Quantity vs. Quality Reason #1 to Reject Contingency Search

There are many good reasons to reject Contingency Search in any form, but for today’s post, I’ll deal with only one reason.  Quantity vs Quality. In most cases, by no fault of their own, recruiters are forced to produce poor quality work or get left in the dust by other recruiters with a quicker trigger finger. The inherent weakness of Contingency Search lies in this conundrum: The more you endeavor to vet and qualify your candidates, the less likely you are to get paid for your work.  The take home is that if you want to get paid, you had better not take too long in skimming those online resumes and be late to the party.

A basic rule of Contingency is: If the same candidate is referred to the a client by different recruiters, only the recruiter who was FIRST to send the resume to the client gets paid for the referral. Therefore, the most conscientious recruiter will far too often lose out and not get paid for their referral. Why? Because they were too thorough in doing the job of a recruiter. Even if you want to do well on behalf of your clients, you are put in the position to have to race to the resume submission before you should. I am convinced that this is the reason that the best recruiters don’t stay in Contingency Search for long.  They either convert their business to a Retained model or leave the business altogether.

Why would a client want a flurry of resumes filling their inbox only to have to spend time sorting them to determine who sourced them only to then begin the arduous task of vetting and qualifying the new resumes?  Furthermore, because of the race to the bottom, they have been flooded with all the “low hanging fruit.”  These are essentially two kinds of candidates; Physically Unemployed or Emotionally Unemployed. In either case, they are motivated to escape a bad situation giving them an impure motive in many cases.  That severe motive can compel such people to embellish their experience and worse, misrepresent who they are in order to meet a basic need they have. If you’ve hired much, you know who this is.  Its the guy who turns out to be a very different person than the one you interviewed.

I’ve spoken to many different recruiters who suffer burnout and mental and emotional fatigue from trying to balance doing the right thing on behalf of their clients and getting paid. Okay, money isn’t everything, but its right up there with air. So the problem for many is that they desperately desire to be a good recruiter who does excellent vetting of the people they present to their clients yet they simply cannot accomplish this and thrive or in many cases survive.

The irony in all of this is that usually the FEE that a client is willing to pay  for contingency is the same as it would be on retainer. The only difference is the terms of payment. Yet the key benefit to working on retainer is the ability to gain a commitment from one firm with a good reputation that you believe understands your company and the needs of the role and giving them what they need to be successful in the search. In doing this, the company will have a slate of qualified, vetted and interested people with the right motivation that ensures the best possible outcome.  This is why it is still a mystery to me that companies think that they are better off working on contingency.  What a tremendous miscalculation!

It’s still TRUE whether you accept it or not!

In recent months, I challenged the value of measuring recruiting metrics. I declared that the only metric that really mattered was how successful the person was that you placed in your client’s company. I received a staggering amount of criticism from recruiters and HR people in cyberspace.  I have to admit, I knew it was a little bit edgy, but not quite blasphemous. I wrote it in respond to the prevailing views on recruiting blogs discussing which metrics are best for recruiters to measure in their business. I realize that these measurements can be useful when managing recruiters, but I was interested in challenging the conventional wisdom and making people think bigger. You might say, that I was trying to get people to think about the outcome of their work and the impact on their clients rather than their own efficiencies. My assertion that only one metric truly mattered, and if we aren’t measuring how successful the people we placed were, and the impact they have in the companies we place them in, we are missing the whole point of our profession.  What is so scandalous about that? Isn’t that the whole point? Are we not placing people to do a job? Are they not hired to effect change or growth or both? Or are we only accountable for helping companies fill open requisitions, with no connection to the results? Because if that is the case, and you’re one of those recruiters, you are guilty of malpractice.  I am not a “Career Recruiter,” so perhaps my view is tainted by actual “real world experience” where sustained results really matter. When I was working for Stryker, I occasionally hired through recruiters.  I kept track of the results of the people who I hired through recruiters and compared the results in order to validate the expense and effectiveness of hiring recruiters.  At that time, I can say that the results I obtained through recruiters was far less valuable than those I hired on my own. Subsequently, I stopped using recruiters.

People who don’t understand why companies engage recruiters  beyond simply filling vacant positions lack a fundamental  understanding the real value that companies expect of them.  Several comments that I received after my bold blog said that I had “too lofty a view” of my role, and that “it isn’t the job of the recruiter to worry about what happened after the hire occurred.”  “we don’t have any control after the hire is done!” REALLY?

No control? FALSE!  You are the “procuring cause.” You cannot distance yourself from it.  During your recruitment process, you perform due diligence to discern who, to the best of your ability, will best execute  in your client’s company and have the greatest impact on their business.  If you don’t get that granular, then you aren’t thorough enough to earn a full fee. , (this may be why so many recruiters are forced to discount their fees to levels more commensurate with the quality of their work.)  You see, I don’t think my view of the role I play in the acquisition of talent for my clients is too high; but if you think I’m wrong,  your view of this business is too low!

As a Search Consultant, you have the opportunity to be a tremendous strategic asset to a company and enjoy the many rewards that come with this type of consultative relationship with your clients and industry.

You also have the right to feed on the bottom with the majority of recruiters who see their only responsibility as “filling openings.”  The choice is yours, but the implications are huge!  Choose wisely!

People Quit Jobs for Two Reasons

People leave their jobs on their own for two primary reasons, their Culture & Opportunity. I’m not referring to when people are let go, but when they choose to leave. The most common reason that people leave their job for another position is due to their boss lacking the ability to inspire, lead or develop them in a way that is satisfying their need to belong and make an impact. You may well come up with several other reasons, but they all boil down to leadership failure. Even when people leave a company for a better opportunity with another company, ultimately, the person’s boss failed to give them the chance to advance their skills and expand their horizon. Sometimes, it isn’t possible due to a variety of logistical reasons, which is why I didn’t say that there is only ONE reason people leave a company.

In a recent VP of Sales search for a $250mm division of a larger company, the final candidate listened to my initial presentation on the opportunity because something inside of him was yearning to be appreciated by his CEO. He felt under-appreciated and thus disrespected by his CEO. This is what led him to allow me to convince him to have an “exploratory conversation” with my client, the President. It was in that call that the President laid out her vision for the company and her philosophy of leadership. When they finished the call, the “bait was set.” Even still, the candidate was not convinced that this was either the right time or the right fit . After our debrief call, he graciously bowed out of contention for the position. Although the opportunity was bigger and the role more impressive than the one he currently held, he felt that he had more to do where he was and thought it better to stay and finish what he set out to do five years ago. Clearly, in his case, the reason to change was not for the “better opportunity” with my client, though it arguably was better.

In his case, he decided that he had more to accomplish in his current role. During the debrief call, he suggested that my client should continue to pursue other candidates and then if they felt that he was the best of the best, perhaps they should speak again. What he didn’t know was that my client had their heart set on him and only him. At this point, I agreed with him that he should stay the course and finish whatever is was that he felt needed to be completed. In speaking with my client, however, I explained to her his thoughts and the President still wanted him, probably more so at this point. I told her that in order to get him, she would have to perform in a manner that her company was not accustomed to. Being a billion dollar company with thousands of employees, they have policies and procedures that would get in the way of hiring him. They would have to move very decisively and have an offer within a few weeks or they would have ZERO chance of hiring him. I also explained that she would need to pursue him and show him that she wanted him more than his company did. She accepted this challenge and to her credit, she accomplished it. Now it was up to me to reel him back in and do so on the “culture side.” Knowing that the bigger opportunity would not be his driver, I tried to learn about his relationship with his boss and found that things weren’t perfect with his CEO. I learned that there were promises made that were not kept. I also found out that the integrity of the leadership was questionable. This was then the focus of all my discussions with the candidate.

Even in situations like this,people can be comfortable and complacent. Just because the leadership and culture isn’t positive, doesn’t mean that people will always be looking elsewhere. Perhaps it is the idea of “the devil you know, versus the devil you don’t.” But it does make the company very vulnerable to a Search Consultant with an equally impressive opportunity. In this case, my client pulled of a respectable feat by cutting through the typical HR rigmarole and executed the offer in record time, even cutting out a standard site visit with a full battery of interviews. This was exceptional on multiple levels. What wasn’t exceptional is that the candidate who was given the offer, accepted and resigned 48 hours later did so, ultimately, because of his boss.

There is a perfect example that people resign their jobs for two basic reasons, bad bosses or better opportunities. In some cases, both.

HR’s Double Standard

The purpose of this post is NOT to vent, but to highlight some of the oddities that I have observed as I have been in search for more than 12 years.

I have a client that retained my firm to hire a Vice President of Sales for a $250mm division of a larger Medical Device company. This was a repeat client with whom I had placed three other VP’s in the past, albeit with a different division. Working with different HR executives at this company, I acknowledge that each has a unique approach and style. With one of their HR executives, it went quite well. Unfortunately, I wasn’t quite as lucky with the others.

After extensive recruiting and vetting, we presented a slate of candidates and scheduled an array of telephone interviews for the President to meet these prospects. What happened next was an example of a double standard coming from HR that they don’t seem to recognize. For the second time in a matter of two weeks time, the President, who was scheduled for a telephone interview with a VP prospect, had to cancel the interview only minutes before the call would be placed. This didn’t happen once, but twice! After the second cancellation, my candidate made a snarky comment about the recurrence and eventually, said that he understood and would be flexible.

The irony is that the same HR person informed me that because a different candidate cancelled his interview only a few hours before his interview due to a conflict with his schedule at his current company, her company was no longer interested in interviewing him stating that “he didn’t show enough interest and it obviously wasn’t important enough to him to keep his appointment.” So here I find myself wondering why it is NOT OK for the candidate to cancel the interview on short notice but it IS OK for them to do the same thing not once, but twice!

Could this HR person be that out of touch with their own reality? Is this Double Standard acceptable? Is the Customer Always Right?

I would love to know what others think…

The Problem with HR

This series will focus on some of the things that HR does wrong. I guess I need to start with a disclaimer saying that there are a lot of things that HR does well. I am speaking in generalities of course, but HR is really good at spearheading policies and procedures. They are quite good at keeping all the regulatory records required by our oppressive government and administering benefits such as health insurance and 401K’s. There are various and sundry other things that HR is quite effective at doing. Furthermore, I find that many HR people that I have worked with are extremely dedicated and put it extraordinary efforts and extremely long hours. Having said that, most HR executives that I have seen are sort of “Jacks of All Trades,” when it comes to juggling many different priorities in a company. Their problems have to do with recruiting. Recruiting is a function of sales & marketing and let’s face it, if HR folks were interested in sales & marketing, they would have pursued that as a career, but they didn’t. Recruiting is the life-blood of any company regardless of its stage or size.

The problem with HR is that they seem to think that because they have a job description and a basic understanding of the roles and responsibilities, they therefore know what it takes to be successful in identifying, attracting and compelling someone to join their company. It is obvious to me that the vast majority of HR peeps have an inability to identify talent, and that is just the beginning. I don’t blame them for this because it is an extremely complex formula that requires a deep understanding of the skill sets and context of the position that you are recruiting for and the psychology of bringing someone from the point of indifference to interest. In a recent blog that I read called “People Who Suck Don't Know They Suck” I instantly thought of 90% of the HR people I’ve worked with over the years who have no clue how to assess talent or recruit talent, yet they are convinced that it is one of their core competencies. I believe this is one of the reasons for the tension that is often present between HR and Executive Search Consultants.

The proof is in the pudding. Not only are most of their hiring processes over-engineered, they are inflexible to the nuances of a successful recruiting process. It requires acute insight into the mind and soul of a person to persuade them to consider a major life change. HR doesn’t seem to fully understand that all people cannot be processed through a check list and evaluated exactly the same even though they are being considered for the same position. Most HR types seem to be under the impression that prospects need to fit into their neatly wrapped hiring process when the best person to determine the ideal process is the one who understands their motivation and the unique triggers that would entice them to make a move. The most effective searches I’ve conducted either didn’t have an HR person involved because it was a start-up or the senior executive took the reigns away from HR and circumvented the sanctioned process and hired the candidate that they wanted. I can’t recall a well executed search where there was an internal HR executive who led the process. The successful searches I’ve conducted with larger companies have been where the HR executive deferred to me and played a supportive role in the process. I fully appreciate that many of them are very reluctant to yield control of the process because they either have reason not to trust the Search Consultant or they simply have “control issues.” I have seen it both ways. The point that I am making is that HR plays an vital role in companies, but when it comes to recruiting talent they are best as a support to the Executive Search Consultant and not the lead.

Alright, now let the bullets fly…

Never Hire a Contingency Recruiter!

Conflict of Interests

An enormous conflict of interests exists between the Contingency Recruiters and their client. What may have seemed like a good idea, in actuality has turned out to silently pit recruiters against their clients. Let’s face it, to many people in business, recruiters have become nothing more than a “necessary evil.” In fact, many HR professionals will tell you that one of their top priorities is to use fewer and fewer recruiters and in an ideal world, they would eliminate using them entirely. After being on both sides of the table in industry for over a decade and now more than a decade as a recruiter, I can assert that the Tragic Flaw in this process isn’t the recruiter per se’, but instead the means by which recruiters are engaged.

First and foremost we must acknowledge that contingency search makes sense on the surface. It is hard to argue against the idea that if you aren’t happy and don’t hire, you pay nothing. However the law of unintended consequences takes over and the fall out is what may look like a good short term outcome rarely lasts and HR very rarely knows the truth of what happens behind the scenes. Evaluate the process, and I think you’ll see that it is rife with embedded conflicts of interests which create all the right conditions for a terrible long term result. Pay for performance seems pragmatic enough right? After all, this is a “Market Driven Practice” brought on by competition and demand. But why don’t we engage all functions on contingency? Why only recruiting? Is it because the barrier to entry to become a recruiter is a phone and a PC? Is it that anyone can make any claims on the other end of the phone about being an expert in any field? But what about the results? Isn’t that what it is all about? I believe that I can make a case that what lies beneath the surface is a conflict of interests of Epic proportions which ultimately rewards the worst possible performance and most unethical and self-serving actors in the recruiting industry. If you’re familiar with the book, Freakonomics, then you know that with each economic incentive comes an element of unintended consequences. This could easily fit into a chapter of their next book because it is a clear example of the negative outcome being more destructive than the specific intended benefit, which was “Paying Recruiters based on their Performance.” Why would it make sense to have a consultant who conducts so important a role have any other priorities apart from yours?

Product Development

Lets take for example a company in need of a product re-design in order to fix a complex problem with one of their existing products. When the company hired a design firm on contingency, they determined the effort the firm could put into the process which is inseparable from the outcome. Would the design firm enlist their best and brightest designers to thoroughly study the problem to find innovative ways of solving the problem without creating new ones? I can promise you that they would NOT if there was even a remote chance that they would never be paid for the work. If they did, they would compromise their very existence. Then what would happen if the same company openly discussed its product needs with other design firms in hopes that they may have an innovative solution. This sort of thing happens all the time. What if the company suddenly changes direction and scraps the whole project after weeks of design work? The design firm will have lost all their time, materials and opportunity to make another part for a paying customer. Any design firm willing to work this way either is in a desperate situation and needs the work, which begs the question, “Why?” Is it because their work is sub-par? A good design firm would never work on contingency because it doesn’t afford them the time and security to make the product that best suits the needs of their client. It would force them to rush the job and commit very little time and energy to the project.

Essentially, a recruiter is no different than a design firm. Although they don’t create people, they must essentially commit the same time to identify and recruit talent with all the right features, skill sets, character and chemistry, to solve a problem that a company has. All of this takes great time and attention if done correctly. On contingency, a recruiter simply cannot do the necessary work and truly put the needs of the client ahead of their own need to secure the fee.

I contend that this conflict of interest is easy to eliminate provided that you find the right firm to partner with; one that understands your unique value proposition and culture. Without a real commitment, not merely words on paper, but a real, “skin in the game” commitment, the immediate pressure is off and the fear of loss is eliminated thus allowing them to do the work right in stead of cutting corners. In a contingency search, it is a race to the most readily available candidates which means that they must already be actively pursuing a new job.

Without this level of commitment from a company, a recruiter will not be committed to the long-term success of the company, which is finding the absolute best people in the industry for your job. Instead, they will be committed to securing a fee above all else. Why don’t contingency recruiters share your priority? Because they are human and their basic needs come before anyone elses needs. This translates directly to the caliber of people they will put in front of you. They cannot take the time to truly understand what your company needs and the challenges this person will need to overcome. They cannot afford to take the time to truly find those people who’s head is down and they are successfully plowing away at their jobs.Those types of candidates are harder to recruit and they do not interview like an “applicant” does. They don’t need your job. Yet, the active candidates who I like to call “Mis-Employed,” will interview in a compelling and aggressive way out of their own need. The “Mis-Employed” fit in to either one of two general categories, “Currently Unemployed” and “Nearly Unemployed.” In either scenario, these candidates are the ones that you will see when working with a Contingency Recruiter simply because they are ready to move. They are motivated to make a change and already have made a commitment to get a new job. These people tend to interview very well because their motivation to find a job compels them to sell themselves. Contrast that with the “Gainfully employed” person who frankly doesn’t need your job. These candidates are completely different. But who would you rather have at your company, someone who is out of a job or discontent with their job? I contend that these people make short term decisions about their future because of the pain that they have. When your boat is sinking, any land mass that is dry seems like a good place to land. To someone who isn’t looking for work, they are more discerning about their future and they focus on what pulls them into a new opportunity instead of what pushes them. This is a concept that once you grasp, I believe that you start to see the breakdown of the contingency search. It doesn’t force the recruiter to rush the search and thus find the best people, but the most available.

If they operated while in a contingency search while trying to find the best prospects for the job, they would certainly lose out to the opportunistic job shoppers because I we just learned, they do a better job of selling themselves. In fact it takes a discerning person to tell the difference between the two. These nuances are critical to understand what motivates your candidate. If however, you’ve hired your recruiter on contingency, you most likely won’t know this because they will conceal these little facts such as the candidate is on a 30 day plan, or she hates her boss, or he has done something against the rules and is under discipline. You will never know this or any other fact that might hurt the contingency recruiter’s chance of making a fee.

I like to tell people that it is the job of an honest recruiter to reveal the blemishes of each candidate, not to hide them. It is the responsibility of the recruiter to tell the prospect what the role entails and what they need to be able to do to be successful, not tell them the “hot buttons” of the hiring manager so that they can check all the boxes of what he or she is looking for. If you don’t believe me, then you’ve never been through the any Contingency Recruiter Training. There are dozens of ways recruiters know how to overcome your objections through preparing candidates to make the grade.

Alignment of Interests

If a recruiter has its clients best interests at heart, then it is constrained to do what is right for the company and not for himself. It is their fiduciary responsibility and sacred trust to do everything in their power to recruit and vet each candidate until they find those who to the best of their ability to discern, the candidates will be successful in their new role and be a valuable and loyal employee for years to come. To make matters worse, most companies have a policy of only paying the first recruiter to email a resume when hired. It shouldn’t surprise you to know that this is an incentive to email a resume prior to speaking to and vetting a candidate. Where do recruiters find such resumes? The Internet of course. Knowing this, how confident can you be as a Hiring Authority that this recruiter will do what is in your best interests. When their top priority is ensuring that they put someone into the position as soon as humanly possible? The truth is that you can not. You have instead undermined your own chances of hiring the best possible candidate. You have forfeited the best for the most expedient. I am fairly confident that no one would think that was a good way to do business when it comes to designing a new product? Why should it be any different when it comes to hiring a full-time employee?

If what you want is a race to the “low hanging fruit,” contingency search is a great way to do it. The incentive exists to do the work as quickly as possible by taking enormous short cuts essentially putting the needs of the recruiter above the client’s. I cannot understand why this would be acceptable to any company. Rates aside, the terms are what determine the outcome of any search. Either it is rushed to make a buck or it is executed responsibly with the highest priority being finding the best possible people to fill the role and excel in it for years to come. Furthermore, I don’t believe that any smart business person would ever knowingly entrust so important a task to such an irresponsible process, let alone arrange the terms in such a way as to guarantee it. However, companies do this all the time when it comes to hiring a full time employee.

The right process involves establishing a relationship with a firm that invests the time to gain a thorough understanding of the problem or the position that must be filled by the acquisition of a very specialized skill-set. Then the comprehensive design/search process would be conducted to be sure that all the specifications of each prospective candidate meet the demands of the role. Thorough vetting of the candidate would then be conducted prior to presentation of the product to the client to minimize risks and ensure the best possible outcome.

I contend that contingency search has incredible pitfalls as it creates a gross misalignment of priorities between the recruiter and the company. No recruiter can do their best work on contingency. When a company and a search consultant have conflicting priorities, the process is undermined and the product and result is severely compromised.

10 likely consequences of Contingency Search:

  1. Active Candidates are simultaneously interviewing with other companies
  2. “Mis-Employed” candidates are less focused on your job. Push vs. Pull
  3. Candidates accept your offer only to later renege after accepting a competitive offer
  4. Candidates stay a short time at your company and never quitting their job search
  5. Candidates turn out to be different people than who you hired. “Over prepared” or “Force Fit”
  6. Search takes much longer than it should have due to turned down offers and other problems
  7. The Replacement guarantee you now need was only 30 days
  8. You lose large amounts of Time & Money not to mention the “opportunity costs”
  9. Multiple recruiters submit the same candidate creating conflict and risk
  10. You grow increasingly skeptical of all recruiters and unwilling to trust them with your best interests
  11. The more I consult with business people, the more convinced I am that HR has settled for scraps when a feast is only a few contract “terms” away.. Companies should never engage any consultant with an incentive any other than delivering the products and services which are in the company’s best interests. The odd thing is that the fees for each respective process are the very comparable, while the process and product are significantly different. Partnering with a search firm in such a way that promotes a healthy alignment of priorities, a company can and should have nothing but the best possible slate of vetted candidates/prospects from which to hire without losing them to a competitive offer or worse, losing them a few short months after their start to an aggressive competitor/suitor.

    The choice is yours to make. Either continue to gnaw on scraps or set the table for a feast of epic proportions.