What Is an Executive Search Firm?
Plus, When and Why Your Company Should Use an Executive Search Firm
Have you ever been tasked with discovering the perfect candidate for an executive-level position? If so, you're aware the process of finding a candidate to fill senior-level roles is much more rigorous, time-consuming, and research-heavy than hiring an entry-level or middle management position.
When recruiting intermediate personnel, you’ll typically post on a job board or two, run the resumes through an algorithm, and review the remaining applicants for the best possible candidates. The process can range from days to weeks. However, when it comes to an organization’s most senior-level roles – from the C-Suite to the Boardroom – different strategies are necessary to find the right candidate who can lead an organization. The executive hiring process typically requires you to seek out the most qualified candidates instead of the other way around.
That’s where executive search firms come in. An executive search firm is a company that specializes in placing highly qualified candidates in executive-level positions across the public, private, and non-profit sectors. Executive search consultants seek to understand a specific executive position, define the core competencies necessary for a successful hire, and target several candidates that fit a distinct profile. Such positions include President, Vice President, CEO, CFO, COO, department heads, and more.
The Executive Search Landscape
The work of executive search firms can at times be confused with the services of contingent recruiting agencies. However, there are key differences in scope, methodology, process, and more, which differentiate these into two entirely different professions. In short, retained executive search firms partner with organizations to provide expertise in their industry or service, ultimately leading to the hire of a successful candidate.
Partnering with an executive search firm is not just a one-time transaction—it’s a long-term relationship.
For instance, if you utilize an executive search firm to place a new CEO, you’ll likely enlist them when you need a new CMO or CFO. Or, if your organization needs executive coaching, culture assessment, organization mapping services, or additional high-level solutions, you’ll likely re-engage your executive search firm.
Read more on the differences between retained executive search and contingent recruiting.
A Brief History of Executive Search Firms
Born out of traditional management consulting, the profession has a 60-plus year history and has spawned the creation of executive search firms worldwide.
In the period from 1870 to 1914 (the Industrial Revolution era), businesses dramatically changed, leading to the introduction of management consultants, a position created to help company leaders adapt to the demands of scale and the changing business landscape. Executive search evolved from the recurring need of management consulting firms such as McKinsey & Company and Booz and Allen & Hamilton to recruit the right executives who could implement a recommended strategy and solve a client’s problem. The first retained executive search firm, Thorndike Deland Associates, was founded in 1926 by Thorndike Deland Sr.
The end of WWII, a period between 1950 to 1973, saw businesses jumping on the opportunity to expand their reach, leading to a departure from the tradition of promoting from within. Leaders more frequently sought out experienced executives from outside of their organizations, enabling the growth of retained executive search firms.
Today, organizational leaders face similar challenges to those that led to the creation of the profession: disruption, rapidly evolving technology, shifting economic forces, and fierce competition for the best talent in the world. The value of leadership advisory services continues to grow as does the executive search profession in response to the ever-evolving world.
How an Executive Search Firm Works
Executive search firms can specialize in a variety of categories including industry, function, and service. They can also serve across a broad array of industries and functions. For instance, some firms specifically focus on placing senior-level candidates in the accounting, financial and private equity industries, while others may specialize in natural resources, energy/utilities, and transportation/logistics. Similarly, firms can niche down on a specific function or service such as CEO, CMO, or CFO positions. Executive search consultants are also poised to help organizations with new and emerging roles such as a Chief Information Security Officer, Chief Data Officer, or Chief Diversity and Inclusion Officer.
By partnering with an organization’s leadership teams, executive search consultants are primed to help businesses gain a competitive advantage in a fast-changing business climate. What makes executive search consultants a value add to leadership teams is the deep-level expertise in the industry and/or function along with the most tried and true assessment, coaching, and onboarding. Expertise in a specific area provides greater chances of a successful hire and a higher quality pool of candidates.
Check out the latest executive placements and appointments from AESC members around the globe.
When Should You Use an Executive Search Firm?
Below are just some of the instances in which your organization should partner with an executive search firm:
- If your organization is interested in placing the best of the best in an executive or board director role. Such a high-quality candidate would typically include those who aren’t actively looking for a new position.
- If your company wants to reduce the risk of a bad executive hire, which can cost a company millions of dollars and hours, as well as an impact on company morale, performance, productivity, and image.
- If your organization is interested in conducting a confidential search.
- If your company just created a new executive position and needs assistance defining the role and building a profile for the position.
- If your company wants to access diverse and out-of-the-box candidates who can quickly drive change and innovation.
The Association of Executive Search and Leadership Consultants (AESC) sets quality standards for the executive search and leadership consulting profession. Its members are the leaders in executive search and leadership advisory solutions.
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