Hidden pitfalls for HR in executive search

HR PROFESSIONALS tend to marginalise themselves by not understanding how executive search firms operate, and as a result, are open to exploitation from unscrupulous firms

HR PROFESSIONALS tend to marginalise themselves by not understanding how executive search firms operate, and as a result, are open to exploitation by unscrupulous firms.

Speaking on the release of a recent study into the practices of executive search firms, Duff Watkins, managing director of Cornerstone International – Australia, said many HR professionals are still too busy bogged down with “more metrics, increased audits and legislative scrutiny”.

“Many HR people are shuffling papers instead of dealing in human capital. The papers can wait, the human capital can’t. Learn how your suppliers operate – it’s important,” he said.

It was also important that HR managers ask the right questions of executive recruiters, Watkins said.

“No HR managers have ever enquired about my potential conflicts of interest … Instead, every HR manager asks about my experience in their industry, which is the least important part of executive search,” he said.

“When a search firm tells you that it has heaps of experience in your industry, it simply means they work for your competitors. What makes an HR person an HR professional is their ability to ask the right questions. Few do.”

Bill Guy, CEO of Cornerstone International Group, said global economic recovery has been slow, and this brings out the worst in those who claim to be the best.

“These so-called rainmakers are under much pressure to sell in order to keep their firms afloat,” he said.

“The warning I give HR executives is: beware aggressive sales people who represent big recruiting firms. They’re under the most pressure to produce because they have the highest overheads.”

Executive search: the dirty secrets

More than 5,000 executive search firms dot the globe and employ modern sales and marketing techniques, according to executive search and HR consulting firm Cornerstone International. A recent international survey of more than 100 CEOs found that, unfortunately, some firms cut corners in pursuit of revenue. CEOs cited a number of ethical issues of concern for HR practitioners:

Limited off-limits: Executive search firms traditionally observe a two year off limits rule, and do not recruit from a client for two years after working for that client. Some large firms, however, have so many clients across so many industries that they simply run out of targets. They then 'cannibalise' their clients.

Combining outplacement with executive search: Even when an outplaced candidate matches the specifications of a search assignment, the search firm is obliged to locate more candidates. Otherwise, legitimate evaluation of candidates is impossible.

Inadequate research: Executive search entails research. Yet one CEO of a telecommunications firm complained that a prominent search firm "gave me a long list of 10 names - of which 8 were supplied by me!" Star candidates are easy to find. They are, talented, conspicuous and adept at self-promotion. Sleeper candidates are more difficult to locate. They lie hidden within their companies and achieve quietly. Only solid research locates both sleepers and stars.

Candidate confidentiality: Confidentiality is the lifeblood of executive search. Executive search is shrouded in secrecy for commercial reasons. If news leaks out that a big-name executive is considering a move, stock prices and company morale can plunge.

Premature client identification: In Australia's small market, it's as important to conceal a client's identity as it is to conceal a candidate's. A search often means that an existing employee will be removed. Premature disclosure of a client's name broadcasts the intention.

Perfect vs real candidates: CEOs preferred to receive accurate reports on candidates, rather than shortlists of perfect candidates with no documented flaws.

Shallow reference checking: The CEOs surveyed complained about inaccurate or cursory existent reference checking, too often consisting of 10-minute phone calls in which headhunters listened only for what they wished to hear.

Quasi-extortion: Brent Ballard, AT&T's HR director in the US, stated: "I've had negotiations with some of the larger search firms where they made it very clear that they would not extend to us the off-limits we desire unless we committed a significant volume of work to them." Extortion posing as executive search is unethical and illegal.

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