Executive Search: The Model Is Broken

Editor's Note: HealthCare Voice, John Self's healthcare blog, will be moving to the web site, JohnGSelf.Com in two weeks. The blog will run on the web and here for a couple of weeks and then the content will be exclusively on WWW.JohnGSelf.Com.

John G Self is a frequent speaker and lecturer. He has a new blog, John G Self. It features stories of hope, redemption, and humor of every day life. His latest blog, URBAN SNAPSHOT: We Assume, We Are Surprised posted on Monday.

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Candidates complain about recruiters – how they do not communicate effectively, how they do not provide real transparency, how they gloss over critical cultural, political and operational issues because to acknowledge them would complicate the search, or because the search consultant simply did not take the time to understand the underlying challenges.

The statistics tend to support candidate concerns. According to several industry studies, more than 50 percent of candidates recruited from outside an organization quit, are pushed out, or are fired within 24 months when you look at all sectors and all management levels. Heidrick & Struggles, the industry’s second largest executive search consultancy, admitted in 2009 that in an internal study of 20,000 assignments, 40 percent of their senior leadership placements were out the door within 18 months.

The record of internal recruiters is not much better. Apparently, the weaknesses that afflict search firms also infect the leadership talent acquisition function of many large corporations, health systems and not-for-profit organizations.

Aside from these periodic studies and an occasional blog or article, the search industry is strangely silent on this dirty little subject.

At the core of this industry failing is a broken business and process model which has existed for nearly 50 years. There are precious few industries in the world that have not undergone multiple transformations over the same period. But not executive search. Yes, there have been technological advances – the faxmachine, computerized databases, the Internet and email, but these developments have not changed the fundamental structure of this industry.

When you look at this problem, which has significant implications for a client's profitability or, in some cases, their actual survival, you have to consolidate the processes and results of both internal recruiters and outside search consultants.

Here is what the candidate’s are saying and have been saying for quite some time:

There is a lack of transparency. Search consultants rarely tell you the whole truth.

Recruiters place the burden on the candidate to sort out things like corporate culture, how decisions are made, how success will be defined, and the hurdles to success. The recruiters either were not perceptive and failed to ascertain this information or they made a financial calculation that to know and to tell would only delay the search and erode profitability of the engagement. Internal recruiters, like their external cousins, did not want to ask the tough questions regarding the search or share unflattering (but truthful) information for fear of rocking the boat.

There is poor communication between the candidate and the firm once a resume has been submitted. That is perhaps the most common complaint and virtually everyone who practices in this profession is guilty as charged. Weekly email updates should be the norm, candidates say.

There is a lack of accountability for the quality of the service provided by the recruiters and for the outcome of their work, and candidates believe this contributes significantly to the problems they encounter in the recruiting process. Here, corporate clients join the chorus of criticisms. There are rarely any fee concessions if the client is unhappy with the quality of the panel of recommended candidates. The placement guarantee -- the industry standard is 12 months at the executive level -- is really no guarantee since the vast majority of candidates do not leave an organization until the 18 to 24-month period, an insufficient length of time for the client to regain their investment. Candidates and clients say the problem seems to be a focus on the process and filling a job order, rather than spending the time it should take to produce the right outcome.

Now the good news: These are problems that can be fixed. These are not rocket science issues. The real challenge will come in changing the culture of how talent acquisition -- external and internal recruiting -- works. There is resistance to change, especially in the large firms where partners earn substantial six or seven figure incomes. The people who should lead the change have a vested interest in protecting a business model that works well for them. You can almost hear it now: If it is not broken, don't fix it.

But the system is broken and in this period of business transformation spurred by prolonged financial uncertainty owing to world economic conditions and the debt crisis, corporations, especially healthcare providers, cannot afford business as usual.