Executive Briefing - High Quality Talent Acquisition Summarized Review of Retained Executive Search Landscape Overview: Strategic growth through talent acquisition is an integral best practice leveraged by topperforming organizations of various sizes.
As investor caution increases, our clients in
Venture Capital take special notice of the value of certain key senior management hires. In a study to help our clients efficiently leverage a search consultant, we reviewed the landscape of the retained executive search industry. Retained executive search firms are directly contracted by a client company to exclusively represent them in recruiting talent.
This approach is characterized by a consultative
assessment, an agreed upon methodology to find the best person for a job, rigorous background checks, and an interview processes to present the client company a short-list of well-qualified candidates. The summary below outlines the landscape of the 20 largest retained search firms in the United States, comparing the following attributes: revenue, number of consultants, average National Strategic Group
l
28917 Euclid Avenue, Cleveland, OH 44092
l
216-395-0300
1
annual billing per consultant, and number of offices. We have also summed up a short list of questions that we recommend our clients ask when interviewing a retained executive search consultant. • Revenue – Revenue can be indicative of the number of searches or of the executive level of placements. Investigate a search firm’s experience with the function and executive level of the position you are looking to fill. With a large quantity of searches and multiple offices, the largest firms may be willing to negotiate fees for multiple hires, international hires or high profile searches. With smaller overhead and private ownership, boutique and midsize firms can often be more flexible in payment arrangements.
Should-Ask Questions Include: • How many searches have they completed for the executive level and functionality equivalent to your project? (This can be particularly relevant to technical positions that may have nuances that only experience can address.) • How well do they know the industries and talent pool you desire to draw candidates from?
• Number of Consultants - The largest search firms often cater to Fortune 500 companies. With staffs of over 100 consultants in multiple countries, they can offer a specialist in most industries or global environments. Smaller boutique firms are based around a few key consultants, specializing in one or two practice areas. Mid-size firms offer significant staffing specializing in multiple complementing industries.
Should-Ask Questions Include: • What expertise do the lead consultants have? (This helps assess the value of strategic advice in negotiating a mutually beneficial deal with top talent.) • What is their search process? What companies will they be targeting to recruit for your position? How will they position your opportunity within the marketplace to make it the most attractive?
2
National Strategic Group
l
28917 Euclid Avenue, Cleveland, OH 44092
l
216-395-0300
• Average $ Per Consultant – Look for a search firm with active consultants who are plugged into an industry. A high average billing rate per consultant can indicate very active consultants with significant experience. A smaller billing average may indicate consultants who are concentrating on a select set of searches that most benefit from their expertise. Having a trusted relevant voice within a field aids in the recruitment of the best talent, who are often not looking for new opportunities.
Should-Ask Questions Include: • What role will the lead consultant selling the work have in running your search, particularly in recruiting and vetting candidates? What is the role of staff directors or recruiters? • What is the search load of the consultants and director/recruiters who will be working on your search? How many other clients will they be working on simultaneously? • What percentage of searches booked by the lead consultant are completed successfully? (Depending on the contract, clients typically owe fees regardless of whether they choose to hire the candidates presented.)
• Number of Offices – Carefully consider how geography may play a role in the scope of a search or may impact how you reach out to candidates in specific industries. Many of the largest search firms have international offices, which can be a benefit if the open position is based in another country or you are looking for specific global experience. Smaller firms may have strength within a particular regional area. Organizations looking for a national scope for their search may consider mid-size firms with multiple locations to reach candidates on both coasts.
National Strategic Group
l
28917 Euclid Avenue, Cleveland, OH 44092
l
216-395-0300
3
Largest Retained Executive Search Firms in U. S. Rank 1
Korn/Ferry International2
Avg. Annual $/Consultant
Total Offices (# US if Int'l)
$654.1
471
$1.4M
72 (18)
2
Heidrick & Struggles
$482.5
376
$1.3 M
55 (14)
3
Spencer Stuart
$330.6
170
$1.9 M
53 (15)
4 5
Russell Reynolds Associates DHR International
$227.5 $143.0
107 160
$2.1 M $894 k
40 (12) 52 (27)
6
CT Partners
$121.1
200
$606 k
24 (8)
7
Witt/Kieffer
$37.1
80
$515 k
17
8
Caldwell Partners International
$34.8
42
$829 k
9 (6)
9 10
Diversified Search Isaacson Miller
$25.0 $16.8
40 23
$625 k $730 k
8 3
11
Herbert Mines Associates
$14.9
12
$1.2 M
1
12
Morgan Samuels
$11.3
10
$1.1 M
2
13 14
Crist/Kolder Associates Cook Associates
$12.0
4 10
$3 M $850 k
1 5
15 16
Schweichler Price & Partners Amrop Battalia Winston
$10.0 $8.6
12 17
$833 k $506 k
1 5
17
Slayton Search
$8.1
7
$1.2 M
1
18
Bench International
$8.0
9
$889 k
6 (3)
19
ON Search Partners
$7.7
6
$1.3 M
3
20
The McCormick Group
$7.2
26
$276 k
2
3
$10.2
1 1 Data self reported previously published Data self ror eported or previously published 2 FY not including Future step revenue of $90.2M 2 FY not Leadership including Futurestep revenue of $90.2M 3 FY not including Consulting revenue of $45.3M 3 FY not including Leadership Consulting revenue of $45.3M
1
No. of Billing Consultants
2011 Revenue ($ Millions)
Retained Executive Firms
Additional Notes:
Organizations preparing to retain an executive search firm may also consider – • The average number of days to completion • % of minority candidates placed, particularly if inclusion reputation is a concern. Are they aware of and capable of a diversity emphasis in their search process? • % of repeat business – how many clients come back when they need more talent? • A search firm’s “off-limits” restrictions can impact your search. “Off-limits” refers to the industry standard contract that prevents firms from recruiting out of their clients’ organizations or recruiting their past placements for a specific period of time. Many firms also have internal off-limits policies preventing consultants from approaching candidates already being considered for a different position.
4
National Strategic Group
l
28917 Euclid Avenue, Cleveland, OH 44092
l
216-395-0300