How to maximise the returns from executive search investment

CXO hiring calls for significant investment. The visible cost components such as executive search fees, flying in candidates/panel members or psychometric testing are the lesser ones. Larger costs remain invisible—the cascading effect of higher compensation of the new leaders; interruption to business because of departure of team members; and inability to shift focus to business due to volatile internal team dynamics. While these costs are difficult to estimate, they are not small. 

It is estimated that visible costs are just 15—20 per cent, leading to a conservative investment of Rs 4 to 10 crores per search. Even after investing so much, success is not guaranteed—our past research indicates that only 35–40 per cent of senior hires are a clear success. Clearly, the stakes are high.

Five things clients can do to ensure a great hire are as follows:

1. Pick the right agency: Executive search is a fragmented industry, giving clients multiple options to choose from—small or big firms; generic or specialised executive search firms. Which one is right for you? Seasoned clients know the importance of the partnering role that search firms can and should play, in opening minds to newer candidate pools or shaping the evaluation process or guiding the team to the right decision. You need a partner who is able to effectively collaborate.
2. Customise the interview process: Firms use different approaches to assessing candidates. For example, one of our clients relies more on panel interviews while majority go with two or three personal interactions lasting 60-75 minutes each. We encourage our clients to go with two to three interactions that last two to two and a half hours (i.e., intense interactions), with each interaction probing one aspect in depth. This requires coordination between the interviewers so as avoid repetitive questions and risking leaving key issues inadequately probed.  A good search firm can customise the interview process to ensure this.
3. Extract value from psychometric tests: Some firms use psychometrics as a checkbox and others as a tool to understand the candidate.  We recommend a different approach by creating three to five typical situations that the new leader may encounter. We use psychometrics to assess how the candidate may behave in these specific situations.
4. Make a compelling offer: Structure an offer that makes the new leader stay and perform. At the offer stage, firms are left with an important decision to make—Should the offer leave the client happy? Should both parties have to make a compromise? Should both the employer and candidate be happy? We encourage the clients to think long term and make a compelling offer that allows everyone to switch focus to the business. A compelling offer does not mean throwing more money. It means, structuring the offer such that it goes a long way in meeting the requirements.
5. Maximise the reference-check process: Reference check should not just be a tick-box exercise but a powerful exercise to identify a couple of things that can set up the new leader for success. For instance, it should answer certain questions—Under what circumstances has the candidate performed exceptionally well in the past? What motivates them? What ticks them off? How can we get the best out of the candidate, in the referee’s opinion? A good reference check process must yield these insights.

These five things taken together tighten the search and ensure a right hire.

When does the search end?

Does the search end with the joining of the candidate? No. The search ends only when the new hire starts delivering. After all, business leaders are hired to deliver an outcome. Therefore, adopt these additional measures:

1. Use the pre-joining time productively: Very few employers use the three to five months between offer acceptance and joining to their advantage. Firms can use this period productively to accelerate the business and situational understanding of the new leader by sharing selective information under a binding confidentiality agreement. They can get them to interact with select external stakeholders such as dealers, or, at least share third-party market research reports and the like. There are several ways to use this period.
2. Integrate, not induct, the new leader: Most firms ’induct‘ but very few “integrate” the new leader. A typical induction plan will have a few ice breakers (e.g., team meetings, plant visit, market visit) spread over a week or two. Before a few days are out, the leader is drawn into the work and the induction plan is conveniently shelved. What firms need, however, is an integration plan – a plan that develops social bonds early on and supplies the institutional knowledge to help understand why things happen in a particular way. This helps to keep costly, credibility-eroding faux paus at bay. Of course, specific actions will vary from case to case, but the central point is that firms should focus equally on both the ‘hardware’ and the ‘software’.
3. Keep track: If new leaders leave after joining, it is rarely due to performance issues. Most of the time, they give up due to small issues that are allowed to snow ball. When addressed early on, these lead to performance acceleration. For instance, in one case, our candidate joined the firm right in the middle of the AOP process and thought that it would be a great way to gain insights into the company and its issues. However, the client had not even considered this and, therefore, a simple, timely feedback not only accelerated the integration but left both sides heard, building trust. Precisely for this reason, we stay engaged for nine months after the candidate joins.

There is no rocket science to any of these measures stated above, and yet, very rarely, firms follow all of them. A good search consultant can help firms to implement the above and ensure that the client is able to seamlessly switch back from hiring mode to business mode.

Ramadhurai K is the Managing Partner and Lead – CEO Practice at Resource Bridge. Ram has a BE Mechanical, MS Industrial and PGDM from IIM Ahmedabad. Resource Bridge exclusively specializes only in CEO & CFO Roles, and has worked with clients across industries and geographies within India and outside.