Career Search Consultants llc

A few years ago, Suzy Stewart, assistant to the chairman at Bradlees Inc., a Braintree, Mass., discount retailer, was traveling more than 130 days a year to find products made by overseas companies and arrange their manufacturing, licensing or sales contracts or develop private-label products. When a recruiter interviewed her for a position with a competitor, he asked whether she’d ever considered becoming an executive search consultant.

"Suddenly, it clicked," says Ms. Stewart. "I had more than 20 years experience in retailing and consulting expertise, and I knew enough decision makers who could give me search work if I called them."

Two years after joining Korn/Ferry International, a search firm based in Los Angeles, she’s a principal. Specializing in recruiting executives for retail, wholesale and manufacturing companies, she’s brought in several high-profile clients, including retailers Toys ‘R’ Us, FootLocker and Ann Taylor.

Formerly director of strategic staffing for NCR Corp., a computer firm based in Dayton, Ohio, Donley Townsend hired key executives for the company’s worldwide operations. But two years ago when the CEO who hired him left, Mr. Townsend faced a career decision. "I interviewed for classic human-resource positions, but search soon became another option," he says. "After sitting on the client side of the desk for 18 years, I knew a lot about the recruiting industry and the profound effect the right executive could have on a company’s success.

Convinced he’d have more impact as a recruiter than as a human-resources executive, Mr. Townsend joined A.T. Kearney Executive Search and is now executive director of the Chicago-based firm’s Dallas office. 

Although few college grads aspire to become headhunters, executive recruiting can be an attractive option for seasoned managers considering a second career. Many of the most successful recruiters were executives in another industry before switching careers, according to Joseph D. McCool, editor of Executive Recruiter News, a trade publication based in Fitzwiu]iam, N.H. Korn/Feny’s 263 vice presidents have had an average of 10 years’ experience in another industry before they joined the firm. "They bring powerful networks, contacts and credibility," says Mr. McCool.

Who You Know

Like Mr. Townsend, many recruiters say they’ve gone into search because of the impact their work can have on a company’s fortunes.

Others switch to search because they relish the process. The first challenge, says Bernadette Pawlik, a principal with Pawlik/Dorman Partners, a Chicago recruiting firm, is helping clients define a position’s responsibilities and scope. the ideal candidate and a search strategy. "The real fun comes m determining the best way to approach desirable candidates and getting them excited about the client and the position," she says.

Like other consulting work, search involves travel and irregular hours. But it offers freedom from the rigid schedule and routine of corporate life that many managers long for. Gene Nees, who -had been vice president of executive selection for Dun & Bradstreet Corp. and is now a partner with Ray & Bemdtson, a recruiting firm in Fort Worth, Texas, says he switched careers because he wanted more control over his schedule.

Another attraction is its low barriers to entry. "It’s a quick ride up," says Scott Scanlon, publisher of Executive Search Review, an industry newsletter based in Greenwich, Conn. "You don’t need any special knowledge or training to -recruit executives." Although most headhunters find it helpful to have some previous business experience, search isn’t rocket science. The basic functions include assessing the client’s need, identifying and qualifying prospective candidates, checking references and presenting a recommendation to the client. Says Mr. McCool, "Anyone with a desk, a phone and a business card can start a recruiting firm."

‘A cash machine’

But for many, the major attraction of executive recruiting is the chance to make a lot of money. A headhunter who bills clients $500,000 annually in search fees takes home an average of $165,000 to $200,000, a 35-40% payout. "Compensation levels in the search industry are among the highest in all professional services," Mr. McCool says. "When you do it right, search is a cash machine," a headhunter says.

Executive recruiting has become an indispensable corporate service. In the late i1960s, only 9% of new leaders came from outside their organizations, according to Business Week. Now, between 25% and 40% of the CEOs at the top 1,000 public companies ranked by annual revenues are former outsiders, and more than 60% of all executive vacancies are filled by external candidates, according to the International Association of Corporate and Professional Recruiters, a trade group in Winnetka, Ill.

Contingency vs. Retained

There are two types of executive search firms. Contingency firms, which bill employers only if they fill a position, typically gather resumes quickly and submit them to clients without screening or reference

Retained firms, which require "retainer" payments regardless of a search’s outcome, present pre-screened, reference-checked candidates to clients, sequentially or as a slate. Retained recruiters conduct most search assignments at the senior executive level— those that involve compensation of $100,000 or more. The distinction between contingency and retained isn’t always clear: some firms offer both types of fee arrangements, including working for partial retainers and "containers," which provide an initial retainer payment and a final fee when the candidate starts.

Executive search isn’t cheap. At most recruiting firms, the official fee for a search assignment is a third of the candidate’s first-year compensation, including base salary, bonus, signing bonus and stock options. Often, clients can negotiate a lower rate if they give the search firm multiple assignments. There’s pressure to lower fees, but it’s still "a hot industry," says Mr. McCool. The industry’s annual revenues grew by 14% in 1998. With unemployment at historic lows and employers scrambling for managers, there’s plenty of money to be made hunting heads.

Is It For You?

Given the attractiveness of search, why don’t more seasoned executives consider it as a second career?

It’s hard work. Corporate career changers usually are startled by the rapid pace and heavy workloads. Companies pay recruiters to find executives quickly, and most assignments are completed - offer letter issued to a candidate - 120 days from the date the recruiter receives it. according to Mr. Scanlon.

"The legwork is intense," says Pat Sklar, president of Sklar & Associates. a Chicago search firm that specializes in advertising executives. "The best candidates get calls from recruiters all the time and searches usually involve contacting hundreds of people. There’s a lot of time-consuming drudge work."

Experienced professionals, such as Ms. Stewart and Mr. Townsend, generally start as consultants, with responsibility for client management and business development. At large firms, consultants generally are teamed with junior associates who perform most of the preliminary phone work.

Even so, consultants are expected to originate 12 to 15 searches per year and contribute heavily at the beginning and end of each assignment by defining the specifications for the search and interviewing finalists.

Pressure for sales. Many newcomers misjudge the difficulties of gaining and keeping clients. "It’s not a matter of keeping up your Rolodex and calling your friends now and then." says Peter Felix, executive director of the Association of Executive Search Consultants, a trade group in New York. "Lots of people think that this field is an easy meal ticket," says Mr. Townsend. "But asking people to part with money without any guarantee of success is a hard sell." Recruiters may compete with the Internet, other search firms and even their own partners.

It isn’t glamorous. Convinced that marquee recruiters, such as Gerry Roche, chairman of Heidrick & Struggles Inc. in Chicago or Tom Neff, chairman of Spencer Stuart in New York, typify all headhunters, many career switchers think that executive search means hobnobbing with senior executives in luxurious settings or interviewing them over a home-based videoconferencing system. In reality, much of search consists of "smiling and dialing" from your office or flying to interview candidates in less-than-alluring airport lounges. Despite the availability of videoconferencing, many headhunters prefer to evaluate finalists in person and spend 30% to 40% of their time on the road, interviewing candidates and calling on current and potential clients.

You’re on your own. Few search firms provide training in selling or conducting searches. It’s up to newcomers to observe how experienced recruiters do their jobs. They’d better learn fast.  A typical mid-sized search firm expects new consultants to bill $750,000 annually by the end of their second year.

Occasionally, a firm will team new consultants with experienced associates, who show them how to make phone calls, when to send letters and how to read candidates’ reactions. But most of the time, new headhunters simply are shown to an office with a telephone. "A senior guy isn’t going to take you under his wing," says a veteran of one of the largest firms. "You either sink or swim."

Not everyone has what it takes to be a successful executive recruiter.

Headhunters and industry observers agree that to attain success, career switchers need the following -

Strong industry or functional background.  A well-stocked Rolodex and solid industry experience and contacts are the basics for getting started.

A plan. Building business isn’t simply a matter of dialing your contacts, according to most recruiters. "Too many people end up in this business without a plan," says Mr. Nees. Those who can combine solid industry experience and contacts into a plan for generating assignments can transition from another industry into search fairly easily.

A name-brand firm. It’s hard to get candidates to return your phone calls unless they know you personally, are given a reference or recognize your firm. Says Ms. Stewart, ‘Who’s going to return a phone call from Acme Headhunters?"

Persistence. "Even if you have a fabulous Rolodex, it takes a long time to develop clients and a book of business," says Mr. Nees. Rarely can recruiters walk into offices and walk out with searches. Sometimes, they have to keep calling or propose a position description and target list.

Consultative skills.  Besides selling searches, - the ability to manage client relationships is critical, according to Mr. Felix. Bill Kane, senior vice president of human resources at Channel One Network in New York, hires recruiters to conduct about 200 searches every year. ‘Success in this business all boils down to relationships," he says.

Organization and self-discipline. Juggling 15 search assignments while developing new business can be a nightmare for someone whose life has been managed by a secretary or support staff. Don’t count on having an assistant to organize your life if you join a recruiting firm - at least initially. 

Business savvy. "An M.B.A. is a waste in this business," says one recruiter. But it’s important to be widely read, current on business news and familiar with the trends affecting your chosen industry or functional area.

This article is from the Arizona Business Journal