When recruiting board members, it’s natural to rely on tools that have been in your toolbox for many years. One of these techniques that has claimed center stage for decades is retained executive search. Chief human resources officers (CHROs), general counsels, and chairs of nominating committees all realize that retained search has its weaknesses. Yet, as they rush from one issue to the next, they have not had time to pick up their heads and explore other alternatives. As a result, they continue to suffer through lengthy recruitment processes that deliver less than optimal board fits. Sometimes the searches even lead to a dead end leaving unfilled seats that weaken board performance.
Why the Executive Search Model Fails to Deliver
How can it be that a technique that has been the pillar of recruitment is now crumbling? Below are some of the reasons for its failure.
- The Numbers Game
The foundational issue is the business model. Executive search firm partners know success is a numbers game. The more searches they conduct, the greater their profitability. So they woo boardroom power players with their confidence, expertise and personality to win the job. Board members naturally expect the partners to be heavily involved in the search. Their attention, however, is elsewhere. Almost as soon as they land the new contract, they are off to pursue the next corporate prospect having delegated the search task to a junior associate.
These junior associates are working hard but do not have direct involvement with the company. Understandably, they have little knowledge of either its culture or objectives in filling a board seat. Also, still a little wet behind the ears, they might not be proficient in finding the right executive. Adding to the challenge, these associates are likely juggling up to a dozen projects, which is more than they can handle effectively.
Heavy workloads on the shoulders of low-paid employees help to ensure a fat bottom line. However, all too often it leads to client dissatisfaction.
- A Cost-Value Equation that Does Not Add Up
It used to be that much of the value search firms offered was the riches locked in their database—the resumes of highly sought-after professionals. Today, however, social platforms have changed the game. Executives are now freely displaying their profiles online.
Despite the competition with free databases, search firms’ rates remain exorbitant. To make matters worse, hiring companies are often expected to pay for services whether or not the search is fruitful. Not only does this seem unfair, but also such payment agreements provide little incentive for search firms to meet agreed-upon objectives.
- Needle in Haystack Searches
If a specification is written, it’s understandable that it would describe the board’s ideal candidate. The problem, however, is when executive recruiters accept the search parameters without providing any feedback. Because they want to look like heroes to win the business, they fail to delineate realistic expectations. They project themselves as the firm that can find the needle in the haystack. The described needle, however, may not exist.
- Haystack Searches
The opposite situation occurs when a search firm writes up the requirements for a board position too broadly. Executive recruiters write “generic” profiles for a couple of reasons. First, they do not dig below the surface to determine the experience and skills needed to move the organization forward. Second, a broad definition makes their job easier—they can find a match more easily.
- When Juggling, Balls Drop
Most boards agree that searches take too long. The delays often occur because associates are juggling too many searches at one time. It’s inevitable that one will have to drop as others proceed. Yes, the associate will pick it up, but when it’s lying dormant, time’s a wasting. In the interim, companies remain without the guidance they need. The cost of delay can be tremendous.
- Goals Missed
Even worse than delayed searches are those that completely fail to meet their objectives. The truth is, this happens far too often—20 to 30 percent of the time search firms are unable to fill board positions. Despite high costs and long waits, there are no guarantees that recruiters will meet their goals.
The Future: Flipping the Search Process on Its Head
Despite everything that’s on the plates of those involved in the board recruitment process at companies, it’s clearly time for them to open their minds to new approaches.
With all the problems that companies have finding the right executives to fill board positions, it may be surprising to learn that executives who are seeking seats have just as many challenges. Professionals who are ready, willing and able to serve as directors often find themselves stuck in protracted, unsuccessful searches.
This reality provides an opportunity to flip the search process on his head. Companies can now work with an executive agent that helps C-level professionals find positions on corporate boards. There are several advantages to this model. First, since those seeking a board seat pay the Agent to help them land a position, there is no cost for the hiring company. Also, since the Executive Agent has a stable of highly qualified individuals in their portfolio, it’s likely that businesses can complete searches more rapidly by using their services.
For executive agents, their success depends on representing the best of the best. So to make this model work, at Summit Executive Resources, we rely on our professional network and people our trusted partners refer to us. Then, we vet them extensively before we accept them into our program.
A good executive agent helps candidates to delineate their value proposition and the organizations that would be good matches for them. To do this, it requires a complete assessment through conversation and testing of an executive’s strengths and accomplishments. The result is a sharp portrayal of the candidate’s ideal role and organization.
To flip the search process around, leaders from companies recruiting board members can contact an executive agent to see if they have an individual on their roster that could meet the company’s needs. This process makes board member recruitment more efficient and less costly. After all, how long does it take to pick up the phone or send an email?
If the executive agent has a depth of experience in board recruitment, human resource leaders can take advantage of their advice on how to strengthen their organization’s board. For example, I fully understand that CHROs are not as well represented in boardrooms as they should be. Their influence runs the full spectrum from having absolutely no involvement to, in a small number of cases, having a seat at the table. Yet their expertise is essential for strategic matters such as CEO and board succession, executive compensation, integration issues related to acquisitions and more. Boards often do not understand the value that a CHRO can bring to the board or do not take the time to assess the true gaps in board expertise. When crucial expertise like this is missing, I point it out to my clients.
So the next time you are trying to fill a board seat, try to add a new tool to your toolbox. Executive Agents just might be the one that helps to shorten your searches and find executives who are the perfect fit.