Human resources: new recruitment challenges
You will perhaps have heard: finding and retaining top talent be it for large corporations, SMEs, associations and consultancies is fast becoming a major challenge. In many cases, the challenge has become a factor in the loss of competitive strengths, and consequent decline of market share.
Some underlying reasons are well known: demographics (the "baby boomers" are beginning to retire and not being replaced by equivalent numbers of new entrants into the workforce); declining unemployment; sustained high demand for candidates with similar profiles in many sectors, such as IT and Telecom; shifts in employee attitudes to loyalty and their work/life balance.
But another, less obvious factor is at play: employers' response (or non response) and in particular the adaptation of their recruitment and retention strategies to a rapidly changing labour force landscape. In fact, pragmatically, this is perhaps the most important issue. Employers can't change demographics, but they can change the way they recruit.
Until recently, most employers were in the enviable position of being able to pick and choose among a plethora of spontaneous candidacies to fill most, if not all their open positions. In those cases where “Mr. or Mrs. Right” was not at hand, word of mouth, and an advertisement would more often than not elicit a more than adequate number of qualified applicants. The biggest challenge was making the right choice! But today, employers are facing new realities. And, as in any rapidly changing environment, those who are the quickest off the mark in adapting their attitudes and strategies will reap the benefits of stronger, more stable, and more efficient human resources. The more senior and/or technical the positions, the more vital this becomes.
New challenges and the need for specialised assistance
With many or even most employers fishing for the same profiles in the same pond, yesterday’s recruitment strategies are fast becoming inefficient and un (or even counter) productive. The bottom line is that most employers are rapidly (re) discovering the value and economic sense of retaining, and building long term relationships with Executive Search firms.
The simple logic is that the quest for talent needs to be both broader, and deeper than ever before. Chances are the ideal candidates are not scanning the “want ads” or online recruitment websites nor talking to friends about changing jobs. They could come from a different industry (which has already faced the challenge an employer is up against today), and thus bring fresh thinking and new vision. They may bring talent that will enable an employer to embark in new, lucrative business ventures. And they need to be in a position to contribute to an employer’s strategic plan. Leading Executive Search firms will build a highly personalised strategy for each individual recruitment taking these complex factors into account.
Headhunters….and headhunters
Most leading headhunters accept the title with a smile….they generally prefer to be known as Executive Search consultants. Perhaps to more clearly identify themselves as employer business builders (via human resources), as opposed to simple recruiters. Recruitment agencies tend to use large databases of names, rely on electronic/web technologies, and place cold-calls to potential candidates whom they might never have met before.
While not eschewing these methodologies, executive recruiters use their specialised and often personal networks of contacts to attract individuals to opportunities and search for candidates for the most senior positions. In Brussels, as an example, the typical minimum annual salary for a position that an Executive Search firm is retained to fill is €100,000. Consultants specialise within given industries, and typically have long-lasting relationships with their clients. These relationships are key, because the recruiter knows the nuances of the internal culture within the client’s organisation, and is best prepared to offer candidates that would make a good fit.
In addition, executive recruitment firms often offer guarantees for the candidates who are hired. That is, if the individual resigns, for example, within six months of the date of hire, the firm will mount a new search to find another candidate.
Taking care of the details
Companies that decide to search for a senior candidate using a specialised recruitment firm find that they save time and resources. Following an exploratory meeting to learn more about the position and after participating in a thorough briefing session, the search consultant returns a written description of the employer, the competitive situation, the recruitment context, and the position to the client for approval. The description is a key step, and the client must share as much information as possible in order to enable the recruiter to identify the best possible candidates. Of course discretion is paramount – privacy of the client, as well as privacy of the candidates.
Building on his experience as Managing Director and Marketing Manager for L’Orιal, Howard Honick has been a senior consultant with Alexander Hughes, one of the leading recruitment firms in Europe, since 2000. “We believe every mission, every client, every candidate is unique”, says Honick. Our consultants spend whatever time is necessary to understand every aspect of the mission; we pay particular attention to soft skills, and matching client/candidate culture”. Confidentiality is of course crucial. And we only present candidates to our clients who we know could be an ideal match in terms of experience and personality, and therefore make a long-term fit.”
It’s all about who you know
Executive recruiters know their client’s industries and have many contacts because they have worked in the sectors themselves. Anne De Greef, a senior consultant at Alexander Hughes previously worked for many years in executive positions in business development, operations, strategic planning and M&A for DHL, UPS and as COO for Fleetlogistics/Wheels. Combined with her additional management experience in the chemical and leasing industries, she is well-placed to identify potential candidates for clients in these businesses, because she knows – and has worked with – many individuals in those sectors. “This detailed knowledge of and ability to recruit high-level executives is what makes clients rely on our services. Clients realise that top-level recruitment is not an overnight process,” said De Greef.
Strategic recruitment impacts the bottom-line
Recruits for top-level appointments will eventually have a role in shaping the future of a company. They will be a part of the team making strategic decisions about the organisation’s direction and developing and enacting its business plan. Thus, candidates must have extensive experience and the business sense to succeed in making the right decisions. “There’s a lot on the line when filling positions for our clients,” said Honick. “The positions we help fill are vital to the client company’s success, otherwise the company probably wouldn’t invest in our services.”
Costs for recruitment services usually are linked to the salary level of the position being filled. Firms typically charge a placement fee when the candidate they identified and recruited accepts a job. The fee can be set as a straight percentage of the salary, or negotiated as a retainer. For some companies with ongoing hiring needs, the retainer model is usually the most advantageous.
Widening the gene pool
Once recruitment profiles have been defined, there are several steps to finding the right candidates. One of the most important is to take a cross-sector approach. Companies must not depend only on the talent that is already employed within their sectors; to the contrary, employers must extend their search for candidates to include industries that they may never before have mined. “Our experience shows that more and more companies are taking this cross-sector approach. This is particularly true in the financial sector, where we are seeing an increasing demand for mathematicians and actuaries to manage hedge funds and private equities,” said Honick.
For big and small
Surveys of European executives indicate that three factors are hampering corporate expansion: increasing bureaucratic and administrative complexity (regulation, compliance issues); uncertainty, as it relates to top line growth; and the difficulty of finding the best people to grow the company. These issues hold true for small, mid-size and large organisations. Executive recruiters specialise in filling senior leadership positions, no matter what the size of the organisation. Perhaps for SME’s, it is even more critical to find not just “the right person” but “the best person”, since each new recruit will have a proportionally greater impact on the existing team as a whole.
“In smaller companies, the quality of internal human interaction tends to have a more immediate effect on overall results,” said Honick, “Also, responsibilities in an SME can cover more than one functional area. A Finance Director will probably have admin duties, and also might oversee HR. So we would need to find a person who can positively impact all three areas.”
Recruiting ‘in-house’ is typically the first reaction of most HR directors. But for small and mid-sized companies searching to fill management positions, looking within is often not feasible. Most likely, for young and/or small businesses the required talent does not yet exist in-house. So for middle and senior-level hires who will have a significant impact on the top and bottom line, it’s becoming more and more common for organisations of all sizes to rely on a executive search firm to find the best talent out there.
For more information about Alexander Hughes, visit: www.alexanderhughes.com
