17 Jan 2019
The future of executive search
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Ed van der Sande, Managing Partner, Odgers Berndtson Amsterdam, interviews Anne van Herwijnen, Partner, Life Sciences, Berwick Partners, and Henk Broeders, former Senior Partner at McKinsey North America about the changing role of executive search firms.
As the impact of technology sweeps through the recruitment and executive search industries, what are firms doing to look beyond the numbers and deliver transformative talent? In this article, we hear from both sides: a client and two leading executive search consultants.
Ed van der Sande: What has your relationship with executive search firms been through the years?
Henk Broeders: I have been in contact with them quite a number of times. Firstly, because they reached out to me, so I was on the receiving end. Most recently it was with my nomination as supervisory board member for PGGM, the cooperative non-profit pension fund services provider for the healthcare and welfare sector pension fund PFZW and a number of other smaller pension funds.
Furthermore, I have a couple of friends in the executive search sector, so I hear about what’s going on. Last, but not least, I have worked with recruitment consultants for clients that I have advised on organisational transformation.
I have assisted in several mergers, when it’s often about who enters the board. In those cases, McKinsey works typically closely with an executive search firm. They handle the interviews, we provide key strategic focus points and outline the challenges that the position will involve. Often, these executive search firms are people we have worked with before and know very well. For me, this included Egon Zehnder and Russell Reynolds. These collaborations were often very productive.
"At McKinsey, we were often asked by a CEO or advisory board ‘what do you think of this person?’ But we’re not people consultants"
We limit ourselves to defining what the role needs in terms of characteristics of success. Which particular individual actually meets those characteristics is up to the client, often assisted by an executive search firm.
EvdS: What would you look for in choosing a firm to work with?
HB: My focus would be on their reputation, track record, and if they successfully completed a number of assignments for my company. Then, as a firm, you’d have the upper hand. If PGGM, for example, were not happy with the current search firm, we would look for one with a track record outside of PGGM, at companies where we know and trust people personally, so that I can rely on their assessments. I could call up a random reference, but then I’d probably get a positive story that in the end will not be truthful. Instead, I would leverage my own network. I ask them about their experience with a certain firm. Was it a pleasant one?
Also, when considering a firm, you look at the breadth of their network. Do they know the sector and the right people?
"I would also be looking for creativity: will a firm provide a longlist with unexpected choices, people from other sectors? I value that"
Another important aspect is gender and ethnic diversity, but I need to know that, for example, the women being recommended are not the same as on everyone’s list.
EvdS: What added value does an executive search firm deliver?
HB: It’s their help and counsel. Are they strong enough to push back when a functional profile is created? Can they say: ‘look, this is not going to work because you already have such a person’. Or, ‘this one is impossible to find in the market’ or ‘if i put this out there, then I’ll have a longlist of 100 people’.
A firm should be able to help and understand a company well enough. With a new client that might be hard in the beginning, but then I expect they do their homework. I do not expect instant internal insights about our organisation, but I want them to at least have read some reports and be able to speak ‘our language’.
Does a firm really understand what we are trying to achieve here? And can they counsel us with regards to the functional profile? I’d be looking on one hand for a firm that can make that match, but even more for the expertise of a strategic HR consultant.
"Honestly, I think that without offering something extra to search capabilities, an executive search firm will not be able to survive. More and more, executive search is turning into strategic HR consulting"
Look for example at dating, that is bringing supply and demand together. It has become almost entirely virtual. For executive search, the same thing is happening.
Anne van Herwijnen: I applaud AI and related technology, and I feel that when the core of our work becomes organised and automated, it will lead to better profiles of candidates, leading to us being able to focus more on our core competency, which is creating value for our clients.
EvdS: Could you clarify that?
AvH: I see four elements where we can add the most value. These are interpersonal assessments, boardroom dynamics, an astute understanding of the company and its market, and the dynamics within the company’s management layer.
With regards to interpersonal assessments, I think this cannot easily be replaced by technology. When we’re looking for a CFO for an organisation and there’s already a strong CEO present with a clear vision, a CFO in the role of consultant would be a better fit. One without too large an ego, because I can see two strong personalities colliding. And technology won’t help with that.
I call that intuition, connecting your gut feeling with your heart and head, and applying the judgment skills that come from experience.
It is not easy to judge if someone’s fit to do a certain job, in just one to two hours. But because we speak to lots of people on that level on a daily basis, we have a depth of insights. That is the added value that executive search has over recruitment, we’re constantly mapping the environment and so we know it better.
We look further than a functional profile or an assignment. Often an organisation is tempted to move fast, before doing a proper analysis. We analyse an organisation’s current position in the market and their wants for the future. That helps us identify if they have the right people on board to go and achieve that. Overall, we bring a sense of calm to organisations.
The important thing to mention is that technology strengthens what we do. It strengthens our search through providing us with more data and objectivity. But emotion, gut feeling and intuition remain important. That is where we add value.
"People are the measure and you cannot expect technology to cover that or replace the emotional side"
When I provide our clients with our value proposition, I tell them we scan the market, take our time, have the network and know the industry. Most companies have no time for these things, no access to it. Because we do it daily, we do.
EvdS: What does a strategic HR advisor do?
HB: Firstly, to determine what the kind of role is a company really needs, given the market, organisation and the people that are already there. You need a trusted advisor to devise the right profile.
Number two is the remuneration strategy. That’s something executive search firms can advise on. Not only with regards to what it should be, but what is realistic within a certain market, given the reputation of a company, the sector it’s in and what is sensible in the long term.
For example, if you advise banks, then there are the legal remuneration issues to take into account. But there is also a toxic environment that does not accept an increase in remuneration, whether it’s a few or 100%. I believe a supervisory board and its chairperson need a senior trusted advisor who not only secures a new CEO, but also advises on the remuneration strategy. Couple that with advice on training and education and a candidate’s trajectory, and you get a better idea of what a search firm should do. Personally, I think, for example, that the supervisory board of ING should consider whether they had the right strategic HR consultant this past year, if they had one.
A firm should help a CEO, and if it pertains to the statutory roles, the supervisory board too. It’s important to understand what a candidate’s needs are, with regards to learning and growth and how realistic that is.
"A creative executive search firm will supply profiles that do not fall 100% in line with all aspects of the function profile"
It takes courage for a search firm to put those people on the shortlist, and tell an organisation why they think that person could do the job, but indicate what training or mentorship is required for that candidate. It goes without saying that it needs to be a compelling logic.
A great search firm also has a role in determining what the right team should look like, and how they might progress and develop together. For example through changing a team’s composition and/or through board trainings, introspective- and team building events and implementing feedback mechanisms.
AvH: Looking at the future, our product is not only search, but a lot more around that. Our offering will become advice on strategic people management and how to arrange succession planning. Finally, I think we could be a great benchmark in defining a company’s reward structure, because we work for lots of parties and can share our expertise.
EvdS: Thank you both very much for such a good conversation. I’m sure this is a topic that will continue to evolve and provide plenty of further debate.