David vs. Goliath – Why Boutique Executive Search Firms Win
The executive search industry can be divided into two distinct models. On one spectrum are a handful of mega-firms, some of them publicly-held, with well-known brand names and revenues in excess of $500M per year.
On the other end of the spectrum are a multitude of boutiques, most of which specialize by industry and/or function. Historically and certainly in our new economic environment, most client companies get better results by partnering with the right specialized boutique firm. Below you’ll see why:
(swipe to view more)
What You See Is Not Always What You Get
When you engage a boutique firm, you are typically dealing directly with the person who will work on your project. In contrast, at mega-firms, the search may be directed by a “Partner” but in fact a significant amount of the work is done by less tenured associates…people you have never met, and who have no industry specialization or expertise, minimal knowledge of your company/culture, your business challenges, and your goals. The results? Candidates who match the letter – not the spirit – of the job description; mis-hires who don’t fit your corporate culture; and often times result in less than desired performance or succession planning.
Access to More Candidates
Executive search firms have an ethical (and usually contractual) obligation not to recruit from clients. Big search firms have significant off-limits constraints, which limits the pool of candidates while boutique firms can access more candidates because they have fewer off-limits companies. In addition, a little known fact is that candidates that are active on a search within a firm are also off-limits for any other search projects. Large firms can have literally thousands of active candidates throughout the firm at any one time…all who are unavailable for your search.
Smaller Work Load
A typical search firm partner may conduct 15 to 20 assignments simultaneously, overwhelming their associates and research staff. They operate in a “book ’em, bill ’em & forget ’em” environment. They also typically have corporate revenue & profit requirements since they may be public companies and certainly much higher operating expenses. Unless your search is carrying the highest fees & add-on expenses or is relatively easy to complete, it may be pushed to the bottom of the heap from a priority perspective. In contrast, boutiques typically work on fewer projects, devoting far more time and attention to each one.
Higher Completion Rates
Boutiques have higher completion rates than big firms. Completion rates at big search firms are well-known to be in the 60% to 65% range. This equates to 35-40% failure rates at larger search firms while the client is required to pay undelivered retainers.
In-Depth Knowledge of Your Company
Because boutiques have a business model that enables them to form a genuine partnership with you, they are usually better at selling your opportunity and assessing candidates simultaneously. While most mega-firms utilize third party administered assessments to ‘get to know’ their candidates, boutiques utilize a combination of actually getting to know prospective candidates, determining ‘fit’ and qualification vs. the faster, short cut of solely administering third party testing.
Exactly What Is Their Process?
Many search firms operate on a “don’t ask, don’t tell” basis, convincing companies that the search process is mysterious and incomprehensible. The reality is, most big firm partners cannot explain their process, nor do they adhere to a proven methodology. Because there are often times many associates doing the ‘actual work’, there are gaps in candidate assessment, courtship and relationship development which is required for a successful match with a client and respective hiring manager.
Bigger is most often ‘Not better’ in executive search. In fact, big search firms face significant obstacles to client service. Large scale makes it easier for search firms to build their brands, but does not provide value to clients or top talented candidates. Many prospective candidates share their displeasure from have to go through such an ‘unpleasant experience’ that large firms typically employ.
It’s important to remember that search firms are service providers. When evaluating your options, look past the false allure of name brands and critically evaluate the quality of service you will receive and the person who will actually be representing you in the market to top talent. Determine the firm’s commitment to your company, assess its process yourself whether this search firm is passionate about serving your company’s needs and providing what you and your company want.
“Over the last 20+ years, I have interacted with and utilized the top global retained firms and a number of contingency firms. From a retained perspective, the large firms carry high brand awareness and traditional market acceptance.
Over the last several years, we have experienced declines in service levels, reduced performance metrics, dilution of access to top talent and increased fees and search related expenses. From a contingency perspective, the level of professionalism and firm due diligence has been unacceptable at best.
On the basis of this, we were referred to and transitioned to TSG Principals for the majority of our retained and contingency requirements. Over the last 7 years, we have experienced significantly higher service levels, strong personal accountability, excellent diverse talent pools & candidate selection alternatives, expedited our hiring process and developed stronger succession planning due to the talent and attributes of our hired employees.
I strongly support and serve as a positive reference for TSG.”