Five Great Questions to Ask a Search Firm Before You Engage Them

Your Director of Finance quit a few weeks ago and you’ve done the usual referral/job posting dance and have come up short. So you decide to bite the bullet and hire a recruiter.

And now the question is: what recruiter should you hire? How do you distinguish one recruitment firm from the other? After all, all the recruiter websites you visit basically say the same thing – right fit – we care – and so on.

Who to Use, and When

Whether or not you should use a placement agency (contingency fee based) or an executive search firm (retainer fee based) is very much a function of the level of the position. Generally speaking, if you were looking to recruit a general accountant or a financial analyst you would hire a placement agency, and if you wanted to recruit a CFO, you would hire me (that just slipped out—I meant to write “an executive recruiter”).

So to lead the five questions to ask a search firm before you engage them, let’s start with that:

1. Do you work on a contingency fee basis or a retainer fee basis?

The placement agency model is to have a lot of pre-screened candidates on hand, which they will draw upon to fill any vacancies their clients may have. Because the work involved to generate their candidate pool is a sunk cost, they’re fine with working on a contingency fee basis. If they fill a position, great, they generate a fee. If they don’t fill the position, it hasn’t really cost them much to give it a shot. That being said, there are some very good contingency based recruiters (like my friend Jennifer Williamson at Peak Associates, http://www.peakassociates.com, for example,) who will go the extra mile and proactively recruit on their openings if their candidate pool doesn’t come up with the goods.

Retainer based executive recruiters don’t rely on an in-house database of candidates to fill assignments. They generate original research in each case and proactively recruit on their clients’ behalf. The executive recruiters’ equation is

We will put in the work + guarantee that we will fill your position = you will pay us.

2. What’s your process for sourcing candidates?

There are actually two issues here. The first relates to sole sourcing from an in-house database vs. actual headhunting, and the second relates to project management.

What you should be looking for is someone who will proactively manage your search from inception to completion. Whoever’s leading your search should direct the efforts of the recruiters, both in sourcing candidates from in-house databases and initiating active research and recruitment as required.

This is the model in all executive search firms and many boutique placement agencies. What actually happens in some large placement agencies can be a very different story. Some of these firms operate more like call centres than service providers, and what the client is promised and what they actually get can be two different things. Instead of diligently managing the search, the recruiter broadcasts the search parameters to all their associates in the hope that they will come up with some suitable candidates. Sometimes they get a good fit, but it’s very much a hit or miss process.

If you’re getting regular updates on the progress of the search and a firm commitment on when you should expect to be interviewing candidates, your recruiter is managing the process. If not…

3. What’s your success rate?

This is a great question to ask, but the odds are that the answer you get back may be Trumpian in terms of its relationship to the truth.

As I noted earlier in this article, most placement agencies aren’t actually all that fussed if they don’t fill a position. LinkedIn did a survey a few years back in which they reported that the fill ratio of most placement agencies was less than forty percent.

That doesn’t necessarily mean that sixty percent of the clients didn’t get their position filled. Many companies choose to work with more than one placement agency on an opening (which explains why placement agencies don’t kill themselves to fill these jobs) so if agency A doesn’t fill their job, agency B or C probably will.

The point is, given the time and trouble you’ll need to invest in working with a search firm, you’ll want assurances that your investment is going to pay off. You don’t want to be three months and seven (bad) interviews down the line with no new Director of Finance to show for it.

4. Do you show your work?

If you read the marketing materials of any given placement agency, every single one of them will extol their recruitment prowess, leading you to believe that they’ll leave no stone unturned in their quest for the perfect candidate.

And some of them may in fact have a rigorous process and protocol they follow to source appropriate candidates. But to my mind, if the placement agency’s unique selling position is that they leave no stone unturned in their quest for the right fit, they should be willing to send you a spreadsheet detailing what stones exactly have been turned over in the course of the search.

If your company is a mid-sized manufacturer of muffler bearings and you’ve given the search firm a mandate to find you a controller, wouldn’t you want to know that each and every muffler bearing company controller (as well as controllers in similar industries) has been looked at in the search?

If a recruiter tells you they’ve covered the market on your behalf, it’s reasonable to ask them to prove it.

5. What if the hire doesn’t work out?

Guarantees from search firms fulfil two functions: they mitigate some of the risk associated with hiring, and they put some of the recruiter’s skin in the game. The rule of thumb should be “the more senior the hire, the longer the guarantee.”

If you’re hiring for a plug-and-play type role like A/P Supervisor, a three month guarantee is appropriate. If, however, you’re hiring a Director of Finance or a CFO, you should be looking for a one year guarantee. No one’s going to be more motivated to hire the right person than you. That being said, you want to incent the recruiter to do as good a job as possible so they don’t have to fill the position twice in the same twelve months.