Lauder Beaumont Associates

Question: Rob, I am looking to put an offer together for a senior appointment.  We are hiring a sales director for the first time and we have identified our ideal candidate.  My dilemma is what package to offer.  We want to make sure the offer is competitive and I’ve searched for salary benchmarking information. We are an IT managed service & outsourcing organisation and I can’t find anything specifically for our industry.  Is there a salary benchmark source that you would recommend?  Is it a general or industry specific?

Rob’s Answer: – I’m going to answer your question with some questions.   What difference is your new hire going to make to your bottom line?  What are you prepared to pay to increase your profits?  Would you pay more to get more?  In other words, what is the return on investment that you are looking for?

Salary benchmarks or surveys are useless when it comes to making an offer.  Each company’s situation is different and the impact a new hire will make will also differ from company to company.  It’s up to you to decide what upside you are looking for and what you are prepared to pay for it. When making a hire, you should always consider the business improvement you are looking for and calculate what that is worth to you and what salary makes sense.  You need a business case just like any other serious investment.    A sales director is usually responsible for profitable revenue growth so this should be an easy one to calculate but you should apply the same principal to any hire.

What if they don’t deliver what you anticipate?  That’s what the interview process if for.  If you run an interview more like a business planning session rather than a question and answer session, you are much more likely to have confidence in understanding what that individual can do for your organisation.  In some circumstance, it could be appropriate to put a bonus incentive plan in place related to achievement of the main objectives and success factors for the role.  You are minimising your risk if you do this so the potential reward for the new hire will need to be weighted accordingly.

The bottom line is to sop looking at salary as a cost; it’s an investment that should yield a great return for you and your new hire.  

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Question: - Rob, we advertised for a senior position we were looking to fill but despite a high volume of applicants, the calibre of candidates just wasn’t what we were looking for.  So we decided to use a headhunter to unearth some better quality candidates but we were extremely disappointed by the calibre of candidates presented – in fact we even had a couple of people put forward by the headhunter that applied in the first instance.  In your experience, is there really such a shortage of high calibre candidates in the market?       

Rob’s Answer: Without knowing the specific details of your requirement, it’s impossible for me to comment on whether there really is a dearth of candidates in the market for your open position.  However, this is not an uncommon complaint; despite relatively high levels of unemployment, companies are not finding it easy to identify and attract the ‘right’ people.

Since the economic downturn and what feels like a painfully slow recovery, I have seen a change in attitudes to hiring.  The list of ‘wants’ and ‘must haves’ is ever longer and the room for compromise has diminished.  Putting it another way, hiring managers have been raising the bar. The question is have they raised the bar so high that no one has got a chance of reaching it?  I have no issue with hiring managers wanting to get top performing talent into their business, in fact that’s what I tell them they must do to gain real competitive advantage but are the role requirements realistic and relevant?  Many hiring managers have become very cautious and demanding about who they hire, which is to be celebrated but the way to go about it is not to increase the size of the ‘want’ list.  We need to understand what success in the role looks like and let our requirements flow down from there; the list of ‘wants’ shouldn’t be bigger but must be sharply focussed.

The other possibility of course is that you want a lot but are not giving enough which will exclude the very candidates that you seek.  The role design, your market position, your company’s reputation as an employer and of course the package on offer are all contributory factors here.   

It does not surprise me that you had a high volume of applicants when you advertised for the position but as you have found quantity is no substitute for quality.  Whilst there will be some great people between jobs right now, the vast majority of top performers will be gainfully employed.   Particularly for senior positions, the odds of a top performer responding to your advert are heavily stacked against you.  This is why companies turn to heahdhunters as you did. 

Again, without knowing the specific details, I can’t pass comment on the headhunter you used, except to say they clearly didn’t meet your expectations so that’s not good.  What I can say is that there are real headhunters and people who call themselves headhunters.  The latter tend to rely on databases and advertising to source candidates; they might make a couple of calls to the obvious competitors but that’s about as far as it goes.  Real headhunters map out a sourcing strategy to encompass a broad range of candidates and undertake a comprehensive search, proactively approaching candidates.   

In summary, there are several reasons why you have been unable to attract the right person for your role.  The most common scenarios I see is that the requirements are not relevant or realistic and/or you (or your headhunter) haven’t looked in enough of the right places! 

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Question: I read in your book that approximately 50% of executive hires fail within 18 months. What is the single biggest contributor to that failure in your view?

Rob’s Answer:  There are of course several reasons why executive hires don’t work out. I outline 10 of the most common ones in my book, How To Hire Top Performing Talent.  I hear many of my counterparts in the executive search industry argue that things generally go wrong from when the person joins the company; starting with an ineffective on-boarding process and the lack of investment in talent management strategies.  Whilst I agree that these are contributing factors, I think that many of the potential issues can be addressed during the hiring process and in fact the lack of a systematic approach to hiring is the key contributor to failure. 

Many organisations do not have a systematic approach to hiring and the process utilised can vary considerably within a single department, let alone the company.  Individual hiring managers often dictate the process which may or may not be effective.  Until there is a standard approach and set of processes that applies to each senior hire, it is impossible to measure the effectiveness of the approach.  There is also no baseline from which to make changes and measure the impact and effectiveness of those changes.

With a thorough hiring process, a potential candidate would get to clearly understand what success would look like in the role; what support is at their disposal to achieve the key goals and objectives; what the on-boarding process is; and even what the talent management strategies are.  That way, the risk of these factors causing failure after they joined would be significantly diminished.

There are too many reasons to list why a senior hire doesn’t work out but many of them could be avoided with a robust, systematic approach to hiring.

Do you agree or disagree with my view?  What do you think is the single biggest contributor to senior hiring failure?  

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Question:  I’d be interested to know whether psychometric testing is the norm or the exception when recruiting at board level or one or two steps below. And what about events such as selection centres i.e. put the short list candidates into a room and have them “fight” until a winner emerges?

Rob’s Answer:  There is no norm when it comes to psychometric testing, it depends on company preference. Psychometric tests purport to measure psychological characteristics, including personality, motivation, career interests, competences and intellectual abilities.

For the vast majority of organisations I headhunt for, psychometric testing is not used as part of the hiring process. A headhunter is looking for an individual who is a proven performer in their field and the approach I favour focuses on how a candidate will meet the challenges of the role taking into account the specific circumstances which are unique to that company.  I believe that this provides more insight into a candidate’s capability to do the job than any psychometric test.  I’m not saying that they are never appropriate but I would need my client to convince me of the value before I took on an assignment in which psychometric testing was part of the process.

I have had experience of selection and assessment centres; a global IT services client I have done some work for used assessment centres extensively as part of their project management hiring process.  However, they are not common in more senior headhunting assignments.

As for putting the short list of candidates into a room and have them “fight” until a winner emerges.  I’ve never been involved in a headhunt where this is part of the process and frankly, I never would. The individuals that I headhunt are almost all working successfully in existing roles and would not entertain this.  It might be OK for candidates looking for an apprenticeship with Lord Sugar but it doesn’t work for senior top performers!

What are your views on psychometric testing, an essential part of the hiring process or a complete waste of time?

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Question: A headhunter sent a CV to me 8 months ago but I wasn’t recruiting at the time and that’s what I told him when he called me to discuss ‘his candidate’. I didn’t even look at the CV.  A couple of months ago I had headcount approved and received a CV from another source which unbeknown to me happened to be the same CV submitted by the headhunter a few months earlier.  We ended up making the candidate an offer and although the candidate does acknowledge that he had some dealings with the headhunter he does not recall expressly giving permission for his CV to be submitted to us.  This has become a mess because there are now two agencies claiming a fee.  Is the headhunter for real? Surely this has no legal substance?

Rob’s Answer: Unfortunately, this is an all too common scenario and regrettably I cannot provide the reassurance you seek about the legal position.  I have written about a similar case in a previous blog which involved Barclays in Singapore who were being sued by a recruitment firm for $266,000.

Barclays ended up settling out of court so they obviously thought that the claim had some substance.  The case provides a valuable lesson for hiring managers never to accept unsolicited CVs from a headhunter, recruitment agency or any other non-approved source.  If any CVs are received, you should immediately respond stating that you have not accepted the CV and do not agree to the terms and conditions of the agency (whether submitted with the CV or not).  You should further state that your company only deals with a select number of preferred suppliers who must show evidence from the candidate that they have agreed for the agency to represent them for a specific position.  You should further state that you do not accept the agency’s representation of this or any other candidate and reserve the right to consider the candidate for opportunities in the future and their representation by other agencies.

You will note that I refer to agencies because true headhunters just don’t work in this way.  They are engaged by clients on specific assignments and don’t work in this speculative manner.

Whether this particular case would stand up to legal scrutiny is hard to judge. As I’ve stated previously, I’m not a lawyer but there is potentially a case to be answered.  The key probably lies in whether the agency can provide evidence that the candidate agreed to be represented by them.  If the agency persists with their claim for a fee it may be worth seeking legal advice. 

Have you had a similar experience?  What was the outcome?  Do you have any other headhunters or recruitment agency horror stories?

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Question: Can a headhunter be challenged on the grounds of ageism or should any challenge be directed at the client he/she is acting for? What if that client hasn’t been disclosed at that stage?

Rob’s Answer: Whilst I’m not a legal expert I believe that a headhunter can be challenged on the grounds of ageism.  Candidates can claim against either the employer or the headhunter or both. A tribunal would consider the liability of each party and determine the level of award, if any, to make against them.

I’m pleased to say that this has never been an issue for me to date, although a few clients have tried to give me a steer in terms of the preferred age of candidates that they are looking for.  In these circumstances, I advise my clients that it is illegal to discriminate on age but more importantly, that they are potentially missing out on some great candidates by discriminating in this way.  Our approach at Lauder Beaumont Associates is all about finding and attracting people that will succeed in the role and for me that is not related to the age of the candidate. I’m delighted to say that I have recently placed a candidate in a role who is in his sixties and the only thing that mattered to me and my client was his ability to perform in the role. 

There are of course circumstance when my client’s identity is not disclosed, particularly at the early stages of a search but because I would never accept an assignment where age was part of the selection criteria, this has not proved to be an issue.

I doubt there is anyone out there who would admit to age discrimination when looking to hire but I would be interested to know whether anyone feels that there should be exceptions.

Are there specific roles or circumstance when you believe it is entirely reasonable to want to hire someone of a certain age? I will take some convincing but can promise an open mind and a fair hearing!

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Question: If I’ve confused you with this one – let me explain. I raise the question because my perception of what a “headhunter” is, and how he/she is engaged by the customer is at odds with a lot of what seems to be going on in the market.  Can you shed some light?

Rob’s Answer: In the traditional sense a Headhunting or Search practice would be engaged, and paid a retainer fee up front to go out, identify, select, and approach targets for a senior appointment. That’s of course a very simplified version of the methodology.

The reality of what has been going on in the UK employment market in recent years is very different, due to the increase of what I usually call “speculative headhunting” or non retained headhunting by employment agencies, who traditionally fill vacancies from their databases of job seekers and on a “success only” fee. These agencies do not have a retainer, and are using the headhunting approach (with or without permission of their client) because of the dearth of available candidates and the mismatch of skills available to talent required (which continues today, despite rising unemployment figures).

Often in this case, the brief will be out to several employment agencies rather than one, and many questions of ethics, best practice, conflicts of interest and client loyalty come into the equation. The cynics would also argue that such agencies often use these methods not just to fill that one role but also to add other useful candidates to their database.

My advice is that if you engage an agency, headhunter or construct a Preferred Supplier List (PSL), define PRECISELY the nature of the relationship, what they can and can’t do, and how they will be remunerated.

If you are approached by anyone claiming to be a headhunter, do take the call and speak with them but once again establish FIRST exactly the nature of the relationship they have with the client they claim to be representing.

It’s a complicated area, as you can see!

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Rob’s Answer: I don’t see this as a legal matter although contractual agreements sometimes address this issue. I see it as more of a question of business ethics.  As a general rule, I wouldn’t headhunt someone who I had placed with a client.  Firstly, I build long-term relationships with my clients based on respect and trust and that is more valuable to me than a one-off fee that I might gain by headhunting from them. 

Secondly, if I was doing the job right in the first place, I presumably spent many hours ensuring that there was a great match between my client and candidate, so what’s changed?   Perhaps the placement was a few years ago and circumstances have changed (different boss, change of company direction, etc.) then it may be worth considering – but I would exercise caution. 

My rule is that I would need to be able to tell my client that I was responsible for headhunting one of his/her staff members and not jeopardise our relationship moving forward – if I couldn’t guarantee that, I wouldn’t do it.

How would you feel if the same headhunter who placed a candidate with you, contacted them again about another position?  Would you work with them again if they did that?  Are there circumstances when you think this would be reasonable?

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Question: As we are in a small niche, if using headhunters we would want to keep our identity confidential in the early stages. How easy is this to do during initial conversations in such cases?

Rob’s Answer: One of the most common reasons you will hear headhunters cite for using their services is discretion and confidentiality.  It’s true, using a headhunter is far less likely to alert your competitors or employees to the fact that you are hiring than a newspaper advert or an online job posting.  However, there is a limit to how far a headhunter can take a conversation with a candidate without revealing who the hiring company is.  In the main, headhunters are approaching candidates that are not actively looking for a new job and they aren’t going to entertain a conversation with a headhunter for long without knowing who the prospective employer is.

You ask whether it is possible to protect  your identity in the early stages.  It’s possible in the very early stages, like the initial contact to gauge whether there is any level of interest but not much beyond that.  One approach is to say, “Let’s assume for a moment that the role is working for your ideal company, a place that you would love to work.  Now let me describe the role and see if you would be excited about this opportunity if it was at your ideal company.”  The idea is that you will eliminate those not suitable or not interested before you have to reveal the identity of the company.  This approach is by no means foolproof or ideal because a common response is, “I haven’t time to play games, either tell me who it is or forget it” and a few will tell you that the role sounds great just to find out who the hiring company is.  

The approach I favour and the one that I recommend is to reveal the identity of the hiring company at  a relatively early stage without going into too much detail about the role.  This way, candidates may rule themselves out before too much is revealed about the role or the hiring company’s plans.  At worst they tell their current employer that they received a call from a headhunter about a role with the competition.  Without any detail, it’s hard to imagine what their employer would usefully do with such information. 

Is there a risk that the potential candidate strings everyone along just to find out what the competition is up to?  Yes, but it doesn’t happen that often and is usually a long way down the process before anything worth knowing is revealed by the hiring company.

The other scenario, particularly in niche markets, is that the potential candidate realises that you are recruiting for a role that is currently filled by someone they know and perhaps respect.  Will they tip them off?  Unlikely but it could happen. 

I can think of a few circumstances when confidentiality is absolutely vital.  Perhaps the hiring company is about to launch into a new market and the element of surprise is key to making a splash in the market against existing players.  I’m sure there are other circumstances but if you really want to keep your identity confidential, you need to avoid hunting your competitors’ key people; otherwise you risk confidentiality being breached.

How far would you go in the hiring process before knowing who the hiring company is?  Would you send your CV or meet with the headhunter?  Has anyone got experience of hiring when confidentiality was absolutely key?  How did you approach it?

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Question: Is it ethical to get a headhunter to spy on your staff?

Rob’s Answer: I was recently asked on an on-line forum whether I ever get asked by a company to contact their staff to check whether they are looking elsewhere and if so what ethical guidelines I follow. 

The questioner also asked whether I knew if others in the industry had the same ethical stance.

Fortunately, I’ve never been asked by a company to contact their existing staff to check on whether they are looking elsewhere. If one did, I’d tell them politely that if they don’t trust their employees they should let them go – I’m not a spy.

Then I’d tell them, if their employees are not always looking for better opportunities, they’re not worth keeping and if they are not always trying to give them new opportunities to keep them engaged, then their competition has every right to them.

If a client asked me to do this, I would probably end the relationship and go and find another client. I really don’t want to place people in a company like that.

I’m sure that most reputable colleagues in the executive search industry would take the same stance but I have no doubt that a few would be prepared to spy if incentivised to do so.   

What do you think? Am I way off the mark here? Are such actions justifiable and if so, in what circumstances?

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