The worldwide Association of Executive Search Consultants (AESC) released its bi-annual report today of client satisfaction levels with retained executive search consulting. Overall, respondents endorsed the differentiated value of retained executive search and its contribution as a high-end consulting service for the recruitment of top management.
According to the survey, during the past decade a number of developments have provided pause for thought and reflection within the retained executive search profession, including:
- The development of internal recruiting functions (the survey revealed that 2/3 of the companies who completed the survey have an in-house search function)
- The rise of social media
- Pressure by clients on the terms and conditions of doing business
- The challenge of introducing retained search into emerging markets
- Opportunities to provide leadership consulting services
In summary:
Retained search is preferred at the top levels.
Regarding higher compensation ranges — above $200,000 — 82% of client organizations continue to view retained executive search as their preferred method of recruiting senior executives, in spite of the increasing growth of in-house executive search departments and the widespread use of social media to identify candidates. For those of you who caught the livestream from our sister site, SourceCon, during the SourceCon conference a couple weeks ago, this was discussed by Jillian Snavley of PNC, who noted that she significantly reduced agency spend on high-volume and lower level positions at PNC by developing an “in-house agency” consisting of a team of sourcers. She noted, however, that she still uses preferred agency partners for senior level and difficult-to-find searches.
Retained search is preferred for global hiring.
Surveyed companies noted that they were less satisfied with, and less likely to use in-house search for, cross border assignments (inadequate geographic reach), confidential search, and board recruiting.
Reputation is the most important criteria for partnership selection.
“In a professional service environment where personal service is fundamental to success it is no surprise that firm and consultant reputation should often be synonymous.” According to respondents, a whopping 70% and 71% respectively indicated that consultant and firm reputation are most important when selecting search partners. Compare this to just slightly over 50% who indicated that price is the most important determining factor.
However…
Retained search is still mostly engaged at a transactional level.
36% of surveyed companies indicated that they work with multiple firms but only on a specific transaction basis. The same is true of clients that work with only one firm (21%). Longer term working partnerships are at 18% for multiple firms and 15% for single firms. This tendency to employ search consultants on an “as needed” basis, while historically acceptable, often results in an inadequate level of investment in the relationship on both sides.
The survey continues on to provide suggestions given by surveyed companies on how search firms can serve their clients better. Some of the suggestions included providing more regular status updates, more transparency of process, more metrics, a greater range of service offerings, and publishing performance against industry benchmarks.
AESC President, Peter Felix, commented: “In its sweet spot, at the higher end of the market, retained executive search is not only relied upon almost exclusively — as compared with other methods of recruiting — to conduct the most challenging and important searches, but is also well regarded. Our survey this year showed very high levels of satisfaction from clients, especially in relation to confidentiality, cross border search, and the provision of professional process and market intelligence. While clients were also open about changes they would like to see, the search profession should be pleased with the findings.”
The AESC suggests that, based on the results of the survey, a review of the positioning and offering of retained search may be in order for many firms since traditional approaches are being tested by the market and are creating vulnerability. Many firms already offer what is commonly referred to as a “contained” search model — a combination of contingent and retained search.
The survey received 222 responses from around the world from HR executives and others responsible for executive search, at a wide range of organizations both above and below $1billion in revenue.
A full copy of the AESC’s 2011 Senior Executive Recruitment Survey Report is available upon request.