With in-house executive search, the question is no longer whether or not it’s valuable, but how to demonstrate that value and make a business case for it in the context of a modern organization.
Among the recruiting leaders we’ve worked with who are passionate about in-house executive search, the common theme is that justifying their initial decision to bring executive search in-house was more difficult than it should have been.
And yet, there are multiple examples of companies who successfully made that choice, from large-scale, established legacy brands like Amtrak, to international tech leaders like IBM, to 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 get the necessary buy-in from different stakeholders within your organization.
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 tend to see executive 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.
It’s easy for business leaders to think that the recruiting team should hand over executive search to external experts – as experts will likely 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 until now, recruiting organizations have been communicating value with metrics like time-to-fill or cost-per-hire, but these are not the best proxy for effectiveness or business impact in a modern recruiting team.
Sure, hiring faster and for less money is great, but are you making high-quality hires? And how long is your talent staying in your organization? Today’s CEOs are often more now worried about the company’s ability to attract and retain the best talent in the long term.
Talent shortages in critical roles have business leaders reevaluating how they view their talent functions. They are letting go of the ‘cost center’ label that Talent Acquisition and HR teams typically get, and are looking at the talent function and a center for value creation instead – one that is deserving of its own investment considerations.
In the case of executive search, most business leaders 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 incurred 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 example).
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. And while outsourcing peripheral or support functions to improve performance may be a simple decision for some companies, it’s a much harder call to make for a core, business-critical role or function.
How do candidates react to in-house executive search teams?
The headhunting firm model is dying in part because headhunters do not have a monopoly on reputation anymore.
The core 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 is well known for placing professionals in senior roles at reputable companies.
The branding element is now being replaced by something more powerful – personal connections and referrals. In-house executive search teams no longer have to rely on an agency’s ‘little black book’ of contacts because with the right tools, they can build their own.
Not to mention, many hiring managers or C-suite executives likely already have some sort of connection to the people they are interested in hiring – either through Linkedin, a local networking group, or from a professional conference or trade show. As a consequence, it’s much easier today for in-house executive recruiters to secure an introduction to their target candidate – without the help of an agency or headhunter.
The underlying assumption there, is that these executive search teams must 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 get to benefit from the impressive tech stacks their organizations can boast of – web sourcing extensions and upload solutions, talent pipelines, sophisticated database filtering and boolean search, marketing and nurture capabilities, not to mention deep two-way integrations that keep all candidate data unified and up to date… Many in-house executive recruiters 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 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 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 search teams from the rest of the talent team right when it is starting to enjoy the full benefits of integrated candidate journeys and dynamic, 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. Most of the time, their recruiting activities sit in different databases and HR systems, and talent leaders have to rely on high-level metrics such as cost-per-hire or time to fill to make decisions.
While integration and consolidation are beneficial, most existing recruiting platforms do not have everything that an executive recruiter needs. However, when a recruiter has the ability to easily nurture those relationships and existing connections, that helps them replace a cold introduction with a warm one.
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 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 company and the impact they have there. How many people report to them? What KPIs are they responsible for? 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 personalized journey is no easy task, which is why many organizations hesitate to bring their executive search teams in-house. But the difficulty is not a good enough reason not to do it, because the business could be leaving enormous value on the table otherwise.
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 an aim to improve the company’s ability to sustainably hire high-impact executives, the shift will result in creating a sustainable strategic advantage for the business.