As the labor shortage continues to tighten its grip on industry, the competition for talent continues to rise. Many employers are searching for innovative recruitment solutions by hiring in-house, corporate recruiters or venturing into Internet recruiting, while others turn to third-party recruiters commonly called executive recruiters.

Executive recruiters are usually hired to assist in the identification and selection of hard-to-fill, or critical talent needs. However several employers are now looking favorably at outsourcing the majority of their key recruiting needs to executive recruiters.

• Experts in recruitment

Executive recruiters are specialized professionals. They work at the recruitment process exclusively, and survive on their ability to get results in a highly competitive marketplace. Most executive recruiters bring years of experience to their work, and are intimately familiar with every aspect of candidate identification, sourcing and selection.

Executive recruiters are hired to cast a wider net and approach accomplished candidates who are busy working and not looking. Many candidates are invisible from where employers sit, and will not approach a public job opportunity without the safety and confidentiality of third-part representation.

Executive recruiters have the advantage of meeting with candidates outside the interviewing arena where they can build trust and rapport in a neutral and protected environment. They have mastered the delicate art of persuading well-paid, well-treated executives to give up good corporate homes for better ones.

Executive recruiters remove a tremendous recruitment burden from management by presenting a limited number of qualified candidates who are usually prepared to accept an offer. They also are skilled at dealing with counter-offers, and managing candidates until they are safely on board with their new position.

• Committed to confidentiality

Executive recruiters understand the privileged relationships they have and are committed to strict confidentiality -- both by professional ethics and common sense.

Many employers want to keep hiring decisions and initiatives confidential from competitors, customers, employees, stockholders or suppliers to protect against unnecessary apprehension. Management resignations are often private matters and require immediate replacements before the resignation becomes public knowledge. Sometimes employees need to be replaced without their knowledge. For these assignments, an executive recruiter is usually the only confidential solution.

Candidates also need the confidentiality which executive recruiters can provide. Many candidates are willing to hear of outstanding opportunities, which could advance their careers, but few are willing to explore those opportunities on their own in fear of jeopardizing their current position. An executive recruiter is a third-party representative that knows how to gain the confidence of nervous candidates.

• Objective professional counsel

The objectivity and feedback from an executive recruiter is invaluable to an employers. Recruiters know how to advise and counsel management so that the best hire gets made -- the choice with the longest-range likelihood of mutual benefit and satisfaction. They can help employers evaluate their expectations, and bring industry expertise to assist with the development of job descriptions, reporting relationships and compensation programs. They can also usually provide investigative reports on candidates, third party referencing, personality testing, foreign language proficiency assessment, relocation assistance and other specialized services.

Executive recruiters help balance the emotional reactions and biases of corporate management. Likewise, the recruiter can act as a skilled intermediary -- a diplomat, if you will - to clear up misunderstandings, straighten out miscommunications, and tactfully convey each party's concerns to the other during negotiations.

• Cost effective investment

The use of executive recruiters should be viewed as an investment in improving the quality of an organization's managerial might. The right choice can dramatically increase a employer's value; and that value rises exponentially moving up the management chain. The fees associated with any particular search become almost incidental considering the ultimate payback.

A good way to view cost is to measure the cost of a bad hire. When an incompetent new employee makes bad decisions, hundreds of thousands -- even millions -- of dollars may be lost. This employee will have to be replaced and the overall downtime for having the position unproductive can be staggering. Employers often engage executive recruiters to ensure that such trauma and expense are kept to a minimum.

There are basically two types of executive recruiters: retained fee and contingency fee. Both retained and contingency fee recruiters perform the same essential service. However, their working relationship with their clients is different, and so is the way these recruiters charge for their service. Retained and contingency fee recruiters each bring certain advantages and disadvantages to particular kinds of executive searches. Cost in fees is basically the same (twenty five percent to thirty five percent of a candidate's first years compensation), with the exception that out-of-pocket expenses are usually reimbursed for retained recruiters.

• Retained recruiters

Retained executive recruiters derive their name from the fact that they work "on retainer." Employers pay for their services up front and throughout the recruitment process. Retained recruiters are typically paid for the search process regardless of the outcome of the search, however most retained recruiters allow employers to cancel the search at any time for prorated rates.

Retained recruiters provide a thorough and complete recruitment effort, often involving multiple researchers and recruiters on a single assignment. They usually create detailed reports on the employer, the position, their research and recruitment efforts, candidate resumes, interviews, reference checks and other tangible services that add value to the search process.

They tend to work in partnership with the employer, offering expert counsel throughout the search, and requiring exclusivity and control over the hiring process. The retained recruiter may participate in all client interviews with candidates, all related discussions within the client employer, all negotiations, offers, and settlements. While the process may take three or four months, the hire is typically guaranteed for a year or longer. Because a retained executive recruiter spends so much time on behalf of each client employer, she can only work with a few clients at a time (usually two to six). Retained recruiters will usually present candidates to only one employer at a time and will maintain a two year "candidate hands off" policy.

It is usually best to hire a retained recruiter when an assignment is critical or senior in scope (seventy five thousand dollars or more), when difficult to fill or requires a thorough recruiting effort, when it requires strict confidentiality, or when locating the best candidate is more important than filling the position quickly.

• Contingency recruiters

Contingency executive recruiters derive their name from the fact that they work "on contingency." Employers only pay for their services if an employer hires a candidate referred by their firm. If there is no hire, then there is no fee due.

Most contingency recruiters work quickly and uncover many resumes. They tend to provide more of a resume referral service, and spend less time with each client. Because there is no financial commitment from employers to support up front candidate research, contingency recruiters tend to move on to new assignments more quickly once a job opportunity becomes difficult to fill. Contingency recruiters find it is usually more cost effective to market exceptional candidates to locate job opportunities than to recruit for employers and locate difficult-to-find candidates. Most contingency recruiters fill lower to middle management positions where candidate marketing can result in greater chances for success due to the greater number of job opportunities. However some contingency recruiters will not market candidates and will only recruit for employers.

The relationship between contingency recruiters and their clients is usually less intense, with less personal contact and a lower level of mutual commitment. It is not uncommon for an employer to use several contingency recruiters on a single search, while continuing to try and fill the position on their own.

Contingency recruiters usually manage eight to twenty assignments at a time, and maintain a one year "candidate hands off" policy. They will usually present candidates to multiple job assignments, and often face pressure working similar assignments with different fee levels. Contingency recruiters generally guarantee their placements for thirty to ninety days, but some offer no guarantee. Although the placement fees are usually twenty five percent to thirty five percent a candidate's annual compensation, many contingency recruiters are willing to negotiate their fees and some charge as little as fifteen percent.

It is best to utilize a contingency recruiter when the position is entry or mid-level management, when filling the position rapidly is more important than locating the "ideal" candidate, when filling multiple positions for an employer with the same skill set, and when it is important to fill the position at minimum cost.

The best place to find a good recruiter is to begin with an in-house referral. Talk with the human resource department and employer managers to see what experience they have had with executive recruiters. Check with colleagues in other departments, peers at other employers or the local trade associations for additional recommendations. Another place to find comprehensive lists of executive recruiters is to purchase one of the major recruitment directories such as The Directory of Executive Recruiters, by Kennedy Publications, Hunt Scanlon's Executive Recruiters of North America, or visit the many Internet directories of recruiters such as the Recruiter's Online Network at www.recruitersonline.com

• A proven track record. A good recruiter should have up to seventy five percent in repeat customer business, and completion rates that exceed eighty five percent.
• Search results. For each assignment, find out how many candidates will be sourced, contacted and interviewed, and how many finalists will be presented.
• Availability. If a recruiter is working on more than three current assignments, you can expect limited attention. Junior associates are no substitute to the quality recruitment offered by an experienced pro.
• Performers. Recruiters should be doers not overseers. They should conduct the entire search from initial client discussions to research, recruitment, interviewing and final selection. Many recruiters will send their most accomplished recruiter or "rainmaker" on presentations to secure the assignment, but quickly pass on the work to junior associates. Find out if others will be involved with the assignment and what their roles will be.
• A recruiter not a recruitment firm. The recruiter is the one performing the search, not the firm.
• Industry specialists, not generalists. Specialty recruiters are more capable of completing an assignment quickly. Knowing where to go to find the best talent, and having the ability to quickly gain their confidence of talent is essential for a timely result. Recruiters that specialize within the employer's unique segment of industry are often more effective.
• Appropriate position specialists. Recruiters often specialize in lower, middle or executive level assignments. Find a recruiter that specializes in the level position the employer is looking to fill.
• Trade association involvement. Association involvement helps establish a recruiter's reputation and network of contacts. Find out what personal involvement and contributions the recruiter has made through participation in trade committees, writing articles for trade magazines, giving talks at industry events, and other prominent networking avenues.
• Twelve month guarantee. Make sure if the new hire resigns or is terminated within twelve months, the recruiter provides a replacement at no professional fee.
• Recruiters with good references. Validate recruiter claims of successes and industry involvement. Speak to references that can discuss recent accomplishments, ethical recruiting practices, and prove long-term, repeat business.
• Premium service. Cost is usually the lowest factor on any hiring survey when employers are questioned on the most important factors looked for in selecting an executive search. The old adage, "you get what you pay for" is true in most cases when hiring an executive recruiter.
• Reasonable blockage. Check "off limit" policies. Find out what firms are "off limits" to the recruiter (protected firms that cannot be recruited from). If those firms are likely sources to fill the position, do not work with a recruiter who cannot touch those executives.
• National capability. A national recruiter can often recruit a localized market effectively, but a local recruiter rarely can recruit a national market effectively. It is even far more important to find a successful recruiter who will locate the best candidates than one who happens to be based nearby.

• What is your experience in recruiting, and in our industry?
• What is your area of specialty within our industry, and what locations do you specialize in?
• Have you filled any recent positions at the level we are seeking?
• What do you know about our firm?
• What is your percentage completion rate? What assignments have you not completed and why?
• What added value to you provide to the search process?
• How quickly can we expect results?
• Are you licensed and regulated by your state?
• What are your most significant search accomplishments?
• What are some of your recent assignments and can we check those references?
• Have you had to replace any executives that were hired through you? What were the circumstances?
• What is your guarantee period?
• What is your process for working on a search?
• How can you insure that you will find the best candidates for the position? What capabilities and resources do you have for researching and recruiting candidates?
• What is your involvement in the research, recruiting, interviewing and hiring of candidates? Who else will be assisting you and what will be their roles?
• What is your "off-limits" policy? What firms are currently "off limits" to you?
• Are you a retained or contingency fee based firm? What are your fees and what is your policy on expense reimbursement?
• Is your firm a member of any professional associations? What involvement do you have?
• Why are you the best choice for us?

The previous information is written and copyrighted by Frederick C. Hornberger, Jr., president of Hornberger Management Company, a national board and executive search firm specializing in the construction industry. This information is provided for personal use only. It may not be copied, printed or distributed to anyone other than you the reader, for any reason without permission from the author. Contact the author at address One Commerce Center, #747, Wilmington, Delaware 19801, phone 302-573-2541, email [email protected], or through the company web site at www.hmc.com.