EXECUTIVE SEARCH INDUSTRY
EXECUTIVE SEARCH INDUSTRY
By
Vanessa Fan, Tsz Lam 2001485245
Ena Keung, Jing Man 2001491268
Esther Lok, Ka Yi 2001473242
Queenie Lo, 20010151914
Project Profile-Executive Search Industry
1. Objective
2. Rationale
3. Background Information
4. Body
A. Operations
B. Company Background
C. Interview I- Mr Armstrong Lee
D. Interview II- Ms Carrie Lau
E. Essential Qualities of a Professional Consultant
F. Comments on Fresh Graduates
G. How to be Head Hunted
5. Learning in doing the project
6. Individual member’s learning reflections
1. Objective
To have a more in-depth knowledge concerning executive search industry and how does it operate.
2. Rationale
Executive search is quite a mysterious occupation as people tend not to realize that there is something going on behind the screen as people often mixed up executive search firm with recruiting agency. We hope to find more interesting concerning the industry and to share it with our group mates.
3. Background Information
Executive Search emerged approximately in the 1950s. Most of the pioneer executive search consultant came from management consulting or industry, therefore all of them had specific business knowledge and client management experience which helped them understand and relate to the strategic goals of their clients. Quite often clients would hire these management consultants to implement the newly developed strategy in an executive capacity or ask them to recommend appropriate executives to do so, and eventually the idea was born to focus on the recruitment side exclusively. Having seen the potential huge market and the logic behind such services, many management consulting firms established executive search departments (e.g. in America, some leading executive search firms like A.T. Kearney, Price Waterhouse, Ernst & Young and Heidrick & Struggles, etc). by the early 1960s, people with no previous consulting experience but with deep experience in other business sectors and human resources started their businesses in this particular field when the executive search business became a clearly distinct branch of management consulting with its own deontology and professional standards.
Executive search business is stable and will rarely run out of business. In the year 1999, over US$6 billion was used worldwide for executive search purpose. There are also numerous growth in the business; within the last two decades, over 1000 percent of growth was found in the business. The business was not going to diminish anytime soon.
Executive search firms, though focus mainly on searching top officers for their clients, have many other services provided. Some of them provided leadership services that are designed to recognize talent potential and to optimize performance across the organization. They would partner with their clients to provide an integrated approach and solution for their problems concerning their business. Executive search firms also provide training for the clients in order to help them to maximize the growth of the company. For example, Heidrick and Struggles, one of the leading firms in America, provides a lot of training, ranging from executive coaching to business development curriculum for their clients. These services help the clients to improve their executive teams function and communication, they also provide developmental guidance executive teams for individual team members as well as for the team as a whole. Executive education varies with the needs of each clients, but can cover all aspects of interpersonal effectiveness and leadership. Interpersonal topics typically include collaborating, handling conflict, understanding and leveraging individual differences, coaching and core interpersonal skills such as listening, asserting, and giving and receiving feedback. Some firms also provide consulting services concerning human resources.
One interesting feature that should be noted is that each consultant or executive search firm would serve only one client in a particular industry. No competitors of an industry would hire the same executive search firm otherwise problems could be arisen due to conflicting interests.
One more interesting feature is that only companies which try to look for executive officers who yearly salaries are over 1.5 million dollars should hire executive search firms or else the searching cost would be too high for the executive search firm as they would take 25 percent to 35 percent of the searched officer’s yearly salary as their commission.
The Industry that is discussed in the presentation was called the “Executive Search Industry” or the Timeshare Industry. It is a specialized branch of management consulting which assists companies in identifying and attracting talented top executives. It is based on thorough and active research of appropriate and suitable candidate who is marketed and tailored to each client’s needs. Research is conducted in competitor organizations as well as in all relevant business and industry sectors. It is uncommon for Executive Search firms to place advertisements to attract candidates (even a lot of employee send their CV to the executive search firms, they are largely ignored, so this would be a waste of time), but focuses on research activity and personal re3commendations. In fact, executive search firm often approaches those candidates who are not actively looking for a new job (i.e. they are already have their own jobs).
Reasons for hiring headhunter firms
The only reason for a company to consult a headhunter firm is that it is cost-effective. For a company which hopes to hire an officer throughout the whole world, it is literally impossible for them to search the suitable one by themselves. They would never have the resources (including men and time and most importantly, information) to do the work. The information cost would be too high for a company to bear. With a headhunter firm who could search world widely with their local experts in each area, they could use three or four months to complete the work; this is of course, an assumption that the company could wait that long so to speak. Even the company need to pay a large amount of commission to the executive search firm, their cost would still be much lower. The time cost could also be greatly reduced if a company turns to a headhunter firm instead of finding an executive themselves. After all, to ask a chief executive officer to interview all potential candidates would be impossible as the officer would never have the time to do so. The time cost of doing so is too high. It is believed that hiring a headhunter firm is much more cost-effective for employers than doing the actual searching themselves.
Leading firms in US
In US, the companies which had hired an headhunter firm before would vote for the best or top executive search firm they believed to be and the ranking would be annually updated. Korn/Ferry International, Heidrick & Struggles and A.T. Kearney are the three most top head hunter firms in the world.
4A. Operations
4A.1 Executive Search Firm vs. Mass Recruitment Agency
The fundamental differentiation lies on the targeted candidates and the compensation policy.
4A.1.1 Targeted Candidates
Everyday thousands of people take their initiative and send CVs over to an executive search firm hoping to have a better job opportunity, even the firm do record files into the database, the probability for being selected is trivial. A head-hunting firm targets on those senior executives who are currently employed and generating good profit for their respective companies. And normally, these high calibres do not intend to move to another job and thus do not bother to pass their CVs. This explains the reason a Head-Hunting firm is needed. Experienced Consultants who specialize with particular industries and skilled research teams will help looking up potential candidates to fit in the jobs from the unknown throng. The high information cost incurred far exceeds the limits of an internal human resources department. Consequently, although companies which are hiring executive search firms do generally have their own HR department, they preferred to seek professional assistance from outside. And the whole process is to be carried under strict confidential.
Whereas the role of a mass recruitment agency is rather similar to a candidates-employers matching process. Their clients are usually small and medium enterprises who do not have HR departments and thus contract out the candidate selection process to save resources. Moreover, candidates do not necessarily meet with the ultimate employer; the recruitment firm takes charge of the whole selection process to screen out the appropriate candidate. In addition, recruitment agencies do post advertisements through mass media and publicize the job openings. And their role is to match the job with the pool of CVs received.
4A.1.2 Compensation Charged
Since targeted candidates of head-hunting firms are currently employed, thus only the employer who is seeking high calibre to fit in its company will be charged. On the contrary, both employers and job seekers will be charged for commission by the mass recruitment agent for the sake of the job seekers’ eagerness in changing their job.
4A.2 Operations
➢ Job Specification
Similar to other recruitment advertisement, a Job Specification from the employer in which stated the Selection Criteria, Candidate Capabilities and Compensation Rate. A Job Specification can be up to five pages long for hunting a senior executive.
➢ Research
Researchers are the crucial component, through tactical cold calling they gather information on worldwide executive and produce Organizational Chart and Presentation for Consultants.
➢ Interview & Presentation
Consultants will individually meet with each candidate, evaluate their willingness to move, attitude towards their career. Very often consultants will not ask any more questions about their pass experience and achievements that are well-known to the public. Instead, conversation will focus on candidates’ family background, preferences and hobbies. Consultants mainly look for presentation and interpersonal skills from potential candidates.
Consultants will then comment on each candidates and present to their respective clients.
➢ Decision & Report
Unlike assignments done by recruitment agency, an employer holds the ultimate power in decision making after meeting the final candidates. And report will be produced to appraise the whole head-hunting process.
4B. Company Background
Worldwide Human Capital Consulting (WWHCC) established in November 2002 with two consultants, Mr. Armstrong Lee and Miss Carrie Lau. Besides executive search, WWHCC also provides services on Career Management, Executive Development and Education and Outsourcing for companies to allow concentration on core business activities for their clients.
For the executive search role, WWHCC mainly focus on four areas: Retail, Banking & Finance, Technology & Communications; and Commerce and Insurance.
4C. Interview I- Mr Armstrong Lee
Personal Background
Mr. Lee is the Managing Director of this company. He began his career as a management consultant, which was responsible for advertising renowned local and international companies in process re-engineering, market studies, financial planning, strategy formulation and execution. After leaving the consulting industry, Mr. Lee held various executive positions in different industries like insurance, IT and retail.
Keys to success
He commented that the service provided by the consultant is an important factor. As executive search is a services business, clients would look for professionalism of the consultant. It would provide competitive advantage if the consultant possess industry knowledge. Taking Mr. Lee himself as an example, he was knowledgeable in different areas such as banking, building installation equipment, construction materials and etc.
Another helpful tool is business network. It is a valuable asset for relationship establishment. Branching out network needs referral and creativity. For Mr. Lee, he is a frequent contributor to major publications and media, e.g., South China Morning Post, Hong Kong Economic Times, China Commercial News, Metro Broadcast, TVB News, etc.
4D. Interview II- Ms Carrie Lau
Personal Background
Ms Carrie Lau is now a managing director in the Worldwide Human Capital Consulting Limited. In her bachelor degree, she majored in psychology. According to Ms Lau, there is no direct linkage between psychology and consultants. Yet, studying psychology did facilitate her understanding on human beings, hence helps her a lot in human resources business since she meets a lot of people, for instance clients and candidates. Whenever she meets a person, she can easily identify the personality of that clients and candidates and interact effectively with them. The studies in psychology overall equip her with interpersonal skills which are quite crucial to a consultant.
Her first job was an executive search associate in a large franchised organization. When she was a researcher, she had to make 40 to 80 calls a day to identify the companies’ names and candidates’ names. Also, she has to call the candidates and asked them to pass the CV to her. These extensive searching of candidates’ information is critical research part for a consultant to search the right person for clients.
Shortly after three months, she got promoted to a consultant. The CEO of this organization taught her a lot of the fundamental bases for running a business; also bring her to meetings to let her know more how to be a researcher. This prepared Ms Lau to start her human resources business afterwards.
After few years of working in that company, Ms Lau left the company and started her own consulting business, i.e. the Worldwide Human Capital Consulting Limited.
Career Path
(Bachelor Degree of Psychology ( Executive Search Associate ( Consultant ( Managing Director in her own consulting company)
Unlike Mr. Lee, Ms Lau started her career with being a researcher instead of specializing in the industries. She was thus unfamiliar with the industries. Yet, consultation works required her fully understanding on their servicing industries. To learn about the industries, she has put great efforts on it. One of the most effective ways to learn about the industries according to Ms Lau is to share the views with candidates. Since most candidates she interviewed specialized in the industries, it is the easiest way to learn more about the industry and select the most suitable candidate based on the industries’ development.
4E. Essential Qualities of a Professional Consultant
In Ms Lau’s view, a consultant no matter working for an organization or own business carried quota. That means, a consultant has to bring in business development and put research into execution. Starting from the research to the closing the deal, Ms Lau has to fully function and handled the whole consulting process by her own.
To perform the consultation work well, there are some crucial qualities a consultant should possess as Ms Lau mentioned in the interview. Some general qualities like being persistent, good language skills and presentation skills are no doubt essential. However, these are common skills a person should have in order to get succeed in every occupation fields. Instead of elaborating all qualities, we would focus on five essential qualities a professional consultant should have, and discuss each of them in-depth in the following:
People-oriented Person
As communicating with people is a major duty of a consultant, a consultant must love to and able to interact with people naturally. On one hand, the consultant can interact with more people and expand his/her networking. On the other hand, he/she must be patient to the clients and candidate, in order to understand their needs.
Analytical Mind
A consultant is responsible to identify the clients and the companies’ requirement. Hence, she must be able to analyze the culture of the company and the developing trend of the industry. Or she would probably select the wrong person for clients. Apart from understanding the company, she has to analysis candidates’ motivation, attitudes towards moving to another company, strengths and weakness from candidates’ conversation in the selection process. Consultant can hardly identify the internal attitudes of candidates without analytical mind, and make a correct judgment on candidates.
Good Selling Skills
No doubt a consultant is selling the service to the clients; he/she is also selling the opportunities to the candidates at the same time. During the selection, the consultant has to persuade the suitable candidate to consider the working opportunity available. And after a consultant select a qualified candidate for the client, the consultant has to present the strengths of the candidate, i.e. showing how that candidate is suitable for the work to the clients. Therefore, the selling skills, i.e. whether consultants are convincing enough to the clients, as well as to the candidates, are crucial for a successful deal.
Objective and Non-biased
During the selection process, consultant had to put their own view towards the candidates. He/she has to try to be more objective when assessing the candidates. And when consultant presents the selected candidate to the clients, he/she should not be too hard selling though it is important to get a successful deal. It is an ethic for consultant not to promote candidates even they are incapable to fit the requirement of the clients, just because they want to complete the deal. Otherwise, the reputation of the consultation company would be affected.
Negotiation skills
After the complicated selection process, consultant would select a suitable candidate for client. The consultant’s work is not completed by satisfying client, he/she has to negotiate the salary package and benefits for the candidates as well. As we mentioned previously, a consultant is selling the opportunity to the candidate, he/she is responsible to provide the candidate benefits, as a return for candidate’s faith on the consultant. Hence, the consultant can satisfy both the candidate and the client.
4F. Comments on Fresh Graduates I
Although, the executive search industry targets at senior staff and seldom interview with fresh graduates, we have asked for their comments on fresh graduates. Mr Lee advised that they should have well-preparation for interview, for example, there should be in-depth study on the company and industry, especially for multinational national companies. This would be a means to compensate their limited experiences.
He also quoted some comments from the employers. They complained about the working attitude of fresh graduates, which are: not hard working enough, too calculative on wages and working hours, and too much sick leaves.
Therefore some of them prefer hiring Secondary graduates, who have better attitude, loyalty to the company and potential.
Comments on Fresh Graduates II
Recommendations mentioned in the following are not only limited for fresh graduates who want to be a consultant, but are also suitable for fresh graduates who would develop career in all kind of industries.
Don’t emphasize too much on the salary
Money is important, yet the career prospects are even more important. What can we learn in the first job, who will be met and how to manage the job is even more critical to our future career, since the first job sets the foundations for career. If we can make use of the first job and youth, we can gain experience, expertise and knowledge. And once we can possess these skills, it is not difficult for us to earn money. Therefore, fresh graduates shouldn’t be too anxious on the financial side of the first job.
Be Passionate
Since the consulting work is quite stressful, only passion of being a consultant can carry us through stress just like Ms Lau. She loved her job so much and made heavy commitment on it. Therefore, she can handle stressful consulting works without giving up.
Have Good Pressure Management
As consultants had a heavy workload; consulting work can be an unpleasant working experience if we couldn’t handle stress in an appropriate way. Obviously, pressure is inevitable, we would have pressure almost in every circumstance. We have to learn how to view the pressure positively as an impulsion to perform better. When facing the problems we can solve it, we should try our best to solve it. For those couldn’t be solved, just let it be.
Good Change Management
Whether we can adapt and excel ourselves in a difficult environment, or how to react properly in a sudden situation concerns our change management. There is always hard time in all business, like during the times of SARS or economic recession, it is very important that how can we function well even in difficult situation. If we can have a good change management, we can function well in difficult time, and even function better in easy time.
Sensitive to Ourselves and Surroundings
We have to know ourselves well, able to identify our own strengths and weaknesses. Everyone have weaknesses, more essential is whether we can identify it. Once we can identify our strength and weakness, we can try to exert our strengths and ameliorate our weaknesses as much as possible. And to the surroundings, we have to know what happening not only in Hong Kong, also the world. This is one of the highlighted requirements for most employers.
The competitiveness of a fresh graduate would be much higher if he/she can possess the above abilities. And hence, the success in career is foreseen.
4G. How to be Head Hunted?
Among those have been head hunted by the consultation companies, they shared some common features. And we would like to highlight these features for understanding what should we possess in order to be chosen by the head hunting companies.
Talent
The selected candidate must have real talent, or no head hunting company would be willing to approach that candidate. As the clients have to pay a large sum of money as the charges of the consulting company, and the consulting company has to provide free consulting services if the clients do not satisfy with the selected candidate during the probation period, the selection process of the consulting company would be meticulous. Therefore, only the real talent would be chosen by the head hunting company.
Studying in famous university or aboard
Targets of the head hunting company are those who are working in and having influential status in the famous international firms or organization. They usually possess a master or doctorial degree in famous university. It would be even better if having experiences of studying aboard since they can help to integrate different culture and enhance the development of the company in the international market.
Personal Conduct and Occupational Mores
If a person is lack of personal conduct and occupational mores, he/she would not be considered by the head hunting company even his/her ability is qualified. For instance, a person, who harms the company’s interest or does not have well arrangement before he/she left the work which cause inconvenient to the company, would not be introduced to the clients of head hunting company. In short, the personal reputation is a crucial factor for being selected by the consultation company.
Learning in Doing the Project
Before the study of executive search industry, it was perceived to be a very mysterious industry. I have a misconception that head-hunter firms would only target at the “head” of the company, but no other positions. From the study, I learn that searching for an appropriate executive consume much time and resources, and its selection process is much more complicated than hiring a lower level staff. It is also made known that the confidentiality and loyalty to their clients are very important. However, I see that there is also a contradiction between using tactics, like informal networking to obtain useful information, and trust. A consultant need to inspire trust to their clients, however, it would sometimes create troubles for establishing network. Therefore, I think these consultants should be very skilful in their strategies and must have passion on their career.
Personal Reflections
Queenie
The most valuable insight I got is the comment quoted by Mr Lee from the employers on fresh graduates. It gave me a reflection on my career planning. There is always a struggle on finding a job, which I was interested, but the salary is much lower when compared with business sector. Having attending for about six interviews with written tests, I started to lose my faith in pursuing my career in social services sector.
As I do not possess a social work degree, I have to find jobs with lower educational level and required experiences. I hope to enter this sector by gaining similar experiences. However, I did not prepared that apply for jobs requiring F.5 level is so competitive.
After hearing comments from Mr Lee, as well as from Dr. Yeung, my goals are confirmed again. Having a job under my preference is not easy, but I should have a more future-oriented career planning and adopt a broader perspective in walking my career path. I do not have a hope that I would be “hunted” by executive search agencies, but I do hope to be a successful social worker, and even a family therapist and having contribution to a society well-being. (By the time this report is handed in I would have starting my first job as a Peer Counsellor. ^.^)
Ena
Before investigating the job of head hunting company, I have no idea on what exactly the consultants do, what kind of services they are providing, and how can they make use of their services to gain profit. This project does give me more insights on the consultation works.
I was so pleased to have chance to interview Ms Lau. At first, I wondered whether a small scale company like Ms Lau’s company can earn profit. And the reality is that they are really capable to gain business even in hard time during SARs attack. Though small scale company can hardly compete with the international consultation firm, it still has it own position in the market.
After the presentation, I remembered that a student asked us whether we would consider being a consultant in the future. I am not quite sure with the answer. Who knows? The consultation career is interesting. However, it is a really time-consuming process for a person to equip himself/herself to be a professional consultant. I can either enter the career through being a researcher or invest years of working experience on a certain industry. The first way, i.e. being a researcher, doesn’t attract me much. And the second way, I have to work in the commercial industries, for instance IT or financing industry. I am not really familiar and interested with these industries at this stage. Therefore, I think the possibility of being a consultant for me is relatively low.
Though I am not sure whether I would be a consultant in the future, I did learn to be passionate and consistent. Probably not doing quite well in the past, I now try to do value my time and equip myself for the future.
Vanessa
Both interviews with Mr. Lee and Miss Lau had given me a great inspiration on how to make a successful career. Although I always thought I have done my role as a student well, having good academic results and keep enriching my scope of learning through different job exposure; these are simply insufficient to win a job offer. I should prepare myself better on the industry knowledge and try to challenge the interviewers by asking relevant questions to show my eagerness in the job.
The most profound belief I learnt is to ‘be passionate’. Having the courteous and affection towards a job is important, it will not only lead you to position advancement, but to broaden my horizon and enlighten my career path. Establishing a career objective is a fundamental element, I have to know what I want to achieve and what I want to be, and endeavor it, excel myself. The passion towards a successful career will carry me through the ups and downs. Thus, from now on I will ask myself clearly on how I want to be, show my passion and warmth during the interviews, and step-by-step strive for it.
Esther
Executive search was a very strange name to me before I started to work on the project. Never in my life had I found the need to find something that is remotely related to executive search as I believed that it would be something much far away from me. However, when I tried to find some background information concerning executive search on the internet, I was surprised as I found more than 10000 entries concerning my search where at least 70 percent of them are the introduction of perspective executive search firms. Some names like Hedrick & Struggles was not in my vocabularies before and I was sad to say that my knowledge on that topic is almost zero. I found that the industry is quite amazing and interesting as they try to be the “matchmaker” for their clients. [pic]
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