Headhunting FAQs (Part 1)

Background:

The headhunting or executive search industry experienced exponential growth in the past 20 years especially driven by the historic growth of Business Process Outsourcing companies. We estimate that pre-pandemic and lockdowns in Q1 2020, there were as many as 70+ professional search firms as well as so-called search firms of which no more than 20% were probably SEC- registered.

This FAQs are intended to help both client companies and executive talents understand how best to deal with executive search firms.

1. What is executive search?

Executive Search is methodical process in identifying high caliber executives who are deemed suitable for specific positions as well as “culturally-fit” for the client.

The client company in need of an executive talent appoints an Executive Search firm whose processes include fully understanding the client’s requirements, the culture of the company, expectations of the “boss-to-be”, challenges of the job and career track.

The core process is a thorough and exhaustive talent market research to surface qualified candidates. Face-to-face/virtual interviews are conducted and assessments of qualified candidates made. The best 3 or 4 candidates are then endorsed to the client.

As a value add, the Executive Search firm conducts discreet due diligence or reference checks on the chosen candidate to ensure that the information shared on the CVs and during interviews are true.

These reference checks will likewise cover strengths and areas for improvements which clients find useful in managing its career and talent development program.

The above-mentioned process takes about 4 weeks to complete.

2. How does executive search get started?

Executive search is initiated by the Client company by appointing a reputable, reliable and ethical search firm which the Client company can entrust with confidential information.

3. Given the existing professional networking sites such as but not limited to LinkedIn, why should companies still engage the services of search firms and pay professional fees?

LinkedIn may be useful for scanning the talent market but has its own limitations. One major limitation is that most senior executives cannot be found in LinkedIn for the simple reason that these executives do not want to openly advertise themselves.

A second critical limitation is that the core processes of executive search per se i.e. thorough and exhaustive talent market research, screening, interviews, assessments and due diligence are definitely absent in LinkedIn’s service.

4. As an executive talent, how much do I have to pay to an executive search firm for their services in finding me a job?

You have no financial obligation to the search firm. This is because the executive search process is initiated by the Client company. The client pays for the services of the search firm.

5. How can I ensure the confidentiality of my papers? I am presently employed and do not want to lose my job if my boss finds out that I am looking around.

Avoid dealing with just any so-called search firm. Many are known to “peddle” resumes without the knowledge of the executive. Choose search firms that are known for their professional and ethical practices.

6. Is there any law or regulatory agency that protects the confidentiality of one’s CV?

The Data Privacy Act (RA No. 10173). This law prohibits the unauthorized processing of private and personal documents, such as resumes/CVs.

An executive can bring a headhunter to court if the unauthorized release of his resume causes damage to his career or reputation.

7. What is a Retained and Exclusive Engagement?

When used?

Clients normally enter into a Retained and Exclusive Search engagement for senior or highly sensitive positions requiring utmost discretion and confidentiality. Examples are:

• An incumbent will be replaced but will only be advised once a replacement is found.

• A new position has been created but an executive from the outside is required.

• Company A does not want its competitors to know its re-organizational plans.

• Company B wants to conduct the hiring discreetly so as not to distract the organization.

Why Exclusive?

Exclusivity is necessary to keep the search confidential. It makes the search firm accountable for any leaks. Having a non-exclusive arrangement is fraught with leakage risks and makes accountability difficult to pinpoint.

What are the fees and terms of payment?

Overseas firms charge 1/3 of the gross annual guaranteed cash compensation. SEC-registered and professional firms charge anywhere between 20% to 25%; the unethical firms and CV peddlers have been known to go down as low as 8 - 10%.

What is a “retained search arrangement”?

Under a “retained arrangement,” progressive payments are made for each milestone, first upon signing of contract; second, upon presentation of short-listed candidates; and third, upon acceptance of the Job Offer.

Advantages of a retained and exclusive engagement

• Top-notch talents who are happy in their current situation are usually “not in the market”. They certainly would not want their names to be linked with executive search interviews, lest the information finds its way to their present company.

• They are therefore quite selective in accepting invitations to explore opportunities. However, when they are contacted by a reputable search firm, assured that the search is a retained and exclusive engagement and therefore very confidential, they are more inclined to accept the invitation.

To these executives, a retained search engagement conveys that the company is serious, the position is critical and the company is not scrimping on professional fees.

• Retained and Exclusive engagements are always handled by senior and seasoned Consultants. These Consultants not only have the credibility and experience to deal with senior executives, they have the competence to make professional assessments that will help ensure the successful placement of the most suitable and capable candidate.

• Retained and Exclusive engagements assure the client that the search is done thoroughly and follows time-tested processes. No short cuts are made for the sake of speed.

Part 2 of this article will include the Contingency Search Model, Guarantees, Malpractices.