By: Chris Murdock, Co-Founder, IQTalent Partners
I was recently asked my opinion on the future of executive search: are traditional search firms still the best solution to finding top talent? With AI and automation gaining traction, will search firms become less valuable? Unemployment is at the lowest it’s been since the late 60s, and it’s getting tougher every month to find superb c-suite leaders. Many heads of talent acquisition still turn to the search firms they know and trust. But, corporate budgets continue to tighten, and with search firm fees averaging in the hundreds of thousands, my colleagues have started to wonder if companies will start to look for another way.
Grandma Knows Best
It’s going to sound a little crazy, but to look at the future, I have to start with a story from the past. Back in early 2005, I had a telling conversation with my grandmother. At the time, I’d worked for Heidrick for nearly four years in executive search. Before my time at Heidrick, I spent a year at TMP Worldwide. By then, I’d conducted research for hundreds of candidate searches for hundreds of clients. During a trip home to San Diego, I spent the day with Grandma. Growing up, we talked about a lot of things. But, one thing we had never really talked about was what I did for work.
I had to describe the entire concept of executive search firms to my grandmother, and her response was telling! I explained that executive search firms are retained to find senior leaders from vice presidents to CEOs to board members. I gave Grandma the rundown on the process of recruitment from research to the offer. Finally, I told her the fee for my firm’s work: a third of the executive’s first year’s compensation, plus, potentially, a chunk of stock and what is called allocables (an extra 10% to cover expenses). When I told Grandma that a search for a role that paid $300,000 would result in a commission of $100,000 or more, her eyes widened. Then they narrowed while she thought about what she was going to say next.
My grandmother retired from the school district after spending over 25 years as a lunch lady. She and my grandfather grew up in The Great Depression and were always really responsible and practical with their money.
She asked, “Why can’t companies do this by themselves?”How are #talentsearch firms navigating a changing workforce? Chris Murdock of @IQTalent discusses the future of #executivesearch:Click to Tweet
The Early Days of Internal Executive Search
Two months after my day with Grandma, I joined Yahoo!’s internal executive recruiting team as an executive sourcer. This was nearly 15 years ago and was incredibly novel at the time. Yahoo!, Google, Apple, and Microsoft were just a few of the progressive companies that invested in setting up in-house teams. Silicon Valley urban legend claims that Apple started the trend of moving to the internal model because Steve Jobs refused to pay another search fee due to a bad experience. Steve Jobs was a true pioneer across the board.
Despite the early adaptation of in-house executive recruiting with technology companies, by 2013, internal executive search teams had not gained much traction. My firm conducted some research into finding in-house heads of executive recruiting. The list was very small; we found under 150 people. Fast forward 6 years to 2019, and we’ve just conducted the same research. The new results? A three-fold increase of internal executive recruiting staffs over the 6 year period! (Note: this was non-scientific research, fully based on LinkedIn searches.)
In-House Executive Search: The Future is Now
Because technology has made it easier to find and engage with executive level talent, companies have chosen to invest in building out their in-house executive recruiting teams. With an internal model, companies have more ownership over the process, more transparency into the candidate pool, and they are able to build long term relationships with high-quality potential manager, director, and c-suite level talent.Do you have a plan for the future of your #executivesearch firm? @IQTalent has some ideas to stay ahead of the changing landscape of the #workforce:Click to Tweet
An Executive Search Partner
The best executive search firms still fill a need, but the need is quickly changing, and firms must adapt to stay relevant. The future lies in creating a partnership with a company’s internal team and in adding value to the in-house executive recruiters. Search firms may be called in to assist with finding an executive for very specific industries, functions, and/or levels. If the in-house team doesn’t have the bandwidth, experience, or connections to fill a certain role, companies will leverage a search firm.
But does leveraging resources from a partner warrant the same fee that made my grandmother’s eyes nearly pop out almost 15 years ago? At IQTalent Partners, we say no way! We’ve created the innovative on-demand search model to bridge the gap between an in-house team and external expertise. Our clients use our services to conduct research, to add to their existing candidate funnel, and to leverage our connections and expertise across multiple industries. We simply extend the existing internal team. This is the future of executive search: an on-demand executive recruiting partnership where value is high, expenses are low, and results are exceptional.