Kyrie Irving is one of the best basketball players in the world, yet when he was traded to the Brooklyn Nets, it just didn’t work out. The soccer star Lionel Messi thrived playing for Barcelona for 17 seasons, but his performance was underwhelming for Paris Saint-Germain. These are a few of many examples of athletes unable to transfer their success to a new team. The same thing happens to leaders in organizations: They are qualified on paper, but end up being a poor cultural and strategic fit for their new company.
Where do things go wrong? Owners and CEOs who decide to go the DIY route on recruitment for high-level appointments often lack the network to handpick the right candidate or the internal tools to process a large volume of job applicants.
That doesn’t mean in-house recruitment cannot work. If the candidate has been sourced from a competitor or even a supplier on the advice of senior staff, there is a good chance you know how they will perform and that they will have good chemistry with management.
But owners and CEOs need to be honest with themselves about whether they have enough experience—and time—for this task. It is one thing to place a mid-level manager into a tactical role, but it’s another when you want to bring in a game-changer. It might be the new CFO who is going to occupy the hottest seat on the board. When you are looking to fill a significant role that can fundamentally change the growth and success of your organization, you might want to think again before doing it yourself.
THE PROBLEM WITH JOB ADS
When owners and CEOs go the DIY path to appoint leaders, they often put up job ads and tap into their network. However, they often won’t spend enough effort determining fit to team chemistry, organizational culture, KPIs, and responsibilities. They hate to admit it, but often they have a “feeling” to pick a candidate and say, “You’re enough.” The short tenure of many C-suite executives bears this out, with the turnover attributed to a lack of accuracy and alignment with job descriptions.
Many owners and CEOs are very entrepreneurial and tend to think they can figure it all out for themselves. But according to Gallup, companies fill management positions with the wrong talent 82% of the time. It is a poor indicator for high-level appointments. The problem with job ads is they invite a flood of non-qualified applications without necessarily having the technology to separate the good from the bad. From 500 applicants, only a small fraction will be evaluated. But what if applicant No. 478 is the top candidate?
Remember, it is not enough for a candidate to interview well. A much more rigorous approach is required, including conducting a range of scientific behavioral assessments to determine an applicant’s fit. If that level of sophistication is unattainable internally, the best option is to engage a recruitment firm.
RETAINED AGENCIES VERSUS COMMISSION-BASED FIRMS
One option is to bring in a contingency recruiting firm. But as good as they are at finding a high volume of candidates, these firms are motivated by placing somebody as soon as possible. They also market the same candidates to multiple other companies for the same reason—they are paid on commission.
By contrast, retained executive search firms take a consultative approach. They typically get paid in three installments: upon engagement, within 30 to 45 days, and upon placement or job offer acceptance. This allows them to spend a lot of time understanding what gap the candidate will fill in the organization structure. They will ask: What are the team dynamics? Are you in growth mode? Are you trying to solve a problem?
The other asset that sets retained executive firms apart is their use of headhunters to target passive job seekers rather than relying on unemployed candidates. When you are looking for the needle in a haystack, these are the agencies you want on the job.
HEADHUNTERS CAN SWAY THE BEST CANDIDATES
If I am looking for a CFO with experience in the consumer packaged goods industry, perhaps for a company with revenue in the $10 million-to-$100 million range, then the pool of qualified candidates will be small. It will get smaller still if I specify someone with a background in e-commerce in the southeast of the US. Once the parameters have been narrowed, the headhunter goes hunting.
After locating their ideal candidate, headhunters do due diligence by going through gatekeepers within their organization. This means building relationships inside the company to learn about the target before actually reaching out to the candidate with the job offer. It is a tremendous undertaking that yields a much higher percentage of qualified people, many of whom are not even looking for new employment.
Headhunters also keep discussions going all the way until the candidate begins the new job in case they receive a counteroffer from their current employer. Finally, headhunting firms act as trusted external advisors to the new hire as they navigate the first 90 days of employment. This form of executive onboarding significantly increases retention and accelerates the ROI from the appointment.
THE RISK NOT WORTH TAKING
Entrepreneurs succeed by taking risks, but it is not worth gambling on a high-stakes appointment. It takes a dose of humility to recognize when outside support may be needed. A headhunter can help you look at the bigger picture and provide constructive criticism about your preferred candidates, which is especially useful if the management team is reluctant to challenge their boss.
Retained executive firms are trusted by candidates for good reason. They feel that headhunters work for them—and to a certain extent, they do because a candidate’s success means they have found the right person for their client. In sporting terms, the ‘trade’ is a win for all parties as the appointed leader successfully transitions to their new team.
Robert Newland is CEO of Newland Associates & HRfrenzy. He’s an expert consultant and public speaker on executive search and talent strategy