Confessions of A Corporate Headhunter

It is likely that, because of writing this article, I will be drummed out of the inner sanctum of retained search laureates (a.k.a. corporate headhunters). Yet I have to reveal what my conscience—and my business sense—knows is best for the industry. Besides, as a female founder of my own firm, I probably never would have gotten into that inner sanctum, anyway.

After 30 years in the business, I have come to realize that my profession is broken. Few in our service sector will admit it; we have image, revenue, and our very existence to protect. But clients have recognized that the system we have co-conspired to create is one of the least client-focused service industries in the global for-profit community.

To begin with, the established payment structure for a search firm's services makes no sense. It is industry dogma that a client will pay one-third of the fee upon contract execution, one-third 30 days later, and the final third 30 days after the second payment, whether or not the job has been completed. That's like going to the tailor, paying for a suit, and then leaving with nothing but an empty suit bag. No wonder we "headhunters" are branded with so many unsavory names. This model has always struck me as unfair, which is why my firm offers performance-driven retained searches. But for performance standards and metrics—payments should be tied to performance milestones—to have any fundamental impact, clients must demand that the performance-driven model be instituted as an industry-wide practice.

No search firm—neither the large, multi-office global nor the boutique player—has all the answers or can do it all 100 percent of the time. Although my firm has been successful 95 percent of the time, there is still the five percent of needed improvement that keeps me up at night.

Several of the big search firms are publicly traded, which means that they focus on stockholders, not the stakeholders, or clients. These firms try not to air their own internal laundry, but what lies beneath the mystique of a global brand is more often than not an internal fight for both candidate and client control.

As my father taught me, "A deal is never a good deal unless all parties are bettered by it once they leave the table." Clients deserve to have 100 percent of their retained searches filled, as long as everyone has agreed upfront that the searches are fillable. But to achieve that goal, the retained search industry will have to change the way it approaches client service, from focusing on one deal only to focusing on what's best for the long-term relationship with the client.

As an old-fashioned girl and business founder, I believe that human foible makes it inevitable that even the most well-intended search firms can run dry on an assignment from time to time, with possibly dire consequences for the client. Particularly in the pharma industry, losing months without pivotal hires can translate into a loss of time to market and revenue—and, even more importantly, to the loss of human lives and quality of life. When a search firm that has given its all still turns up empty-handed, the client company is left with a dear price to pay, and the whole situation is lose-lose. Even if the client seeks out a new firm, they end up paying two fees—one to the original firm that failed and one to the new firm—for just one hire.

This happens largely because all retained search firms have committed to "hands-off" provisions dictating that they cannot poach talent from certain competitors of that client. The bottom line is that it's unethical to steal people out of the company that entrusts a firm with their retained searches, as well as sensitive information about their own organization. It's easy to see how limiting this can be for a client.

But what if a firm were to partner with another firm to guarantee that the entire market is covered? Some strategic companies have done this, but the client still ended up paying two fees. Would you be happy paying twice for the same item? I don't think your stockholders would, either.

The driving force behind any service industry should be to always do what is best for the client—and therefore, what is best for the firm's long-term relationship with that client. So if a retained search firm takes the high road and gives up its fee when it is unsuccessful, or seeks to split the fee with the firm that completes the job, the client will be likely to remember it as an upstanding, client-friendly organization and is more likely to return to it for future recruitment needs. It is difficult for any competitive company to give up its fee for an assignment, but in the long run, isn't one lost fee worth the survival of a long-term, and potentially lucrative relationship?

Of course, we must overcome fear of losing revenue and control, as well as the fear of being perceived as having lost competitive edge. But these fears must take a backseat to the mantra of every service profession: It's about the client, stupid. The focus, from beginning to end, must be about the client's needs.

The sooner search firms learn to work in partnership for their clients' interests, the sooner we will earn confidence and trust of clients, who will undoubtedly be delighted to find that it is in their best interests—not ours. Then clients will begin to view search firms as partners—and all of the intrinsic rewards, professional motivation, satisfaction, and legacy that goes along with that kind of a mutual relationship—rather than vendors or commodities. When that happens, clients and search firms alike could realize a much higher ROI for the fees earned.

We recently met with a major pharma company in the throes of some very difficult business times. A week before a very public fall from grace, it had launched multiple new search assignments with its search "partner." No real work had been committed to, except for the signing of contracts. The pharma company asked the search firm for a release from those contracts, because the positions would not be filled. The search firm offered only to settle for being paid their full fee.

These are very tough times for pharma and as partners, it's our obligation to work through painful times with our clients. If that means we have to respond with human support, rather than contractual enforcement, so be it.

As CEO, I aim to maintain a culture marked by generosity of spirit and the belief that the more you give, the more you effectively serve, and the more joy and professional satisfaction you receive. It's my job to train and communicate that message to my team and to our clients, and to live it myself. By sharing, seeking, trusting, growing up, and even losing, we gain, we grow, we enrich, we provide, and we renew. These are the lessons that must come from the top to make a difference.

The corporate sector has already begun imposing limits on how search firms serve them. Will those firms respond by striving to earn and, therefore, to deserve the honorable title of partner? I hope so, and I hope it's in my professional lifetime.

Denise DeMan Williams is the founder, president, and CEO of Bench International, the oldest retained search firm exclusively dedicated to the pharmaceutical and biotechnology industries. She also is a member of the National Association of Women Business Owners Hall of Fame, and founder of ALIGN, A Management Forum™ and the S*T*A*R Solution™ (Strategic Talent Acquisition and Retention).