Impact, Summer 1999, p. 3-4 - ©1999 by The International Association of Corporate and Professional Recruitment - In January, the firm of Jones-Parker/Starr (JPS) of Chapel Hill, N.C., surveyed retained executive search professionals on a broad range of topics. The survey represents a broad sampling of the search community; responses were received from 182 professionals in firms of all sizes, including the top 20.
"When answers were compared between consultants in firms over $10 million in revenues and all other sizes, there was such an insignificant difference that we decided not to break them out separately," said Janet Jones-Parker, managing director. "This was a surprise to us and could represent a blending of the search consultant's view and approach to the business without respect to the size of firm."
Here's an overview of the results they received:
Selection Criteria
Most important criteria clients use when selecting a firm: Relationship with consultant (94%) and familiarity with industry (93%) as well as number of searches completed (77%) and knowledge of function (73%). Least important criteria: fee structure (20%), years in search (19%), firm size (13%) and international reach (13%).
JPS Comment: We believe that the trend
to specialize will continue and the generalist may be on the endangered list.
However, no matter how strong the industry experience is, the
relationship with the consultant will tip the scales in shootouts.
Speed
Factors affecting how long it takes to complete a search: Too many participants in the decision process (55%); indecisive client (50%); client unavailable to interview (49%); shortage of qualified candidates (42%).
JPS Comment: Search consultants and
clients can improve the search process by agreeing to guidelines at the
beginning of the search, including scheduling the first round of interviews on
the client's calendar, reducing the number of decision levels/ participants and
having full agreement on position specifications including most important &
least important requirements.
Success Measurement
The criteria firms use to determine their success include: longevity of hired candidate (76%); time to complete assignments (65%); percent of searches completed (55%) and contribution to shareholder value (46%).
JPS Comment: Measuring performance is important and should include summary reports on all searches including: percentage of completed searches, time to completion, candidates presented, and why a search was not completed. An outstanding record is a powerful marketing tool as well as benchmark for internal development.
Technology
How the use of Technology influences the search process: 81 percent believe in the value of capturing information in a database to identify potential candidates and 60 percent say the candidate yield from internal sources is less than 25%. On the other hand, a database is helpful to provide sources leading to candidates (72%).
Sixty percent now use the Internet and 66 percent now accept resumes over the Internet; however, candidates are found through the Internet less than 25 percent of the time.
JPS Comment: Search firms may lag behind their corporate staffing counterparts in using Technology. We believe that firms developing Internet based research tools will gain a competitive edge as the "technology facile" managers (the 30 somethings) move into senior positions over the next decade.
Compensation
Payout is not the only reason a consultant remains in a firm, but it is important. Consultants believe that their income should increase, commensurate with the revenues they produce and that reconciliation should be frequent.
Payout should be graduated based on revenues and averaged to: 0-250k at 36%; 251k-500k at 43%; 501k-750 at 51%; over 1ml at 58%.
A fair draw should be graduated based on revenues and averaged to: 0-250k at $92,000; 251-500k at $116,000; 501-750k at $151,000; over 1ml at over $200,000.
Reconciliation should be frequent: Monthly (19%); Quarterly (38%); Semi-Annually (22%); Annually (18%).
Executors should be compensated by salary and bonus according to the majority of respondents (62%) with additional consideration for quality, timeliness, and repeat business.
JPS Comment: It has been our experience
that the payout norm is becoming 50 percent with draws starting at $125,000 and
reconciliation three times a year. Executors are receiving salaries at $90,000 plus bonus.
Fees
There is a general belief that firms are under pressure to lower their fees. Seventy-three percent say they will remain at 33 1/3%; however, 56 percent say they do not always charge at that level.
When queried regarding fixed or flat fees, 50 percent say they will fix fees at 33 1/3%; 17 percent admit to fixing the fee below that level; and 7 percent say they charge more when fixing fees; 26 percent were unsure of the fixed fee amount they charge.
Thirty-three percent of consultants expect fees to be lower in the future; 34 percent are unsure; 14 percent believe they will remain the same and 19 percent think they will be higher.
JPS Comment: Clients want value and are
willing to reward outstanding performance; however, firms will continue to be
pressured to deliver faster results, meet performance criteria and be flexible
on fees.
Execution and Research
Sixty-four percent of respondents believe that support staff teams should be paid out of the firm's share and charged only on special occasions to clients (65%); however (38%) feel it is never appropriate to charge clients.
JPS Comment: Some firms charge clients
for research and administration; however, we predict that this will change in
the future as search management consultants focus their attention on cost
reduction.
Search
Professionals' Motives
The most important factors influencing a search professional's preference for a firm include: reputation of the firm (27%); cultural fit (22%); payout (21%); and execution and research support (13%).
The least important motives are: ownership possibility (9%), size of firm
(5%); management responsibility (2%); benefits (1%); and retirement plans (0%).
JPS Comment: Quality of professional
colleagues is one of the main reasons consultants have joined our clients.
Other key factors are the firm's vision and business strategy; i.e.,
where is it going and how will it get there.
Consultants want to be part of a dynamic organization.
New Developments
There are new developments in search. 80 percent of respondents believe that specialization is a permanent factor. 55 percent say affiliations do not work as well as wholly owned offices and 82 percent believe consolidation will continue. Most (88%) believe it will be important to understand the changing search landscape.
JPS Comment: If a majority of
respondents believe specialization is a permanent factor, then we wonder why so
many consultants continue to describe themselves as generalists (34%).
While we believe that there will always be a place for the highly
concentrated specialist boutiques, we predict that some of the affiliate
networks will become wholly owned entities, resulting in a dozen large global
firms.
You can reach Janet Jones-Parker at Jones-Parker/Starr, (919) 542-5977 or e-mail JonesPark1@aol.com.
Learn more about Impact and the International Association of Corporate and Professional Recruitment (IACPR) at http://www.iacpr.org.