Most senior executives, particularly those who are Harvard Business School Alumni, have a pretty good grasp of how the financial markets work. However, even the brightest can sometimes be myopic about the “career market place” for senior professional talent. With this in mind Fidelio was recently delighted to support HBSA in preparing and moderating a panel discussion held in London “looking under the bonnet of Executive Search”.
To develop the metaphor of the market place, many candidates focus considerable or exclusive attention on building relationships with Executive Search. While Executive Search has a key role – which we explore in this Overture – the end buyer or investor is the corporate. As such we were delighted to be joined by Frances Illingworth, HR Director WPP, Norman Walker, Senior HR Advisor to TPG Capital and Martin Powell, Senior Vice President, HR of Dialog Semiconductors. We were also joined by over 80 HBS Alumni plus guests providing for a frank and lively debate.
To frame the debate Fidelio provided an overview of the Executive Search sector, including some working definitions. In Executive Search the client is the corporate and the service is sourcing the right senior executive/Non-Executive for a clearly defined role. Executive Search is a global industry with estimated worldwide revenues of US$10.57 billion* versus a much larger recruitment industry sourcing more junior or standardised roles.
The Executive Search sector has become increasingly polarised with a small number of concentrated global firms and a thriving community of specialised boutiques. The middle ground has become very tough. The top five global firms contribute US$3 billion of total sector revenues of US$11 billion. Four out of the top five global firms are US in origin and one is European. Indeed Search is most established in the US and European markets. Two of the top five global Search firms are quoted.
Responding to client needs, most large Search firms now derive a significant portion of revenues from leadership consulting. Indeed in the December 2013 Harvard Business Review, Gary Burnison, CEO Korn Ferry, looks to a leadership consulting market that is many times as large as the Executive Search market.
Against this backdrop our panellists outlined their approach to talent acquisition. Given the companies they represent: WPP as the world leader in marketing communications; TPG, a leading global private investment firm with over US$59 billion of capital under management; and Dialog, one of Europe’s fastest growing semi-conductor companies – their comments and insights arguably have macro-economic significance.
To maintain a competitive edge all our panellists were constantly overseeing the talent pipeline to meet their specific industry needs. On the one hand a global marketing services provider has to partner with leading multinational clients in their communication programmes, requiring maturity, experience and thoughtfulness; on the other hand this is an industry which must remain not just digitally relevant, but cutting edge and innovative. Private Equity fully recognises the importance of the right leadership team to grow the value of the investment. There is little room for error. And rapid changes in technology mean that players in the sector must marry engineering excellence with honed management capability.
Our panellists, all highly experienced HR professionals, described how they had established channels and networks to secure the expertise and talent that their respective companies need to remain one step ahead of the competition. At a senior level this also provides the basis for succession planning. The healthy functioning of these talent eco-systems was a priority for the panel with Executive Search making a specific contribution.
Each of the talent acquisition strategies outlined by our panellists warrants an Overture in its own right. Today we focus on one aspect of the debate – how leading corporates utilise Executive Search within their talent eco-system.
What really differentiates Search consultants is a combination of real expertise and understanding of the company and sector dynamics, which allows the necessary level of challenge to our thinking; an ability to think well beyond the ‘obvious’ candidates; and finally helping us think through whether candidates will fit culturally. The latter factor is in my view the single biggest one in determining a good from a great hire.
We expect all of this at a pace which serves us and is not to suit the Search firm.
– Norman Walker, Senior HR Advisor, TPG Capital
A clear preference was expressed for Executive Search consultants who truly understand the business of their clients. For a senior role that lies outside the HR Director’s existing and extensive network, Executive Search is frequently used. The Search consultancy must demonstrate a strong understanding of the role and its challenges as well as the specific market place, in both geographic and functional terms. Much emphasis was put on the individual Search consultant rather than the name over the door.
In the early stage of a Search assignment our panel emphasised the importance of establishing KPIs for the role. Here a Search consultancy can support in the role definition process and critically in communicating those KPIs to prospective candidates.
Once a candidate has been identified who meets the criteria, can deliver the KPIs and who has been rigorously interviewed by both the Search firm and the company, at that point assessment and referencing become important tools. The methodologies employed by our panellists varied but a clear theme emerged of the importance of checks and balances and separating the Search process from assessment and referencing. It was clear that highly experienced HR Directors use a number of tools with discretion rather slavishly relying upon one particular metric.
Delivering a consistent external pipeline of senior talent, in addition to developing from within, is now the top issue that keeps global HR leaders awake at night. Only with highly effective talent scouting capability in place can sustained organisation growth be fuelled.
– Martin Powell, Senior Vice President, Human Resources, Dialog Semiconductor
A final and critical need was identified by all our panellists – scouting for exceptional talent. Here Executive Search can play an important role. An effective scouting capability supports succession planning and helps to secure the talent needed to move into new markets or take the business to the next level. Such senior executive talent is rare and is often to be found in different market places from the client’s core business. An Executive Search consultant with a deep understanding of the client’s needs, challenges and business objectives can present the HR Director with innovative concepts – but it is tough to do and a far cry from the industrial, volume driven approach of recruitment.
Our audience also had many questions for the panel on managing the talent pipeline and, being HBS, also on potential M&A activity in the Search sector! For those in the audience considering their own careers, our panellists had clear advice. If you are interested in being on the radar screen of a particular company, the direct approach is absolutely valid. But be self aware. Be explicit about the value you bring and make sure you are thinking about that value from the company’s perspective.
Our look under the bonnet of the Executive Search industry revealed that leading corporates are sophisticated in thinking about the talent pipeline that they require in order to remain ahead. Highly experienced HR Directors with a strategic remit will have established complex eco-systems to ensure that they have access to the talent they need. Technology and in-house capability will play a part. And an Executive Search consultancy at the top of its game will also have a role to play.
* Source: AESC State of the Executive Search Industry, 2013 Annual Report
Fidelio High Notes – May 2014
- Critical roles for Governance and Communications drive demand for Fidelio’s Executive Search capability
- Fidelio sees increasing demand across sectors and geographies for Board Development
- Clients turning to Fidelio to support them deliver their growth agenda at Board, Executive and Partner level
- Fidelio moderated HBSA “Navigating Executive Search” Panel Discussion with WPP, TPG and Dialog Semiconductor
- Fidelio hosted a private dinner “leadership at the front and beyond” with General Sir Richard Shirreff, recently retired Deputy Supreme Allied Commander, NATO
- Forthcoming Fidelio programme includes Board breakfast with Dame Alison Carnwath and moderating CFO Panel at the 2014 IR Society Conference
Please contact us with comments or for more information on Fidelio Partners at info@fideliopartners.com