Most job hunters think that retained search firms
operate like employment agencies, matching job applicants to jobs.
Retained search firms are consulting firms retained
by employers and are structured like the Bains and McKinseys of the world, or
like law firms, accounting firms and other professional service firms are.
There are two types of retained search firms: Major Firms
The back-office structures of each is quite different.
have multiple offices, operate nationally or globally, and have a
hierarchy that is similar to one you would see at a large law firm,
accounting firm, consulting firm or other professional services firm.
To oversimplify it, these firms are composed of rainmakers/project
managers and search consultants. The lead consultants, called Partners
or Managing Directors or sometimes Principals and Vice Presidents,
bring in work and then manage it. The lower-level consultants are
called Associates, Researchers or perhaps Principals (at firms where
the senior consultants are titled Partner or Managing Director).
rarely have been search consultants for their entire careers. They
typically have held senior executive roles in their past lives,
generally in the industry in which they specialize.
are frequently freshly-minted MBA’s, or they could simply be new
entries to the search world, hoping to eventually move up. The role of
an Associate varies depending on the firm’s structure and the workload
of the partner for whom he works. Duties often include basic grunt
work, like in-house database searches and developing call lists, but at
some firms includes most of the search process, including interviewing
candidates. More often than not, the Associate is the one
who makes the initial calls to prospective candidates. These
prospects are developed by reviewing the firm’s database and by using
external databases to identify prospects working in the client’s
industry who are not already known to the firm. Normally, the
Partner who manages the search makes about 25 calls to people in her
network, and interviews the candidates developed through these contacts, plus
the candidates identified by the Associate. If the Partner has a
heavy workload, the Associate may do most or all of the candidate
range in size from solo shops to perhaps as many as ten consultants and
associates. These firms tend to be more industry specific, and have one
or just a handful of offices. Being smaller, they have smaller
databases. Despite the smaller databases, being smaller can be a major
advantage in the retained search business, however. Since retained
search firms can't recruit any employee who works for a client company
(whether the firm was responsible for that person getting hired there
or not) of any recruiter at any one of their global offices, the major
search firms often have their hands tied - Korn Ferry will have
thousands of clients off limits. The boutique firms can reach out to
far more prospective target companies and candidates (to learn more
about the off limits rule at search firms, click here to read The Off-Limits Rule: Retained Search Firms Can't Recruit from Client Companies).
Some consultants at
boutique firms handle the entire search themselves, including making
cold calls to candidates. Others employ in-house researchers/associates
to make cold calls, or outsource these calls to external research firms.
Most search consultants have cultivated several specialties, but by the
same token, most will opportunistically work outside of these
specialties. Be wary of believing that the specialties listed in the
Kennedy Guide or even on the firm's website represent the full gamut of
industries in which they work. Although some firms refuse to step
outside of their specialties, most will take on any search that they
feel they can comfortably handle.
The Process: A
retained search begins with the lead consultant meeting with the person
who engaged the consultant (generally, a retained search firms is
engaged by the chief human resources officer, the CEO or the division
head) and the hiring manager. In some cases, they will also meet with a
variety of other people who will be interacting with the new executive,
including future subordinates, and the heads of other functional areas
within the organization.
At a large search firm or at a boutique at which someone other than the lead consultant has candidate contact, an
Associate or Researcher often accompanies the lead consultant on this first meeting.
During this initial meeting, the firm develops a good understanding of
the corporate culture, what the hiring manager is like, and the
specific requirements needed in the position they will fill, especially
if they haven't served this client in the past. The client views the
search consultant with trust, just as they would their attorney or
accountant. If a firm regularly works for a client, the client will
often discuss long-term strategy and future personnel plans with the
search consultant. They will at times ask the search consultant for
their opinions on various staff members that they meet during these
presearch interviews as they plan their organization’s future
do retained search firms find candidates?
The first place a retained search firm turns to find candidates is
their in-house database. Many of these people are known entities –
candidates they have presented on previous searches, candidates who
have been interviewed and not presented, and people who have been good
sources or are otherwise known to the firm through past projects. These
also contain resumes of unknown candidates that have been emailed or
mailed in. The known entities are far more likely to get a call.
the client company:
The search firm frequently is asked to interview and rate internal
candidates and compare them to the external candidates that they
develop. The firm is paid the same fee, regardless of whether an
internal or external candidate is hired. Sometimes, this is done merely
to make an internal candidate feel good; the client has decided that
they are going to hire from the outside, but they need to make internal
staff members feel that they have been given their due. In other cases,
the client plans to hire the internal candidate from the start,
and they have brought in the search firm and interview the external
candidates they serve up to prove to their shareholders or board that
they are doing their due diligence. There are no hard and fast rules in
search, and the process is unpredictable.
referred by the client or who the client asks the search firm to target.
The client refers candidates who have come to them or who they have
identified through internal referrals to the search firm for
evaluation. They also will ask the search firm to target certain
companies, and often will request that the firm contact specific people
at these target companies that they know but feel uncomfortable
The second place the firm reaches out to is their network. To learn
more about how to become a part of a retained search firm's network,
In the parlance of retained search, cold telephone calls to unknown prospective
candidates are called research. Search firms identify candidates to
call cold from all manner of sources, including industry databases,
trade show directories, web research and LinkedIn, among many
Resumes: a minority of searches are filled through resumes that
are e-mailed, mailed or submitted through the firm's website.
In the past, retained search firms almost never advertised
positions. This has changed somewhat, although the vast majority
of searches are filled through the techniques mentioned above. Ad postings could
appear on the executive job sites (ExecuNet, Ladders,
RiteSite, or Netshare)
or, less often, the major job boards
Firms working on nonprofit or education jobs
may be required to advertise in publications such as The Chronicle of
Philanthropy or the Chronicle of Higher Education.
Panel of Candidates Presented:
Most search firms present a full panel of three to six candidates for
interviews to the client. The firm will never bring a bagful of 25
resumes to the client and ask them to pick out the people who they are
interested in meeting – that is the way a contingent firm operates.
Clients expect the search firm to fully screen candidates and bring
them a limited number, all of whom are well-qualified.
Some firms do present
in serial, one-at-a-time, as they develop them. I’m not a fan of this
approach, because the first candidate in tends to get butchered, and if
the client, after eight weeks, decides to go back to candidate #1, he
is often no longer available or interested.
of candidates contacted during the search varies, but the number tends to be large.
Few firms can put together a panel from 25 contacts, even if all of
those people are already known quantities. This may come as a surprise
to you if you are hunting for a job, but most qualified candidates say
no. Relocation is a major factor, as are all the other components of a
job. Client requirements are usually extremely specific, so it takes
digging, and often requires contacting 75 to over 200 prospects to put
together a full panel of candidates.
Out of this group, the
consultant or her associates will interview six to twelve candidates to
pull together a full panel.
interviewed in person. Candidates
are interviewed face-to-face if possible, although more firms are
depending on videoconferencing these days to save time. Some of these
meetings take place at the firm’s headquarters, with the candidate
driving in or flying in (at the client’s expense). In other cases, the
consultant meets the candidate at an airport or other site near the
(A word of warning: Don’t take it for granted
that you are a stellar candidate and certain to be presented to the
client because the search consultant comes to you. Taking such a
meeting lightly, and thinking that the search consultant wants to get
you hired to get her fee is a major mistake that too many candidates
make – you are being evaluated every minute that you are speaking to a
search consultant. I can’t tell you the number of times I’ve
spent a day’s time traveling to meet a candidate who acted with
arrogance, dressed inappropriately, came late, took cell phone calls
during the interview and generally acted as if I should be happy to
represent him to my client, and I passed him up because of this
by some search consultants before presenting a candidate to the client,
and others save the detailed referencing for when the client is
prepared to make an offer. Indirect referencing occurs throughout the
search, however, as the recruiter speaks to people in the industry,
asking trusted sources for candidate recommendations. Don’t, however,
fear that the recruiter will blow your cover by calling around to
people he knows, mention she is talking to you about a new job, and try to learn more about you if you are a prospective
candidate. Retained recruiters are very good about keeping candidate
many searches does a consultant handle at a time? A
boutique consultant who handles the research calls himself may complete
as few as six or eight searches a year, while a partner at a major
firm, with her team’s assistance, may complete 25 searches. That means
that a consultant may be working on as few as two searches (less if he
or she isn’t busy at the time) and perhaps as many as ten (rare, in
today’s economy). That means that it is a needle-in-the-haystack chance
of you calling a search consultant at random and her having the perfect
position for you. And remember, perfect is judged harshly in the world
of retained search – we are expected to hit our client’s specs exactly,
and your evaluation that you are yourself well-qualified is one that is
rarely shared by the consultant who is seeing a much broader array of
candidates and understands the client and the position far better than
you possibly could.
are firms paid?
Regardless of whether the firm is a major firm or a boutique, the
traditional fee is one-third of the first year compensation
(compensation = salary + bonus/incentive, with benefits excluded).
Expenses are billed in addition. The fee is traditionally paid in
thirds, with the most common setup being a third of the fee due
upfront, a third due after 30 days and a third due after 60 days. The
full fee is often paid before the search is completed, and the fee is
normally not contingent upon someone being hired, although the firm
normally is committed to continuing on the project until the position
In this economy, there are
some variations in the fee percentage and the payment schedule,
although far less often than you would think. There are
reports/rumors that some firms are offering multi-search discounts to
clients, with fees of 25% to 30% per search. There are also some
firms (and some firms have always operated in this manner) that have the second payment due on presentation of candidates to
the client, and the final payment due when the candidate is selected
are also some quasi-retained search firms that are really operating
primarily on a contingent basis. They take a small retainer – perhaps
$5,000 – and get the remainder of the fee on contingency. These firms
often do not meet with the client or the candidates personally, nor are
they brought into the client’s sanctum sanctorum. They will know less
about the client and its strategy. They will likely be the only search
firm working on the project, but the client is often free to review
candidates that they develop themselves, and if they hire on their own,
the search firm is paid only their $5,000 retainer in many, and perhaps