel numbers (no. of calls made, no. of calls who actually became live candidates, no. of total candidates and no. of diversity candidates), cycle time to hire, weekly status reports which included metrics and off-limits policy.
• Metrics tend not to be as much an issue with clients who are repeat business. Additionally, metrics come into play more often before you get the business as opposed to after you've already won the search.
• Regarding retention — within about 6 months, one can generally determine whether a placed candidate will make it or not.
• Quality Control — Member Example: a person at the firm, outside of the search, calls the hiring executive once a week to conduct a customer satisfaction survey. A report of this conversation gets sent to the President of the hiring organization weekly.
• Importance of Regular Reports to Clients:
• Improves Communication
• Increases Transparency
• Offers Client Feedback on a Scheduled Cycle
• Improves Client Satisfaction

Topic 4: Growth Strategy — What strategies have you pursued to grow? Does your growth include expansion of the focus/scope of your search practice; people; services and/or affiliations with providers of other services? What is your model for rainmakers vs. executers? How do you build compensation around each group? Have you turned executers into rainmakers? How?

• Areas of growth and opportunities have included interim management and assessment practices (in some cases they have been profitable and in other cases not).
• Growth Strategy via Acquisition or Merge — the success of this depends greatly upon your firm's "footprint" and correctly aligning your firm.
• Non-profit searches — while fees are generally lower, potential access to new business via the board of directors.
• Staff Growth — hiring the next generation of young consultants. Things to Consider:
• Industry Experience versus Search Experience
• Gauging Cultural Fit
• Unique compensation packages for Rainmakers versus Executors
• Offering flexible compensation packages for employees — customizing packages to accommodate their needs.
• Identifying Potential Search Talent — Member Example: This firm used to hire out of industry (professional services) but it generally did not work. Over time, they have found that there are certain traits that a search consultant must have in order to be successful, these are; instinct, ability and good business judgment.
• Success in Transitioning Executors to Rainmakers — Member Example: This firm had a higher success rate when hiring from industry as opposed to those with search experience. Typically those that have been from industry were formally candidates or clients at some point. They were then trained in search and all but one eventually became rainmakers.
• Proposed survey for Small Firms — what common traits exist in the backgrounds, experience, personality profiles of successful search consultants.

Topic 5: What Keeps You Up at Night?

• Capacity issue — whether our firm is under or over staffed.
• Is this the right time to think long-term (i.e. industry stability)?
• Work / life balance.
• Working with HR executives who are not knowledgeable.
• Fees / decreasing rates.
• Top Reasons for Client / Consultant Disconnect:
• Clients see hiring talent as a commodity.
• Clients do not view the relationship with a search consultant as a long-term investment.

Final Thoughts, Observations and Insight from David Friedman

• Overall Structure of the Industry — There are real environmental changes going on in the business that affect the way the game is being played. Speed has picked up significantly — via email, voicemail and other technology — and with this comes increased expectations from the client that the search process will speed up as well.
• Things To Think About:
• How can we do what we do differently and better without altering the fundamentals or the value that search consultants bring? How can we deliver it in a slightly different, possibly more innovative, way (i.e. leveraging technology)?
• With clients continually demanding speed, we need to adequately communicate the cost of delay versus the cost of finding the "right" person.
• How we can use metrics as a measure of our own performance — as a tool for individual improvement.
• Disciplined communications with the client can be an invaluable tool; be proactive in trying to keep ALL clients happy.
• How can we better understand and communicate our value proposition; we should also understand the value of saying no to the "wrong" clients.
• How do we better explain the value of partnership to the client? A true partnership results in => better fit, better retention and increased proactive behaviour from the search consultant.
• Clients seem confused in terms of the value of the search; in the long run, there will always be pressures from the client, but as long as clients see the value of search, the industry will thrive.

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