February 18, 2016 – Last August, I sat down with Mark Oppenheimer, managing partner for the Americas at Marlin Hawk, to explore the evolving relationship between CHROs and executive search firms.
Back then, Mark made the point that CHROs were in the driver’s seat and that executive recruiters needed to shape up to meet their increasing demands. In his words, “Many CHROs are disenchanted with the outdated practices of their executive search partners. CHROs want a sophisticated partner that can deliver strategic insight and competitive advantage. That demands fresh thinking, sharp market intelligence and an open minded approach to where the next generation of leaders is coming from.”
This week I met up with Mark again to get an update on where the market is going and how the executive search industry is evolving to meet the challenges faced by tomorrow’s CHRO. But this time I came armed with a video device and Mark agreed to ‘go on the record for time immemorial.’ His short three minute running commentary is well worth a glance. I have embedded the video here so you can take a quick look.
Mark heads up the U.S. territory for global boutique search firm Marlin Hawk. Since joining the firm in 2005, he has been the driving force behind the expansion of the firm here in the States. At 30, Mark fits right in to the Millennial genre and, not surprisingly, he is a great advocate of change.
In-House Recruiting Reaching a Plateau
Mark said that the heat is now turning up on executive search firms because so many clients are building in-house talent management functions. He quoted one of my company’s recent surveys on in-house recruiting: “It’s very telling that as much as 84% of the sample you surveyed think that search firms are losing a competitive edge to social media technology and that only 52% of talent leaders were highly satisfied with their external search providers.”
The warning is there. The executive search industry needs to finds new ways to sharpen up, stay relevant and add value because one thing is clear: the trend toward in-house recruiting will keep gathering pace before reaching a plateau, where it is likely to remain. He believes that plateau won’t be wide enough to prevent some executive search firms from falling off into the abyss – only the fittest will survive. This is something I have been writing about since the Great Recession, when in-house recruiting looked inside and essentially never looked back.
One Firm’s Secret Sauce
Marlin Hawk is building a reputation for offering clients an extra dimension. The firm’s secret sauce includes investing time and effort into really getting under a client’s skin – and then providing deep insight. Mark sees the future executive search firm as being more comparable with management consulting firm McKinsey & Co. than its traditional recruitment counterparts. Again, it is something I have been saying for years.
“What executive search partners need to do is to mirror their client’s sophisticated HR and talent construct and ensure that talent management integrates with business strategy,” Mark told me. “Search firms need to become a 360 degree talent consultancy arm that deliver progressive advisory services and actionable intelligence.” Actionable intelligence. Either the search firm of the future is based on the McKinsey model, or it might very well find itself copying from the playbook of the CIA, it sounds like!
Picking up on the comparison with McKinsey, Mark claimed it is not enough to simply react to a client’s brief. “Search partners must be proactive and their capability needs to span the entire talent ecosphere. Research must have breadth & depth, shedding light on the client’s peer group in terms of organizational design, benchmarks, workforce planning, compensation / attraction / retention strategies and talent pools. This market intelligence can then be used to shape talent pipelining, succession planning, leadership assessment, coaching programs and, of course, executive search.”
The real point is that executive search does not necessarily come first as it is not most effective when practiced in a vacuum, without market context. Other leadership advisory services can act as a prelude to executive search, ensuring that it fits into a wider talent strategy and is therefore more effective for the client.
Other Changes by 2020?
“If the executive search firm gets it right, it should permit large companies to outsource talent management instead of handling it internally. Having a variable overhead is attractive to some companies. To do that, search firms need to become indispensable, going the extra mile,” said Mark. For example, he said they should be actively involved in the onboarding process, supporting positive assimilation and ensuring that new hires’ performance matches expectations 12 months on from the start date.
Another area that will change by 2020 is candidate assessment. Finding top candidates is just the start. Executive search firms will need to be pioneers in assessing constantly evolving executive genres. The current trend is to select on future promise, rather than past performance, which takes a blend of science and art, psychology and psychiatry. The best firms will develop their own proprietary methods, adopting the strengths of respected psychometric tools (such as Hogan and Topgrading) and combining them with feedback from their own client base, cross industry and cross geography.
Crucially, technology will be a catalyst for change in the coming years. Digitization is a reality and is what is changing the talent landscape. “Executive search firms will need to cater to the needs of clients and fill gaps in their in-house capabilities,” Mark told me.
Search firms, he added, will need to be open minded about how to earn their money. Income will keep shifting away from commissions to retainer fees and even subscription fees for knowledge-based services. “Executive search needs to take the next step from a technology, a process, a methodology and a design perspective or else it will start to have its margins eroded away.”
Welcome to the 21st century talent management perspective of a new breed of corporate recruiter.
Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media