Why Data Analytics Is the New Game Changer for Search Firms
June 19, 2017 – As workforce management paradigms shift to meet 21st century talent needs, HR leaders and executive recruiters are leveraging new tools and capitalizing on analytics to adapt their strategies and address changing trends. As we all know, anyone who’s been put in charge of selecting a new leader has a daunting task in front of them.
But what’s changed in just the last few years is how leveraging data and analytics can minimize the risk associated with bringing someone new onboard – at every professional level. Big data is behind it all. Readily available analytics have created a seismic shift in how companies now operate, go to market, track employee performance and take the guesswork out of hiring.
But there’s a growing problem. While most organizations have collected vast amounts of information about their employees and stored it in databases around the world, few are using their own human capital analytics to its full potential – especially when it comes to hiring and people management.
While executive search firms traditionally have not been early adopters of technology, clients are now forcing their hand. According to Larry Hartmann, CEO of ZRG Partners, the fastest growing U.S. search firm, clients are finding great value through objective data in all parts of their business. “Hiring is no exception,” said Mr. Hartmann. “Smart clients are embracing new ways to hire top talent and making better decisions using data and analytics in tandem with traditional search approaches.”
Holy Grail for Clients
“As we work with our clients globally across industry sectors and geographies, we are seeing the impact of data within the search process leading to better hiring decisions and faster time to fill metrics,” he noted. The holy grail for clients, he said, is finding ways to make better hiring decisions and completing them more quickly, with less time actually spent with their search partners.
The need to enhance innovation in executive assessment is one area search consultants have been focused on. Recent advancements in technology have enhanced assessment tools, which have become a more defined and data-driven business. The list of search firms offering leadership assessment has been expanding rapidly, whether it be through acquisition, alliances, or launching new, closely related services.
Everyone, from clients to the search firms that service their talent needs, are after one thing: developing best-in-class tools and analytics to locate, assess, onboard, and retain talent.
Hoping to create better predictive leadership for clients, executive search firm Caldwell Partners has aligned with Caliper, a research-based management consulting firm focused on assessment and leadership development. “Our goal is to minimize uncertainty for clients with respect to how a particular candidate will t into the role and culture of the hiring organization,” said Elan Pratzer, one of its managing partners.
A few months ago, higher education executive search firm Greenwood/Asher Associates and The Devine Group, a behavioral assessment and development organization, formed a strategic alliance. “We see it as integrated in the search process and providing additional information about candidates,” said partner Jan Greenwood. “It allows for a more complete profile for the candidates. One does not replace the other.”
Ms. Greenwood is a licensed psychologist and a psychometrist who specializes in tests and measurements. “Technology provides a faster analysis allowing timeliness of feedback and more time for one-on-one interpretation,” said Ms. Greenwood.
When assessment doesn’t bring the desired results in attracting top-level executive talent, it presents challenges for search firms.
According to Allen Austin founder and CEO Rob Andrews, his firm is seeking more positive results from its partnership with ENGAGE, a sourcing intelligence platform combining big data and predictive analytics to identify potential targets. “We hoped that it would be a game-changing technology for us. But that’s very different from assessment. One really has very little to do with the other,” said Mr. Andrews, who heads Allen Austin’s global CEO and consumer packaged goods & durables practice. “ENGAGE allows us to quickly identify specific kinds of research on candidates. We thought it would help with the speed of execution, with gathering information faster. To some extent, it may have helped. But there’s a lot of developmental work left to be done.”
Mr. Andrews said his approach to executive search is radically different than that of his primary competitors. “We’re in the business of executive search,” he said. “If you want to do it right, if you want it to stick, if you want to deliver real value, you have to do the right kind of discovery and assessment up front. I’ve seen assessment used as a qualifier and disqualifier. It should be included in the decision-making process, but be no more than one-third of the basis for your decision.”
Capturing Market Data
According to Mr. Hartmann, executive search is no longer just about finding the right CEO, CFO or head of marketing, but more about the market intelligence, insights and feedback a client can gain throughout the search process. Helping a CEO or board to better understand the competitive talent landscape through talent mapping work is often requested as part of a search and can precede a full- edged retained process, he said. “Clients who take a deeper look at the type of talent that competitors might have in similar roles often revise their thinking about how to fill an open role or how they might solve a broader business problem with fresh perspective and thinking.”
Compensation is another area where rich data resides, said Mr. Hartmann. A good search process that captures market data will also enlighten the compensation discussion and provide clarity around how a company should invest in top talent.
“While compensation consulting firms can hypothecate about compensation from the 100,000-foot level for a role, the reality is that the market speaks from the ground up,” he said. When a client articulates a model candidate with 10 specific skills and experiences from 20 specific competitors, he noted, the results of the search provide real compensation data for the role, not a market study.
Ian Ide, managing director and partner at executive search firm WinterWyman, agrees. “I find that executives react well to hard data; it’s tangible and sets the stage for a much better conversation.” Mr. Ide said data provides evidence and allows the client to draw logical conclusions. “If parameters of the search need to be changed, the data arms the stakeholders for conversations they may need to have throughout their organization,” he noted. Some of the search parameters that may change include compensation level and reporting structure. In other cases, mapping the candidate pool and gaining an understanding of the availability of local talent at the outset of the search helps in the decision as to whether a search is conducted nationally or locally, as well as what industries might be particularly viable.
“Once we have had enough conversations to have a viable data set, we can provide feedback on a company’s reputation, reaction to the opportunity, target salary, and reporting structure along with common questions that have arisen,” said Mr. Ide. By providing clients with this information early in the search process, he added, it allows for adjustments to be made when necessary and possible.
In Mr. Ide’s view, good data provides for more transparency in the talent selection process and allows for corrections if a search is going down the wrong path. The data and feedback keeps the search on track, he said, and that positively impacts the timeliness and effectiveness of the search. “All of this allows for greater efficiency,” he said. But data mining can also have unforgiving ramifications. “It can easily become overwhelming if you are not curating it. So our job is to help makes sense of that data and allow our clients to make informed decisions with it.” He said it is the expanding role of search consultants now to use data to help drive a new narrative, “versus just throwing data at a client without a reference point.”
For its part, ZRG has converted embedded, search wide compensation data into graphical compensation analytics that can be sliced and diced multiple ways. As clients assess a slate of candidates, just looking at skills and experiences is not enough the search firm has found. Factoring in cost versus benefit with actual compensation data clearly helps to keep projects on point and filled in quicker timeframes.
Know Your Candidates
Given a choice, any client would prefer to know more about each candidate compared to less. Knowledge about a candidate today goes well beyond a resume and an opinion. This is perhaps the most dramatic change impacting hiring over the past years, said Mr. Hartmann. The available information to better get to know candidates is abundant through many means. In the old days, it was the executive search firm’s 10-page candidate report and opinions. Today, this is replaced by more precise skills and competency charts and graphs that highlight strengths and concerns. What companies seek today, he added, are bottom lines, not dissertations about a candidate.
According to Mr. Hartmann and other top executive search consultants, the science of assessment has become mainstream for most companies today. That is likely to prime reason search firms are jumping into the space as well as other tangential areas surrounding the recruitment process. In the end, all of these ancillary services point to one hopeful outcome: confirming hiring decisions and making better culture matches.
Culture Fit
“The hottest topic we hear from our clients today is culture fit,” said Mr. Hartmann, and the discussion typically revolves around how the search firm can we add value in the process of measuring culture fit and compatibility with a client’s core values. Companies today spend millions of dollars to better understand and define culture and core values, yet there is little science to confirm a new hire will fit these precise cultures. To address this gap, ZRG has developed a learning algorithm to predict better culture fits and compatibility with those values. The new thinking is that being able to understand a candidate, and how they would fit in a culture, is actually something that is quantifiable and measurable.
Clearly, the ascendancy and influence of data and analytics is changing the entire model of executive search. And according to recruiters and talent acquisition professionals who have been plying their trade for years, there is no end in sight. For executive search firms and their clients, the next big change will come once they have both figured out how to effectively use the insights gleaned from all the people data they’ve compiled to drive better hires and achieve faster fill times. “Turning this valuable information into actionable insights without making it overwhelming or cumbersome is the hard part,” said Mr. Hartmann.
While some of the Big Five search firms and scores of boutiques are addressing this through adding new business lines, clients seem to be asking for one integrated approach that is simple and perhaps more business friendly. Their gripe: having three different business units work on a search or talent project is not a seamless or cost effective approach any longer.
Making the client experience effortless and robust with great insights to drive better results seems to be where everyone is heading – or, at least, would like to be heading. Embracing the best technology and assessment solutions and problem solving approaches will be clear differentiators for search firms of the future. “The best of us,” said Mr. Ide, “will eventually have data sets that can be leveraged in conjunction with our network and successes.”
Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media
