HEADHUNTERS AND HOW TO USE THEM

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HEADHUNTERS ANDHOW TO USE THEMA guide for organisations and individuals

Nancy Garrison Jenn

THE ECONOMIST IN ASSOCIATION WITHPROFILE BOOKS LTD

Published by Profile Books Ltd3a Exmouth House, Pine Street, London ec1r 0jh

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Copyright The Economist Newspaper Ltd 2005Text copyright Nancy Garrison Jenn 2005

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The greatest care has been taken in compiling this book.However, no responsibility can be accepted by the publishers or compilers

for the accuracy of the information presented.

Where opinion is expressed it is that of the author and does not necessarily coincide with the editorial views of The Economist Newspaper.

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ISBN-10: 1 86197 734 4ISBN-13: 978 1 86197 734 2

Contents

Acknowledgements vi

1 The search business 12 Using headhunters: advice for organisations 333 Using headhunters: advice for candidates 514 Leading executive search firms 75

Korn/Ferry International 79Heidrick & Struggles International 88Spencer Stuart 95Egon Zehnder International 106Russell Reynolds Associates 113Ray & Berndtson 122The Amrop Hever Group 128The Globe Search Group 137IIC Partners 141Transearch International 145Whitehead Mann Group 152Highland Partners 157A.T. Kearney Executive Search 161Signium International 167Stanton Chase International 172Christian & Timbers 178Eric Salmon & Partners 184Penrhyn International 188ITP Worldwide 193Boyden 198

5 Sector specialists: leading consultants and boutiques 205

Appendices1 Glossary 2212 Association of Executive Search Consultants: list of members 2253 Useful addresses 233

Acknowledgements

Many thanks to all those who helped me in my research for this book,in particular John Barker (UK Cabinet Office), Rudy Baert (Danone),Bruce Beringer (33 St Jamess), Virginia Bottomley (Odgers Ray &Berndtson), Jenny Bryant (Vodaphone), Luiz Cabrera (Amrop Hever),Ben Cannon (Heidrick & Struggles), Christopher Clarke (Boyden), LuisConde (Amrop Hever), Tim Cook (Egon Zehnder), Peter Duffy (bg),Peter Felix (Association of Executive Search Consultants), AnthonyHarling (Eric Salmon), Simon Hearn (Russell Reynolds), Rudy Kindts(bat), Russell King (Anglo American), Mark Linaugh (Ogilvy & MatherInternational/wpp), David Lord (Executive Search Information Ser-vices), Nicholas Mabin (Cap Gemini, Ernst & Young), Manuel Marquez(Spencer Stuart), Robin Roberts (Egon Zehnder), Carol Scambler (StateStreet Bank), Steve Smith (Odessa), Charles Tseng (Korn/Ferry), ChrisVan Someren (Korn/Ferry), Matthew Wright (Russell Reynolds), FergusWilson (Spencer Stuart) and Peter Wright (Este Lauder). Grateful thanksalso to my editors, Virginia Thorp and Penny Williams.

Nancy Garrison JennFebruary 2005

vi

1 The search business

Executive search consultants do not come cheap the clue to their value is inthe name. Headhunters do not add value administratively or in a mechanisticrecruitment sense. They add value with knowledge of the market, creativesuggestions or an alternative view of individuals who are demonstrably able todeliver the results you want, or they may be aware of suitable individuals whohave legitimate reasons for moving to another employer. Headhunters aresearching not sifting.

Steve Smith, business consultant, Odessa International,

and former director of European human resources, Franklin Templeton Investments

There are an estimated 5,000 firms worldwide claiming to do retainedexecutive search, which means they are employed by a client to find asenior-level candidate with a compensation package usually above$150,000. Choosing the right firm is crucial, as is ensuring that you workeffectively with your headhunter to produce the desired outcome.

This book is a guide to help individuals and companies decide howto go about choosing a headhunting firm that best suits their needs andhow to use them to best advantage when they have chosen a firm orfirms. It looks at the leading firms in executive search and provides help-ful advice on maximising a relationship with a search firm for both indi-vidual candidates and corporate users. It provides practical tips for jobseekers on networking with headhunters, as well as a strategic analysisof trends and issues in the executive search profession and how searchfirms are diversifying into related services. There are profiles of the 20leading global firms and details of leading search consultants by sectorand industry in these firms and in the best specialist boutiques.

Definitions

Headhunters earn a living by identifying the best candidates for a spe-cific job vacancy. To be able to do this effectively, they must understandthe sector or industry in which they work. They must also have a goodnetwork of contacts within the sector and a knowledge of individualsmotivations or career interests. Most consultants handle about 20searches a year, but this number is highly variable and can be muchlower if, for example, the consultant is involved in managementappraisals or other services that headhunting firms are involved in.

1

Executive (or retained) searchExecutive search is the term used when headhunters are hired to findsenior executives, from senior functional or line managers to chief exec-utives, typically at base salaries of $150,000 upwards. Firms conductingthis type of search are typically divided into large global players andsmall specialists or boutiques.

This type of search is often known as retained search because a feeor retainer is paid which is not usually refundable, even if the search isunsuccessful. A portion of the retainer is normally paid in advance. Theminimum fee for most retained search firms is about $50,000, but feesare more commonly calculated as a percentage (perhaps 33%) of the can-didates annual salary. Expenses are also payable to cover travel, meet-ing costs and communications. Large firms also charge allocatedexpenses, which are research, secretarial and technology costs and canbe around 48% of the retainer. But everything is, of course, negotiable,as is made clear later in this chapter.

Contingency recruitmentContingency recruitment is when a fee is paid only if the position isfilled successfully. In general, contingency covers the $75,000150,000salary range but it is by no means exclusive and varies by country. Thismethod is firmly established in the United States, where it representsalmost half of the total recruitment market. Besides the difference in theway the fee is charged, contingency recruitment and executive searchdiffer in the type of service provided. Retained fees are paid for the pro-cess of searching, whereas contingent fees motivate recruiters to pro-mote attractive candidates to clients.

Advertised recruitmentFor recruitment and selection at mid-management levels the primaryvehicle is often media advertisement such as newspapers. Retainedsearch firms will sometimes offer a selection service for middle-man-agement posts at lower levels. The usual retained search fees apply.Firms operating on a contingency basis that offer an advertised servicewill be paid only if they fill the position, though advertising costs areborne by the client. In advertised recruitment the clients name may ormay not be divulged. It is also used for unusual recruitment where can-didates might not be identified easily and in some fields such as govern-ment or education, where vacancies must be announced.

2

HEADHUNTERS AND HOW TO USE THEM

Internet recruitmentThis is recruitment by website, mostly at mid-management levels up to$120,000. It involves a reactive, or applications-based, approach and afee is normally charged only for the posting of the advertisement andnot for the placement. Sometimes the clients name is divulged, whichcan be a major attraction for candidates. The market leader iswww.monster.com.

Headhunting: a chronological checklist The relationship between a client company and a search firm beginswith an initial conversation in which the client explains its manpowerneeds and the search firm explains why it is well suited for the assign-ment. Once contracted, or retained, by a company, a headhunter pre-pares a job specification, draws up a target list of candidates, interviewsthe client company and begins to approach candidates. Each headhunt-ing assignment follows a similar pattern. The following represents whathappens when the s