What should a company look for while evaluating an executive search consultant?
Track record is absolutely essential while selecting an executive search firm. It demonstrates what the search consultant has done in the past and the kind of situations they have dealt with. Assessing the reputation of the firm and the individual consultant who will be leading a particular project is very important to gauge if the consultant is able to meet the firm’s needs. Secondly, it is important to see if the executive search consultant firm is willing to share the details of the team. Besides the lead consultant, the team’s involvement will be critical for success and thus, if an executive search firm is open to letting the client speak with the team that provides an additional layer of comfort and trust. The third important aspect is access. The executive search firm’s ability to conduct proactive research, their understanding of the market, and their process of accessing candidates is an important factor behind making a decision to partner with an executive search consultant or not.
Leaders are not sitting in one place any more. An effective executive search consultant is one who is willing to go beyond the boundaries of geographies and bring in talent for an organization without worrying about the geography or industry.
How is the market for executive search consulting evolving?
Executive search consulting companies are continuously broad-basing their horizons towards multiple services. As a result, the supply of specialized consultants in the executive search business is gradually shrinking. The need for specialized search consultants, however, has not diminished. Companies now need talent at a global scale and access to best practices in other geographies in order to gain competitive advantage. Hence, specialized consultants who have seamless access to research and global best practices will continue to be in demand.
Agility is the key to success in the executive search consulting business. A service provider’s size can both be an advantage and disadvantage in the global market. Companies, which are too large, are dealing with challenges of agility. At the same time, a company that is too small finds it difficult to build deep relationships with clients. Agility and relationships are both necessary in the search business globally.
Talent is a key factor in the executive search consulting business. Executive search consulting is a science and not an art and good talent is key to providing good service. Good relationships are essential in the executive search business and therefore, executive search consulting firms need good talent who understand the client’s requirements and are able to deliver satisfactory results.
What are the key trends in executive search consulting?
Clients of executive search firms are becoming increasingly cautious about their hiring plans. First of all, they are not hiring in a hurry. As a result, hiring processes are getting elongated and more due diligence is done. Compensation is greatly under pressure and organizations are much more careful about what they are willing to offer. On the other hand, candidates are also getting more risk averse. They are asking more questions about the company’s future and its strategy.
From the demand side, the need for global citizens is increasing. There is a lot of demand for talent who have cross-geography experiences. Additionally, candidates who have been through cycles of upturn and downturn in companies are also in great demand. Earlier, companies were looking for leaders who could fuel growth in companies. Companies, at this point, are now looking for talent who are good P&L managers and see a company through periods of downturn. The rigour around reference checking has changed. With talent hiring getting closely linked to business outcomes, both organizations and candidates are conducting more due diligence.
Are companies willing to pay disproportionately hefty compensation for the right leadership talent?
The phenomenon of disproportionately huge compensation pay-outs to leadership candidates was a very real phenomenon until 2012. It made sense in a growth economy because an organization hoped that it would recover the money when the business was growing. Now, it has become obvious that companies will not just pay anything to have the right leader on board. Two key trends have made an impact in the executive search market since then. First is the focus on equity. Companies are unwilling to provide fixed compensation beyond a certain threshold. Companies are much more willing to tie leadership impact and performance to equity, in an effort to link pay with performance. Secondly, from the supply side, leaders are now keener than ever before to associate themselves with recognized and renowned brands even at the cost of lower compensation. Talent brands, which have more reputation, stand to gain from this trend as they can look forward to hiring leaders at a lower cost. Executive compensation can be divided into guaranteed cash, benefits, equity, and long-term incentives. Cash is being controlled much stronger than the other components. Companies are trying new mechanisms to create inventive ways to distribute payouts between these four components.
Are skills in the talent market keeping pace with the changing demands of the business environment?
Transferrable skills are one of the key criteria that companies are looking for in candidates. For a long time, companies sought talent who specialize in one key industry or function. For example, if a telecom company was looking for a CEO, then they’d seek candidates only within the telecom function. This has changed largely in the past couple of years. Companies now seek candidates who demonstrate the leadership and the ability to see through changes and disruptions.
Some selection criteria have managed to remain unscathed among recruiters despite the manifold changes in talent selection fundamentals. One of the most important of these is track record. When the global economy called for companies to aggressively grow and expand, companies sought candidates who could take risks and drive monumental changes. After experiencing an extended period of volatility, companies are now looking for talent who have a successful record.
Culture fit is another key criteria that companies are seeking in talent. In these business conditions, any employee cannot afford to carry on by being either disliked or being unsupported by colleagues. A chief executive officer once told a leader in the company that he was ‘doing all the right things in the wrong place.’ This is a clear indicator that a candidate is stuck with the culture fit challenge and will be ineffective in impacting the business.