Info about Executives
Large versus small search firms
What are the advantages and disadvantages of using a large versus small search firm from the perspective of the company retaining a headhunter? This will be explored by presenting the key questions one group raises in relation to the other and examining them with the client's best interest in mind.
Is it true that in small firms the partner does the work while in large firms it's delegated to an assistant?
There are small firms where the partner does all the work. They are either structured that way or lack the business volume to need additional staff. There are hybrids where a few very productive senior people have assistants reporting to them while others do not¡ªbut may in the future if the number of searches which they work on increases. Sometimes the assistant has a vice president title and to the corporate user of search it may seem as if the assignment isn't really being delegated or downstreamed. In fact, as in some big headhunting companies, it is being worked on by a professional team.
There are giant executive search companies where some or most of the consultants do all of the search work and there are others who have the team approach.
So the basic answer to the original question is¡ªyes and no. But there is much to consider. Some clients prefer working with only one headhunter because they know who is doing the work and what to expect, and can avoid their search's becoming a forgotten element on a second or third party's desk. However, the team effort employing more than one person calling possible candidates, plus a researcher or two developing executives' names, greatly speeds up a search. Furthermore, the search is managed by the partner, who is your prime contact. But if he is away for any reason, you have an additional and informed liaison in his assistant or associate. Besides, associates are generally all professionals with impressive credentials. And better they diligently bang out the voluminous, repetitive cold calls to prospective executive candidates than the partner. This would be a poor use of his time. He is best off calling his contacts for leads, managing the operation, assessing people developed by his assistant (and himself), interviewing, and staying in close and less fettered touch with you.
Don't big firms have many clients and become therefore blocked from effectively serving them because there aren't enough nonclient companies left for them to hunt in?
Big doesn't mean too fat with clients to function effectively. It represents multiple offices around the United States and often overseas, and very often serving many of the same clients in these diverse locations. It represents much repeat business with these clients based on successful previous work. Hence, more searches are done, more staff are employed, and annual billings are greater. This kind of achievement attracts new clients and further expansion. It's an inaccuracy to categorically believe that the giant firms would take on so many clients that they subsequently had too few companies left to search in. It's a good sales pitch often leveled by smaller firms when competing with the giants for an assignment. Since small firms have fewer clients, they can call into more companies. Practically speaking, most big executive search companies leave ample room and don't develop an excessive number of client relationships in any field. They have been known to refuse work with a potentially new client because they do not want to crowd themselves in an area.
Some search firms claim they deliberately stay small to avoid being blocked. But so many are just too small for this to really be a factor. It sounds good, but a dearth of clients may represent many things: inability, inexperience in certain fields, or the current limits of the firm's wherewithal to expand due to the competition. Exploring who an executive search company's clients are in a specific field can quickly settle the issue.
Do small firms have staff of lesser ability, background, and experience?
The officers in some small search companies hail from big ones where they were either successful or less so, from other small headhunting firms where they were either successful or less so, and from industry where they enjoyed varying degrees of achievement. There are some high quality people among them.
To join a major bracket search firm today as an officer typically requires that one be successful¡ªin executive search with either another small or large firm or in industry. Then there is a shake-out if you aren't good. It's internally competitive. There are performance measurements in some (developed by the likes of McKinsey) that include the firm-wide dissemination of information regarding all new business developed by partners (or the lack of it), and all positions which they have filled (or failed to). Accordingly, large companies don't have much deadwood. The cream rises.
Do small executive search firms lack sophisticated research departments?
They may have select directories and periodicals, or use an outside research service, or just go to the library.
There is no comparing them, however, to the resources which are typically available in a big search firm. Some virtually have a small business library with all of the current directories and periodicals in different fields, and even computer based hook-ups to other information sources (Dun and Bradstreet, Wall Street Journal, New York Times, etc.). This can naturally add speed and depth to the work. And the ability to pay attractive salaries enables hiring talented researchers.
Since large headhunting companies have broad networks of offices (domestic and international), can they outperform small companies because they can look everywhere for talent drawing on their many contacts?
A large search company was asked to find a very senior level executive¡ªand given one month to do it in¡ªprior to an important board of directors' meeting. The firm assigned several staff members in different offices around the United States to blitz the search in their locales. Each developed one or more possible candidates. A timely hire resulted.
If your need is for a senior executive who could be located anywhere¡ªin the United States or overseas¡ªlarge firms can effectively network among their many clients, friends, and staff. If your need is local, such as for an executive in the metropolitan New York area, then small firms have a reasonable chance at competing. Given the volume of searches done by large executive search companies, there is a good likelihood that they may have recently completed an assignment similar to your need and are therefore market-current regarding good people who may be available.
• Do small firms charge smaller fees?
As previously mentioned, fees generally range from 25 to 35 percent of the first year's total compensation, including base and bonus, plus general expenses which amount to 10 to 15 percent of the fee dollars. Most major firms charge 33.33 percent. Some overseas companies charge 35 percent. Small concerns usually charge 25 to 30 percent. But the real question is whether the difference in fees is too small to make any bones about considering the benefits derived from using a major search company.
Some firms will offer a discount if the client hires more than one executive of the same kind. For example, if they hire three vice president/corporate lending officers, the first one would cost the full fee of 33.33 percent while the second is 30 percent. A third hire would go for 25 percent, the lowest most executive search companies would charge. This can represent a savings though it's infrequently utilized because most search needs are individualized.
Do small specialty firms do the best work if a company has a specialized need?
They are staffed by headhunters who come from the particular industry, and possibly assistants who do too, or they both grew up in search in this field. So they are ideal for specialized work.
But if a giant firm has a specialty desk in this discipline¡ªand most do in all the hot jobs and fields¡ªyou have equal if not better talent servicing your needs plus all of the additional resources of a major search company.
• Can small firms guarantee a placement for one year?
This kind of service is on the wane. A few search firms (very few) still offer it on occasion. The toll in time and money of having to replace an executive without charging another fee is costly. It's naturally a bigger burden for a smaller company.