With in-house executive search, the question is not whether it’s valuable, but how to demonstrate that value in the context of a modern talent organization.
We’ve talked to a few recruiting leaders who are passionate about bringing executive search in-house, and they all agreed that justifying their decision to the rest of the business was trickier than it should have been.
And yet, there are multiple examples of companies who successfully made that choice, from large-scale, established businesses like Amtrak, to international tech leaders like IBM, to massive scale-ups such as Revolut or up-and coming startups such as Improbable. So the value is there; the challenge is to articulate it to different stakeholders.
Why shift to In-house Executive search?
The difficulty with justifying this decision to the C-suite lies in the fundamental definition of “value” in recruiting.
The usual argument in favor of using an external agency is often a financial one:
Business leaders see exec hires as “one-offs”, especially when the target is a particularly senior and specialized role, or an executive close to the C-suite. "One-offs" are exactly the kind of function that their gut instinct tells them to outsource.
Their position is more or less that a generalist recruiting team should hand over executive search to external experts, as experts will be able to do it better, faster, and for the same amount of money.
However, the conversation is moving away from this financial argument. Up to now, recruiting organizations have been communicating “value” with metrics such as “time to fill” or “cost per hire”, but these are not the best proxy for effectiveness or business impact in a modern recruiting team.
But this is not the case any longer. CEOs are now worried about their ability to attract and retain talent in the long term. Talent shortages in critical roles have them reevaluating both how they see their talent functions. They are letting go of the “cost center” label, and looking at the talent function and a center for value creation deserving of its own investment considerations.
In the case of executive search, they see the true measure of value for an effective team as being directly correlated to the value of the capability they deliver to the business. Any cost they incur must be stacked up against the business impact of their hires: a CTO, a CMO, but also a senior specialist or an expert in a scarce skill, for instance.
Not only that, business leaders are also becoming more aware of the strategic impact that the right person in the right role can have on the entire business. As such, in-house executive search is not just any peripheral upstream section of the value chain. It’s a core process that, when done right, can be a source of competitive advantage to the business. And while outsourcing peripheral or support functions to improve performance is an easy decision, it’s a much harder call to make for a core, value-creating function.
How do candidates react to in-house executive search teams?
The headhunting firm model is dying in part because headhunters do not have the monopoly on reputation anymore.
The strength of headhunting firms was that a seasoned executive was unlikely to take a call from an unknown recruiter, but they would talk to a firm that known for placing professionals in reputable companies.
The branding element is now being replaced by something more powerful: personal connections and referrals. In-house exec search teams do not have to rely on an agency’s “little black book” because they can build their own. Not to mention, their own hiring managers or C-suite execs likely already have a connection to the people they want to hire—through Linkedin, a local Meetup group, or a professional conference or trade show, to mention only a few. As a consequence, it's much easier today for in-house executive recruiters to secure an introduction to their target candidate.
The underlying assumption there, of course, is that these executive search teams have the technical capabilities and the infrastructure necessary to take advantage of those connections at scale and with efficient workflows.
What does an in-house executive search recruiter need?
Many of the in-house recruiters we talk to do not benefit at all from the impressive tech stacks their talent organizations can boast of. Web sourcing extensions and upload solutions, talent pools, sophisticated database filtering and boolean search, marketing and nurture capabilities, not to mention deep 2-way integrations that keep all candidate data unified and up to date… They do not have access to any of those highly valuable functionalities.
One reason for that is that executive recruiters need a much higher level of confidentiality around their activities than any other part of the talent organization. They are much more motivated to guard the experience of their valuable target candidates, and less likely to collaborate with their peers on hiring projects, given that many of them are compensated based on successful placements.
Executive hires are also usually considered sensitive information in any large enterprise, and as such cannot be managed on a system that doesn’t offer the right kind of confidentiality settings.
Ideally, in-house executive search would be kept safe with configurable confidentiality measures, without being siloed. It would be a shame to cut off executive teams from the rest of the talent team right when it is starting to enjoy the full benefits of integrated candidate journeys, and granular, future-facing analytics.
Reporting in particular is a strong motivation for business leaders to bring executive search in-house. Executive search firms, even on retainer, cannot offer the level of granularity and continuity that a centralized recruiting function has. As their recruiting activities sit in different databases and different systems, talent leaders have to rely on high-level metrics such as cost-per-hire or time to fill.
While integration and consolidation is beneficial, most existing recruiting platforms do not have everything that an executive recruiter needs, however: the lack the ability to easily leverage those relationships, or existing connections, that we mentioned earlier, and that help the recruiter replace a cold cold with a warm introduction.
Using organizational relationships to find the right executives
Having to rely entirely on an executive’s linkedin profile and job title is not enough to help the recruiter determine whether they’re looking at the right candidate for the role they’re trying to fill.
Titles, especially in large enterprises, become less reliable as the candidate gains in seniority. A Director in one enterprise might be much more experienced than a Vice-President in another, and less senior than a Managing director in a third.
A lot of the research that executive recruiters do consists of effectively mapping out where the candidate falls in the organizational chart of their organization, and the impact they have there. How many people report to them? What KPIs do they own? Does anyone in the organization already know one of their direct reports or direct superiors, and can that information give context to the seniority of this candidate?
Mapping out these relationships, building a figurative organizational chart around every target candidate, then reaching out to them and nurturing them with a bespoke journey is no easy task, which is why many organizations hesitate to bring their executive search teams in-house—with good reason. The difficulty is not a good enough reason not to do it, however, because the business might be leaving enormous value on the table.
The benefits to be expected from bringing executive search in-house are not lower costs or faster times to hire. If done right and with a view to improve the company’s ability to sustainably hire high-impact individuals, the shift will result in creating a sustainable strategic advantage from the business.
That is not to say that in-house executive search cannot result in substantial savings as well. In her webinar with Beamery, our guest Alison brody from Amtrak explains how bringing executive search in-house resulted in savings numbering in the millions of dollars for the company.