29May

The Unsavory Side of Executive Search: How the Headhunting Sector Is Neglecting Candidates and Clients

Selecting the ideal executive talent may make or break a firm in the high-stakes world of business. Step inside the executive search sector, an apparently priceless tool for companies trying to appoint the finest and the brightest to their highest positions. Beneath the well-polished exterior of these companies, though, is a developing worry about the unethical and too prevalent behaviors in the industry.

The diluting of executive search

It’s time to recruit a senior position to your company. You hire an executive search firm thinking you would deal with an experienced headhunter who is familiar with the subtleties of your sector and can find you the ideal position. Rather, you find yourself junior, inexperienced recruiter who appears more concerned with meeting their quota than with matching you with the ideal candidate.

Executive search firms have been more and more common in this situation as they have veered off course in their quest of expansion. Many companies have evolved into mass recruiting machines, turning out placements at an astounding rate, rather than concentrating on the specialized, high-touch service that characterizes great executive search. Clients who come anticipating the skill and grace of a senior executive headhunter wind up wondering if they’ve wandered into a sausage factory.

Organizations Affected by the Diluted Executive Search

Don’t simply believe us. We talked with a number of businesses who have personally felt let down and frustrated by working with search services who put quantity ahead of quality.

One CEO who asked to go unnamed bemoaned, “We thought we were getting the crème de la crème of executive search.” Rather, “we got a revolving door of junior recruiters who couldn’t tell the difference between a CFO and a CPA.”

Similar feelings were expressed by another client, the HR head of a large company: “We paid top bucks for what we believed was a tailored solution, but it felt more like a one-size-fits-all approach. It was similar to purchasing a tailored suit and getting a tracksuit that was mass-produced.”

Working with companies that have lost sight of the real purpose of executive search can have dire repercussion. Employers who hire incompatible applicants run the risk of expensive turnover and company interruption. Candidates, however, can become frustrated and disillusioned if they are placed in positions that don’t fit their qualifications or professional goals.

The Unethical Practice of Poaching

As if the diluting of executive search wasn’t bad enough, some companies have gone one step beyond and started the immoral activity of poaching. Imagine that an executive search agency helped your organization employ a top executive recently. Congratulation. But your joy is short-lived, for a few months later that same company makes your just hired executive an irresistible offer.

These companies are basically drawing CEOs away from their clients and artificially creating a need for their own services. Like a doctor purposefully getting a patient ill so they can bill for the treatment. Such activities obviously have ethical ramifications, and they can have a disastrous effect on client-search firm relationships.

Poaching Economics

Why therefore do some executive search firms use poaching? As they say, follow the cash. A firm can charge a high price for locating a successor if it can lure an executive away from a client. Though the client and the executive who must handle the repercussions suffer, the firm benefits.

Naturally, these kinds of activities are not done by every executive search agency. But because poaching is so common in the business, clients and search firms are becoming more and more distrustful of one another, which makes it more difficult for the good actors to set themselves apart.

The Pitfalls of Contingency Search

For many executive search firms operating in the APAC area, contingency search is now standard procedure. Clients can sign contracts more easily under this approach because agencies only get paid if they successfully place a candidate. This approach, meanwhile, also produces asymmetrical incentives that can cause search businesses to be less dedicated and follow-through.

Contracts being signed but not actually worked on have been reported by clients when companies give preference to easier-to-fill or higher-value employment. Some have even been pressed to raise pay budgets in order to improve the recruiter’s possible commission rather than necessarily draw in better applicants.

Pressing for More Pay

Talking about commissions, let’s address the relationship between recruiter compensation and candidate salaries—the elephant in the room. Higher pay typically translates into higher commissions for recruiters, it’s no secret. Though there’s nothing intrinsically wrong with this, it can lead to a tendency to give applicants more weight in terms of money than qualifications.

Sometimes recruiters would advocate for larger pay not because it benefits the client or the candidate (well okay, it probably always benefits the candidate), but rather because it helps them to make more money. This method presents moral questions and can result in placements that are eventually unsatisfactory because of mismatched expectations or bad fit.

Achieving Accountability and Transparency

What therefore can be done to deal with these problems? In the executive search business, accountability and openness must be given more weight, to start. Customers ought to expect early on clear communication and expectation-setting, as well as contracts and service level agreements that specify precise deliverables and deadlines.

Additionally encouraging dedication and quality are retained search models, in which companies are paid a set price independent of the result. Using this approach, companies are more interested in selecting the best applicant than in filling a post as soon as feasible.

Reforming the Executive Search Sector: The Path Ahead

As executive search businesses, we must, in the end, examine ourselves closely and pose some difficult questions. Have we forgotten why we started? Do we value quick money more than enduring friendships and a good name? Do our actions serve the interests of our candidates and clients or only of ourselves?

The fundamentals of executive search – specialization, experience, and involvement at the senior level – must receive fresh attention if the business is to be genuinely transformed. Companies should spend more on attracting and keeping top people than they do in hiring a plethora of entry-level recruiters. They have to put quality before quantity and establish enduring bonds on openness and trust.

Being a part of the solution is our commitment at Arkynn. With our boutique strategy, each engagement gets the attention and experience it deserves, because senior Partners, who are aligned with the client and only concentrate on a few projects at a time, facilitate a customized, individualized service. By means of cutting-edge services such as our Executive For Rent service, we can also supply leading industry leaders on a need-basis to cover critical shortages. We think we can contribute to the executive search industry’s restoration of honesty and confidence by giving quality, openness, and responsibility first priority.

The ability of search companies, candidates, and clients to hold one another responsible and demand better ultimately determines the viability of the executive search market. Working together, we can build an industry that genuinely fulfills its mission of bringing the best talent in the world to the businesses that most need it. Perhaps even along the road, we might have a little fun.