Executive search (informally called headhunting) is a specialised recruitment service which organisations pay to seek out and recruit highly qualified candidates for senior-level and executive jobs.
To put it simply, executive search is a service used by professional companies to find the most suitable and relevant candidate for an open position. The candidate can be someone who is looking for a new challenge or not. The ‘looking for a new challenge or not’ is the difference between executive search and contingent recruitment. The reason that executive search exists is that the best people or employees are always hired and very rarely ‘looking for a job’. As a competitive company, you need the best people, the right people are the key to the success of a business.
Engaging the Retained Firm
Retained executives search firms work by a retainer and exclusive contract. The standard retained search contract stipulates that the firm serves as the exclusive representative of the search for external and internal candidates. It also defines engagement timing, off-limits agreements, and other issues relevant to the particular assignment.
The retained search firm meets with the hiring executive and relevant stakeholders to discuss the requirements for the role. The meetings often include key board members, members of the senior executive team, peers and subordinates. These meetings enable the search firm to gather important information about the requirements of the role. More important, the search partner witnesses first-hand the management style and corporate culture, which are essential to understanding what makes someone successful at the company.
Creating Position and Candidate Specification
The retained search firm drafts a description of the position, detailing its reporting relationships, responsibilities, and objectives. The candidate specification details core competencies, preferred experience, and soft skills — the personal qualities that sought in the ideal candidate. The document serves as a touchstone, defining all the requirements of the role, preventing searches from veering off course. Once the client approves the document, it is used as a marketing tool with candidates.
Setting Research Strategy
The search team develops a strategy targeting companies most likely to yield a successful candidate, including the initial list of target companies. The strategy considers the level and scope of comparable roles as well as other key data points: office location, corporate culture, and each company’s ranking. Companies that are off-limits are also delineated — companies out of which the firm will not recruit due to sensitive client relationships or because the firm has client blockage.
Conducting Original Research
Using the strategy as a blueprint, the search team conducts original research to identify and profile idea candidates, mapping the reporting relationships and often building out org charts of target teams. Traditional search firms usually do most of the research online. The search firm will also query its own candidate database, proprietary information services, and social networks such as LinkedIn to yield prospective candidates.
Search firms sound their network of sources for candidate referrals and calibrations. Sources include journalists, professional associations, and other relevant groups. Prospects that meet the requirements of the role are added to the initial list of prospects.
The search team contacts prospective candidates to determine whether they meet the primary requirements of the role and gathers details on the candidate’s motivations — what it would take for that candidate to make a move to a new company. The search team reviews the list of qualified, interested prospects to determine whether more research is necessary or whether it is time to schedule in-depth interviews.
Interviewing and Pre-referencing Top Prospects
The search consultant interviews and evaluates top prospective candidates in a deep-dive interview that steps through the career history. The executive search partner evaluates the candidate against the candidate specification through in-depth, in-person or video-conference interviews. Taking great care not to jeopardise candidate confidentiality, search firms pre-reference candidates whenever possible to verify past performance and essential soft skills. Those who are not a fit are closed out.
Writing Candidate Profile
For those candidates the search firm presents to the client, they prepare a written Candidate Profile, a report that details the candidate’s education, career history, honours, and awards as well as an analysis and appraisal of the candidate strengths and weaknesses and appropriateness for the position. The report also highlights any key motivators, issues, and deal-making details essential to closing the candidate.
Presenting Candidates and Tracking Progress
The search firm presents candidates at regular progress meetings. Working closely with the client, the list is refined to a slate of 3 to 6 strong contenders for the client to meet. Client-candidate meetings are then scheduled.
Scheduling Client Interviews
Client interviews of the candidates scheduled to winnow selection down the two or three finalists. Those that are eliminated are closed out.
The search team checks the candidate’s references, contacting the contacts provided by the candidate as well as other sources available to the firm. The team makes every effort to ensure discretion and confidentiality. Verification of employment and academic credentials is often performed by third-party services. It is the consultant’s responsibility to ensure that such checks have been conducted.
Extending the Offer
When a final candidate is selected, the search consultant works closely with the client and candidate to position the offer with the candidate, and to negotiate a package that is agreeable to both parties.
Closing the Candidate and Search
The search team closes” the candidate when the executive accepts the offer, agreeing to join the company. The search firm then closes out the engagement by thanking those involved for a successful outcome.
More suitable candidates:
In Executive Search, a long list of candidates is produced, and a shortlist of suitable candidates that are collaboratively agreed to take to interview.
Retention: You’ll benefit from the increased speed to appoint a replacement or get a new business area up and running – boosting morale and revenue and reducing future turnover.
A more collaborative process helps us to filter the most suitable candidates – demonstrating where the value is being added and offering full visibility.
High priority: The positive pressure to deliver makes your Executive Search consultant less likely to take on additional projects and more likely to focus on delivery of the assignment.
You’ll work with one consultant, saving you time and energy, and creating a relationship that will benefit the hiring process through focused knowledge.
Engaging candidates directly through headhunting means executive consultants get a better response from in demand passive candidates. Where possible, approaching on the client’s behalf is more powerful, with more accurate results.
The interview process can be planned, dates put aside in advance, second and final meetings considered – allowing senior managers to use their time more efficiently.
From branded advertising campaigns and ad-hoc websites to psychometric and verbal and numerical testing, you’ll have more opportunities to add on extras.
Exclusive candidates: Executive Search is unlikely to market candidates to other clients (they are focused on delivering your assignment) – eliminating bidding wars at offer stage.
In the eventuality that your ideal candidate is countered, gets cold feet, or decides to emigrate, Executive Search includes a ‘back-up’ option, open to offer.
Typically, the process takes between 6 – 8 weeks
You can, but the process is better suited to C-Suite or hard to find skill sets.
Any company looking to headhunt the best employed talent in the market.
- What is the search firm’s process?
- Will the search firm be a “credible ambassador” for your organisation?
- Who in the firm will be handling your search?
- Do the consultants understand the real strategic, operational, and financial importance of the position and possess the skills and experience necessary to recruit for that opening?
- Does the search firm have knowledge of the industry and type of position in question?
- Does the search firm offer qualified professionals who can objectively assess a candidate’s soft skills?
- What are the firm’s metrics related to typical benchmarks for search projects?
- What kind of service can you expect after the completion of the search?
- What is the “guarantee period” offered for new hires?
- What is the current search load of the firm’s consultants?
- What are the fees and their policy on expense reimbursement?
- Does the search firm offer a clear fee arrangement in writing? Which expenses will be billed separately? Are billed expenses really a hidden profit centre for the company? While a search firms rates should be competitive, be wary of selecting a search consultant based solely on the quoted rate alone.
- Does the company utilise any structured forms of retention-variable analysis to qualify potential candidates?
- What “Off Limits” policies would the search firm face when seeking to recruit the talent that you seek?
- Ask for client references.
A non-executive director is a member of a company’s board of directors who are not part of the executive team. A non-executive director typically does not engage in the day-to-day management of the organisation but is involved in policymaking and planning exercises. In addition, non-executive directors’ responsibilities include the monitoring of the executive directors and acting in the interest of the company stakeholders.
A short list to the final list of candidates that come from a structures search, whose skill sets best for the role. Typically, the list will contain the details of between 3 – 6 headhunted candidates.
Psychometric tests are a standard and scientific method used to measure individuals’ mental capabilities and behavioural style. Psychometric tests are designed to measure candidates’ suitability for a role based on the required personality characteristics and aptitude (or cognitive abilities). They identify the extent to which candidates’ personality and cognitive abilities match those required to perform the role. Employers use the information collected from the psychometric test to identify the hidden aspects of candidates that are difficult to extract from a face-to-face interview.
Executive search fees range between 20 – 33% of the annual cost to the company, executive search companies always work in a retained and exclusive fashion.
High-end executive search firms get a retainer (up-front fee) to perform a specific search. The roles which these firms are often mandated to source for are C-Suite or “hard to find” skill sets.
Executive search firms often work in a retained and exclusive fashion on senior searches and are paid in 3 tranches. The first tranche payment is equal to one-third of the estimated fee and is paid upfront before the search commences. A second tranche payment is paid on presentation of a short list, the final tranche payment is paid on placement and is adjusted upwards or downwards depending on the final salary offered.
Headhunters work in a structured fashion, actively headhunting candidates from direct competitors or similar businesses. They will often map the market for appropriate skills and actively seek out the best in the market for a particular role. They prefer to look for candidates who are not in the market for a new than to make use of recruitment portals where talent is actively looking for a new opportunity.
Headhunting is part of the executive search process, but simply headhunting a candidate for a role is not the same as following a highly focused and structured executive search process.
Another form of high-end executive search, delimited or engaged search, is often improperly categorised as retained search, although there are distinct differences. Similar to retained search firms, delimited/engaged search firms require an up-front fee before engaging the search. Unlike a conventional retainer, however, the delimited/engaged search commitment fee is refundable if the recruiter fails to achieve a hire or other deliverable specified in the contract.
Moreover, the delimited/engaged search commitment fee does not follow the typical 1/3, model of retainers, but rather is a relatively small up-front fee which is discounted from the final placement fee of 25–35% of the successful candidate’s first year compensation. Both retained and delimited/engaged searches to involve partial payment prior to filling the job, and the contracted recruiter has the search exclusively.
In contingent recruitment a client pays for the service only upon the successful placement of a candidate provided by the recruitment agency.
Contingent recruitment (sometimes called non-exclusive) means that the recruiter is competing on the role either with other agencies or indeed the client should the client have advertised the role on a job board or their website etc. The recruiter will only get paid should they successfully fill the role.
The benefit of using an executive search firm can be weighed against the cost of preparing and executing a recruitment/advertisement campaign, qualifying and screening candidates and operating without a necessary employee for an extended length of time compared to the relative assurance of getting the right individual for the job. Using an executive recruiter is an investment in improving the quality of your organisation’s managerial horsepower.
Access to a Global Network of Contacts
Top-notch executive talent is a scarce commodity in this day. Because the best candidates have already been picked up by another company. But many times, such top talent will only deal with a recruiter – they appreciate the worth of third-party representation, professional mediation and confidentiality. The limited contacts of in-house human resource departments cannot keep up with the wide net cast by a recruiter’s network.
What’s more, executive search firms perform professional evaluations of clients’ expectations, define the realistic profile and compensation goals and use seasoned expertise when helping to fulfil new executive positions.
A major advantage to using executive recruiters is the turnaround time in hiring employees and having them start. Since executive recruiters solely interview candidates and place them with their clients, almost all recruiters have a substantial candidate pool from which to pull. So, the recruiter likely already has qualified candidates ready to fill an opening.
Candidates frequently form loyalties with their recruiters. In fact, a recruiter might routinely place the same candidate in various jobs over the course of each other’s careers. Such loyalty is potentially a disadvantage to an employer, because the recruiter may keep the candidate informed of other opportunities that are out there. Contractually, recruiters can’t “pull” a new employee for one year; however, recruiters have covertly done this in the past — although very rare.
An advantage to using an executive recruiter is the guarantee period of 90 or 120 days that follow a new hire. If the candidate does not work out for reasons other than a companywide layoff, then the recruiter will either refund the client or replace the candidate as agreed on the terms of business. This “candidate guarantee” offsets the risk of hiring for a 90- to a 120-day time period.
Retained fees are based on a percentage of salary, and for an executive, it can be somewhat significant. However, important to remember here is that this is still worth the cost compared to that associated with the wrong hire.
Executive Firms are “External”
You need to make sure you work with recruiters who have the experience of recruiting in your specific field and know the specific skills, attributes and experiences you require to take your company where it needs to go. This may not necessarily be viewed as a “disadvantage,” but it’s something to keep in mind when considering an external firm to handle this kind of hiring project.
You need to always believe in your company, no matter what the challenges – but sometimes you have to really step back and be honest with yourself, and with the firm you choose to recruit your talent, so you can find the right people.
Unfortunately, many do, which has moral implications.
Succession Planning is a process for identifying and developing new leaders who can replace old leaders when they leave, retire or die. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available. Taken narrowly, “replacement planning” for key roles in the heart of succession planning.
A talent pipeline is a pool of candidates who are ready to fill a position. These can be employees who are prospects for advancement or external candidates partially or fully prequalified to take an opening.
Market Mapping is the analysis of a market, especially competitors, and the employment status of key people who work in it. This helps create an idea of the level of skill and talent competitors have which can help ensure your business is better prepared for recruitment and attracting the best candidates.
Interim management is the temporary provision of management resources and skills. Interim management can be seen as the short-term assignment of a proven heavyweight interim executive manager to manage a period of transition, crisis or change within an organisation.
The main function of an executive coach is to create a “confidential thinking space” for the client. This is done by listening, asking questions and enabling clients to solve their own problems or achieve their goals.
The executive coach performs the dual function of supporting and challenging the client. Both these activities are necessary to move the client out of their comfort zone towards their goal.
CEO succession refers to the process by which boards of directors ensure that their organisation has the ability to sustain excellence in CEO leadership over time, with transitions from one leader to the next.
C-Suite, or C-Level, is a widely-used slang term used to collectively refer to a corporation’s most important senior executives. C-Suite gets its name from the titles of top senior executives which tend to start with the letter C, for chief, as in chief executive officer (CEO), chief financial officer (CFO), chief operating officer (COO), and chief information officer (CIO).
The C-suite is considered the most important and influential group of individuals at a company. The suite is usually the top of the echelon at a lot of companies
Executive development refers to the programs in place to help develop an executive employee’s, or potential executive employee’s, performance, skills, or competencies. Most commonly, executive development programs are specifically for leadership skills, meaning they are usually employed for executive-level members of the managerial team, or possibly simply the highest-level member of management, regardless of whether they qualify as an executive.
Guarantees range anywhere from 3-months to 12-months in the executive search space.
Board appraisal is about a systematic assessment of how well the Board (rather than the organisation) is performing in relation to its legal responsibilities and in contributing to the success of the organisation. It looks at the performance of the whole Board and the contribution of individual members.
Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities.
Includes activities which ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organisation, a department, employee, or even the processes to build a product or service, as well as many other areas.
In-house sourcing refers to when a company makes use of its own internal recruiters to source directly on behalf of the company.
Contingent agencies will charge roughly between 10%-20% of the candidate’s first year salary.
Executive search firms develop a hands-on relationship with the company and are hired for a specific period of time to conduct a search and will typically work on a retainer/upfront fee basis.
The majority of executive search fees are between 20% and 35% of the candidate’s total first year annual earnings.
An advisory board is a body that provides non-binding strategic advice to the management of a corporation, organisation, or foundation. The informal nature of an advisory board gives greater flexibility in structure and management compared to the board of directors.
The performance of any system is primarily determined by the design of that system. An optimal organisational design is one that fosters an organisation’s fit for purpose. A design that is fit for purpose naturally, by the way, it is designed, supports ongoing leadership transformation, develops internal capacity for progress, enhances cultural vitality, and promotes operational excellence. Fit for purpose design improves the ability of the organisation to continually adapt itself and compete effectively in a world of constant change and mounting complexity.
Talent assessment and development help managers ensure that their organisation has the right people necessary for achieving the organisation’s priorities and has systematic processes in place to develop a strong pipeline of talent and support individuals’ ongoing development.
Talent assessment can provide insight into areas in which the organisation needs to complement its current talent pool as well as identify places where current staff members are succeeding or need to grow. Talent development can provide pathways to fill gaps in the staff and achieve growth among individual employees. Ultimately, talent assessment and development are essential to creating an effective organisation
The process of finding and hiring the best-qualified candidate (from within or outside of an organisation) for a job opening, in a timely and cost-effective manner. The recruitment process includes analysing the requirements of a job, attracting employees to that job, screening and selecting applicants, hiring, and integrating the new employee to the organisation.
It varies from company to company and depends on how many committees the Non-Executive Director is part of, but typically it would be between 4 – 8 meetings a year.
An independent director is a director of a board of directors who does not have a material or pecuniary relationship with a company or related persons, except sitting fees.
Independent directors act as a guide to the company. Their roles broadly include improving corporate credibility and governance standards functioning as a watchdog and playing a vital role in risk management. Independent directors play an active role in various committees set up by a company to ensure good governance.
“Non-Executive Chair” means that the chair is someone who is not an employee of the company. That person is usually a truly independent, but may also be a former CEO of the company.
A Non-Executive Chairman has no operational responsibilities and only has board responsibilities.
Competency based test is often used as the basis to develop competency assessment tests. Competency assessment tests are valid and reliable tests that measure knowledge and skills required for a job. Competency assessment tests are developed for many occupations for the purpose of determining certification in the occupation.
Corporate culture refers to the shared values, attitudes, standards, and beliefs that characterise members of an organisation and define its nature. Corporate culture is rooted in an organisation’s goals, strategies, structure, and approaches to labour, customers, investors, and the greater community.
Employment Verification: A Crucial Check. … Looking into a candidate’s past work history can reveal insight into their job stability and loyalty to an employer. Employers should compare what a candidate claims on their resume with the actual information reported by a background screening company.
Types of common checks include:
- Credit Check
- Qualification Verification
- Reference Check
- ID Document Verification
- Criminal Checks
Corporate governance is the system of rules, practices and processes by which a firm is directed and controlled. Corporate governance essentially involves balancing the interests of a company’s many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community.
Corporate governance is the mechanisms, processes and relations by which corporations are controlled and directed.
KING III is the term used to refer to both “The King Report on Corporate Governance for South Africa (The Institute of Directors in Southern Africa) September 2009” and “The King Code on Corporate Governance for South Africa (The Institute of Directors in Southern Africa) September 2009”.
Three reports were issued in 1994, 2002, and 2009 and the fourth revision in 2016.
King IV is principle- and outcomes-based rather than rules-based. Corporate governance should be concerned with ethical leadership, attitude, mindset and behaviour. The focus is on transparency and targeted, well-considered disclosures.
Chartered Director is the only professional qualification for all directors that demands both knowledge and experience of how to make boards effective, as well as a commitment to continuous Professional Development.
Chartered Director (SA) is designed to enhance directorship as a profession and further promote sound corporate governance in South Africa.
Johannesburg Stock Exchange Limited is the oldest existing and largest stock exchange in Africa.
Well established companies who want to raise equity to grow their business exponentially are listing on the JSE’s Main Board. This is where you will find the JSE’s Top 40 stocks, as well as securities like exchange-traded funds (ETFs), exchange-traded notes (ETNs) and warrants.
AltX is an alternative public equity exchange for small and medium-sized companies in South Africa operated in parallel with and wholly owned by the JSE Securities Exchange.
An audit committee is one of the major operating committees of a company’s board of directors that is in charge of overseeing financial reporting and disclosure.
Contingent search firms rely heavily on their contacts and recruitment databases, which is why clients often work with many contingent recruiters at once to maximise the number of resumes they receive.
On the other hand, executive search is used to find candidates for senior level roles. Clients and retained recruiters generally develop stronger, more long-term business relationships.
No, it is not, but there are certain executive search firms that tend to specialise in a sector/s