The Hidden World of the Head Hunter
A corporate head hunter’s life is supposedly filled with secret meetings, furtive phone calls, and messages left under pseudonyms. Like sharks in inky waters they attack without warning, for the benefit of their clients.
In fact executive search consultants (their proper title) are paid to
recruit successful business people from one company to another. The chiefs
of Westpac, Pioneer, Coles-Myer, AMP, and Boral are examples of head
hunters’ work. "Like corporate sharks," one CEO told me, "they tear off
chunks of key personnel."
But what is life as a corporate carnivore really like? To find out I slipped
into the pool and went "swimming with a shark" by spending time with Dr.
Duff Watkins of Re:Search executive search consulting. For
years Mr. Watkins worked in international executive search firms while
finishing his Ph.D. in group psychotherapy. Now he combines "head hunting"
with "head shrinking" by using psychological assessments in executive
search.
Womb With A View
Head hunting and head shrinking are surprisingly similar. Executive search firms remind me of a psychiatrist friend who constructed his office with a separate entrance and exit so that patients never accidentally met each other. Why? Because the patient must feel that the therapist exists only for him exclusively and is not shared by others.
Likewise executive search firms give the impression that they exist for
the client exclusively. They go to great pains to create an atmosphere of
permanence. Parquet floors, pre-federation photographs, antique furniture,
separate entrances and exits, polished wood, burnished brass -- every
furnishing shouts stability.
When entering their offices cameras record your presence as you leave the
lift. A monitor on the receptionist’s desk presents you even before you ring
the bell at the locked door. Once inside, you may see harbour views but you
won’t see stray letterheads, invoices or business cards that might
accidentally disclose the firm’s other clients. I’m enclosed in a commercial
womb with a view.
Who’s In The Pool?
The Australian market place is a crowded pool. All the "top tier" big international search firms operate here: Amrop, Egon Zehnder, Heidrick & Struggles, Korn Ferry, Russell Reynolds, Spencer Stuart, Ward Howell, and Tasa. There are also many small "second tier" firms: Insight Group, Horton Group, Profile, Rochford Williams among others.
"Second tier" refers to size not quality since small firms can be as expensive as big firms. Whereas consultants within "top tier" firms are often former heads of multi-national companies, consultants within "second tier" firms are often local business people. Whereas "top tier" firms are usually international partnerships, "second tier" firms are usually run by owner/operators.
Their main distinction, however, is that "second tier" firms are less likely to delegate assignments to junior colleagues, a common practice in big firms. "Second tier" firms are also more likely to employ women and younger (e.g., under 50) consultants.
Hunter-Killers & Cleaner-Skinners
Executive search is a two pronged business: sell the service to potential buyers, then perform the service once hired. Therefore search firms employ two kinds of people: hunter-killers and cleaner-skinners.
Hunter-killers sell the service, win the business, get the assignment and bring it back to the office. The dapper, blue-suited, buttoned down corporate head hunter is largely a salesman. One head hunter confided to me that over the last 5 years he made 87 introductory sales visits per year to prospective customers. And that’s not counting the innumerable follow-up visits, phone calls, chats and correspondence generated by those introductory visits. All that just to win the work! Like sharks, head hunters must keep moving or perish. Cleaner-skinners (i.e., junior consultants or researchers) do the researching, phoning, interviewing, report writing, etc. Some consultants, however, complete their assignments from "go to whoa."
Who makes a good head hunter? Anybody it seems. Neither qualifications nor previous experience is required. Successful and failed executives end up as head hunters. Accountants, psychologists, clergymen, engineers, bankers, lawyers -- all currently work within the Australian executive search market. "No one is born a fisher of men," jokes one "we receive the call after other careers."
Where Are The Women?
Most consultants in Australia are men and a surprising number of them were born in North America. Perhaps this isn’t surprising given that executive search originated in the US over 60 years ago.
There are female head hunters but as with most aspects of executive search, it’s a secret. Patricia Rochford of Rochford Williams has a reputation as good as any of her male counterparts. Deborah Cartwright of Palmer Holt is well regarded for her expertise in the travel and hospitality industries. Yvonne Coburn of Peebles & Associates specialises in the legal industry.
Yet most women in executive search operate behind the scenes in subordinate roles as associates, researchers, assistants and secretaries. For every male consultant there are approximately 3 women support staff, all of whom are paid less than the consultant.
How To Save $300,000
The joke goes: why is divorce so expensive? Because it’s worth every cent! Executive search is expensive for the same reason: it’s worth it. Hiring the right people has tremendous impact on the bottom line. Research indicates that a mis-hire on a senior level can cost a company upwards of $300,000.
But there’s another darker reason why head hunters are essential. Like professional gun-slingers from the American Wild West, head hunters are mercenaries for hire. To an executive search firm your company is either a paying client or a possible target. The only head hunter you can be sure is on your side is the one you hire. Therefore a clever company retains executive search firm(s) as a means of protecting itself from the very head hunter it hires!
So which firm should you hire? Well, obviously, the one that protects you best. But this may not be the biggest or most expensive firm. In executive search as in real estate the 3 things that matter are: position, position, position.
Executive search consultants position themselves by cultivating contacts
and relationships. This "networking" allows head hunters to interact
regularly with decision-makers in order to win work, meet candidates, and
stay "in the know."
Positioning also includes "adding value" to clients by offering remuneration
advice, management assessments, market research, or even introductions to
potential customers.
Research And Seduction
The second prong of executive search is performing the assignment. Head
hunting is shrouded in secrecy because senior-level recruitment inevitably
reveals a company’s corporate strategy and because the candidates work for
other companies. A publicity leak can jeopardise the future of both the
client and the candidate.
Performing an assignment is straightforward: find candidates who match the
client’s need. This means do enough "homework and legwork" until you find
the person who can solve the client’s problem, then "woo" that person to the
client. This seduction of the candidate is where the "wining and dining" and
secrecy occur. It’s also why head hunting is often called poaching. "But
poaching is exactly what we don’t do," sighs one consultant, "we simply
cannot make somebody take a job they don't want."
The popular image of head hunters working on top-secret assignments involving the big names of the corporate world is only partly true because there are so few top-level positions in Australia. The market is too small and competitive to make a living from a few big-dollar, high-profile assignments. After all, how many heads of Westpac, Coles-Myer or Olympics 2000 get recruited in any year?
In reality head hunting is mostly the grunt work of research. It’s
tedious, labour intensive, mind-numbing stuff which consists of poring over
trade journals, attending conferences, studying industries, tracking
individuals, and making hundreds of phone calls. "People think that
executive search is phoning up four mates and trying to give them a great
job" laughs one consultant, but the real recipe for success is a tonne of
research with a dash of seduction.
So the popular image of head hunters isn’t as sexy and glamorous as is
commonly believed. Clandestine meetings and jaunts overseas occur but not
daily. It’s through the daily grind of research that a consultant acquires
expertise, and it’s this expertise that is so expensive to hire.
Head hunters earn their fees by becoming recognised authorities in
certain fields. Because each assignment is a time-consuming, detailed,
research project, the client pays for the consultant's time regardless of
the outcome, just as you would pay a lawyer, doctor or engineer. That's the
bad news.
The good news is that a successful head hunt can generate big profits for a
client. "It’s economical," declares Dr. Watkins, "For several thousand
dollars a client may gain an employee who generates many hundreds of
thousands of dollars of new revenue. For the company, it’s a bargain." This
is typical of successful head hunts and it’s why the sharks seldom go
hungry.