Executive Search Enters a Pivotal Moment

June 1, 2021 – Most search firms don’t innovate because they are led by people who aren’t very innovative, according to Mike Myatt, founder and chairman of N2Growth. Search firms are most often led by longtime recruiters who have grown up on the inside – “industry insiders refer to this as a safe pair of hands,” he said. Most search firms don’t know what clients want because they don’t know what questions to ask – they haven’t walked in the shoes of their clients, he said. “So, here’s a quick point of irony – How often do search firms recommend to their clients that they need outside-in thinking, that they need to bring in ‘bigger thinkers’ from adjacent and non-adjacent industries? The industry needs to move beyond the HR and talent acquisition world to expand thinking and explore the art of the possible.”

As an industry, Mr. Myatt says that if legacy-based executive search firms “don’t start to eat their own cooking, they shouldn’t be surprised when clients stop ordering menu items they’ve choked on before.” When was the last time your search firm developed a truly new product or service? Mr. Myatt asked. “I’m not talking about renaming the old as something new, but a truly game-changing product or service that puts your competition on their heels and creates advantage for your clients,” he said. “How many people on your search firm’s executive team come from the search industry? Here’s a hint, only one member of my executive team is an industry insider. When was the last time you tried something for the first time?”

Meaningful Investments

Just one example of a clear gap between the executive search industry’s outdated—or worse, misguided—worldview and their client’s perspective is the lip service many firms pay to digital transformation. “For years, our clients have been investing huge amounts of capital and resources into digital transformation, predictive data analytics, machine learning, natural language processing, cognitive AI, IoT, future of work and culture transformation,” said Mr. Myatt. “If you look at the majority of search firms in the market, they haven’t made meaningful investments in these areas – period. This has resulted in a widening of both the knowledge gap and understanding gap between executive search firm and client.”

Mr. Myatt says if your search firm has ever touted the size of your database as being synonymous with a certainty of execution, you just don’t get it. Data is ubiquitous. “Assuming a search firm has adequate financial resources, anyone can get access to the same data. It’s the insights you can draw from your ability to synthesize high volumes of curated data quickly that matter to clients,” Mr. Myatt said. “If your search firm’s idea of a market scan is a sending a few candidate profiles for the client to review, you should be embarrassed. If your definition of a market map is sending a wonky Excel file for review, well 1980 called and want’s their spreadsheet back.”

The reality is that if executive search firms continue to propagate tone-deaf arguments that insult the intelligence of clients, “we simply won’t advance the industry’s gravitas as value added professional service providers,” according to Mr. Myatt. He offers one example – that he calls “the patently silly” debate around the generalist firm versus specialist firm. “Let me put this debate to bed once and for all,” he said. “If you want to be of value to your clients, you better be both. If your search firm is a niche firm that only specializes in one industry, one geography, one type of role, or one type of anything, you have more limitations than advantages. Conversely, if your firm is a generalist firm absent domain expertise you have the same problem. Clients simply won’t continue to invest disingenuous, half-baked offerings when there are other alternatives in the market.”

Related: Executive Search Firms Adapting to the New Normal

Robust Market Cycle

It’s one thing for an industry to survive, but a quite another for an industry to thrive. “If my business logic hasn’t swayed your opinion on how and why the executive search industry needs to change, let me offer a more mercenary approach – let’s talk economics,” Mr. Myatt said. “From a basic macroeconomic perspective, as industries mature (and ours is certainly very ripe), price compression and commoditization occur. Continuing to try and justify/ protect the same fee structure put in place decades ago just won’t resonate with clients – moreover, it’s simply not sustainable.”

“Here’s the good news: With a focus on innovation around new products and services and unlocking new value for clients, it won’t be necessary to continue to justify outdated pricing methodologies,” he said. “In fact, clients will pay more for your services and you’ll be able to more easily defend pricing as clients will be able quickly calculate return on investment.”

Mike Myatt is founder and chairman of N2Growth. He is a leadership advisor to Fortune 500 CEOs and their boards of directors. He has worked directly with hundreds of public company CEOs and board members globally, and his representative corporate clients include Accenture, AT&T, Bank of America, Deloitte, EMC, Humana, IBM, Lincoln Financial Group, McGraw-Hill, Merrill Lynch, PepsiCo, and other leading international brands.

The executive search industry, like most, suffered casualties recently, and while the pandemic and its effects are still present in our day-to-day lives, smart search firms have moved on. They have addressed the needs of their workforce, they have listened to the needs of those they serve, and they have reinvented and reimagined a new and better way of navigating rapidly changing markets. “The search firms currently experiencing rapid growth in the market have already embraced some of the items mentioned,” said Mr. Myatt. “What we need to do as an industry is champion firms getting it right and weed out those who are holding on to a world that has long since passed them by.”

“The search industry suffered major setbacks as did our clients last year, and while the pandemic hasn’t left us, and the memories of 2020 will live with us forever, we are clearly in a new and more robust market cycle,” Mr. Myatt said. “With Q1 now behind us, the light at the end of the tunnel has become much brighter. In fact, many executive search firms have already come out the other side.”

Related: C-Suite Pain Points and Opportunities on The Road to Post-Pandemic Recovery

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media