Big vs Boutique what you should consider for your next Retained Search?
By J. James O’Malley, Former Andersen National Director of Experience Recruiting, Jim is a Managing Director and leads the executive search practice for Felix Global.
Several years ago, marketing guru Seth Godin http://www.sethgodin.com/sg/bio.asp wrote and spoke extensively about why “small” is the new “big”. He listed a whole host of reasons on why smaller businesses often outsmart and outsell bigger ones including:
- Small means the founder makes a far greater percentage of the customer interactions.
- Small means the founder is close to the decisions that matter and can make them, quickly.
- Small means you can tell the truth on your blog.
- A small firm is succeeding because they’re good, not because they’re big. So smart small companies are happy to hire them.
Let’s apply Godin’s logic to executive search. The industry is characterized by two types of companies. On one extreme are a handful of mega-firms, some of them publicly-held, with big brand names and revenues in excess of $500M per year. These large firms typically cater to Fortune 100 clientele and have deep relationships with their boards. It sounds prestigious to say “we’re using a big name firm”, but, unless you’re a Fortune 100 company, your search can get very expensive, lost in the shuffle, and they will ultimately recruit from you after their hands-off time has expired. On the flipside, there are a multitude of boutiques, most of which specialize by industry and/or function. We believe strongly that most companies get better results by partnering with the right boutique. By answering the following questions, we’re pretty sure you’ll come to that same conclusion:
Are you really dealing with the recruiter who will do your search?
When you engage a boutique, you are dealing directly with the person who will work on your project. In contrast, at big search firms, the search may be directed by a “Partner” but, in fact, a significant portion of the work is done by less tenured associates. These
may be people you have never met. Or people with minimal knowledge of your company or your business challenges and goals. As a result, the candidates may possess the functional match to job description but may not have the cultural competence and traits (or what we call “the spirit’) of the job description. This can result in bad hires who don’t fit your corporate culture and perform poorly down the road.
Will you have access to more candidates?
Executive search firms have an ethical (and usually contractual) obligation not to recruit from clients. Big search firms have significant off-limits constraints, which limits the pool of candidates. As these firms get bigger, this problem also gets bigger. While the big firms are becoming cleverer by defining off limits around a project or client - and not the company they represent - boutiques can access more candidates because they have fewer off-limits companies. In addition, a little-known fact is that candidates that are active on a search within a firm are also off-limits for any other search projects. Large firms can have literally thousands of active candidates throughout the firm at any one time…many of whom are unavailable for your search!
How many searches is the firm or consultant working on?
A typical search firm partner may conduct 15 to 20 assignments simultaneously, overwhelming their associates and research staff. They operate in a “book it”, “bill it” and “forget it” environment. Unless your search is carrying the highest fees or is relatively easy to complete, it may be regulated to the bottom of the pile. In contrast, boutiques typically work on fewer projects, devoting far more time and attention to each and every search. We recognize that our partners and associates are performing at their best when they have 3-6 projects at any one time and so we take measured steps to adhere to that.
What about Completion Rates?
Boutiques have higher completion rates than big firms. Completion rates at big search firms are well-known to be in the 60% to 65% range. At Felix Global, our completion rate is over 90%. There are many reasons that a search does not get completed, not all of them attributed to the search firm. But, with a 90% completion ratio, you know that Felix Global selects projects that we know we can complete successfully. It is imperative that we do so since a large portion of our retainer is performance based and at-risk if we do not complete the project.
Does the firm have in-depth knowledge of your company?
Because boutiques have a business model that enables them to form a genuine partnership with you, they are willing to take the time to get to know you in the hope that this will be a long term relationship and not a transaction. As a result, smaller firms like Felix Global usually are better at selling your opportunity and assessing candidates because we know you. Combining our access to talent with our knowledge of your opportunity and applying our proven performance-based assessment -- this is where we combine the art and science of executive search as true consultants in talent acquisition.
What is the firm’s process and how will they bill?
Many search firms operate on a “don’t ask, don’t tell” basis, convincing companies that the search process is mysterious and incomprehensible. The reality is that most big firm partners cannot explain their process, nor do they adhere to a proven methodology. At Felix Global, we believe that being transparent is key. That’s why we transfer all of the research we do on your project to you after the search is completed. This helps develop your database for future needs as well as to fill the specific open position. The same goes for our fee. Our initial retainer is invested in new research and name generation, while the second retainer goes to our operating costs. In contrast, the big firms often attempt to pad this by charging an high administrative fee (usually 10% of the retainer). We cap ours at 6%.
What are Felix Global’s differentiators?
Beside our people and our one-firm approach we have a unique value proposition in how we leverage assessments and coaching into our executive search process. May firms have similar capabilities, but few offer it as a part of the search. Our Talent Advisory Service are incorporate as part of the overalls search fees so we can provide the expertise of external executive coaches untainted by organizational politics, with a proven coaching methodology grounded in the stages of assimilation and the goodwill built with new hires who otherwise might “sink or swim” alone in their new roles. We provide this on-boarding and acculturation coach of the new hires first three months.
Big Fish…Small Pond?
If your company plans to do more than ten searches a year, you may have enough leverage to get the attention you deserve from the big search firms. But, if your needs for search are more focused, you will get far more personalized and attentive service from a boutique. Typically, the big firms sell the strength of their network as the major selling point. The reality is that their network is full of previous placements that they are ethically obligated to never recruit again. We start each project with fresh research; by getting the specific names and contacts on individuals currently in the roles you have asked us to recruit for. No old names - new ones.
Bigger is not better in executive search. In fact, big search firms face significant obstacles to client service, off-limits and availability of the right candidate pool. Large scale makes it easier for search firms to build their brands, and create their own economies of scale but does it provide value to their clients? Search firms are service providers. When evaluating vendors, look past the false allure of name brands and critically evaluate the quality of service you will receive. Determine the firm’s commitment to your company, assess its process and determine whether the search firm is passionate about serving your company’s needs and providing what you and your company want, not what they want to sell to you.
Don’t wait. Think big. Go Small. For more information on our Executive Search Practice, contact us at:
About J. James O’Malley: Jim is focused on helping professional service and financial service organizations with critical talent needs. For over 30 years, Jim has leveraged his passions for executive search, talent acquisition, workforce planning and analytics, and executive coaching to solve a variety of talent acquisition challenges. For more information and to contact Jim at: firstname.lastname@example.org.