{"id":440,"date":"2023-04-24T14:22:06","date_gmt":"2023-04-24T14:22:06","guid":{"rendered":"https:\/\/dexian-brasil.website-in-dev.co.uk\/this-executive-search-firm-practice-may-be-keeping-you-from-your-best-candidates\/"},"modified":"2023-08-21T15:55:02","modified_gmt":"2023-08-21T15:55:02","slug":"this-executive-search-firm-practice-may-be-keeping-you-from-your-best-candidates","status":"publish","type":"post","link":"https:\/\/brasil.dexian.com\/en\/blog\/this-executive-search-firm-practice-may-be-keeping-you-from-your-best-candidates\/","title":{"rendered":"Generalist Search Partners Better for PE Firms"},"content":{"rendered":"\n

\u200bWhen your private equity firm or portfolio company is in the market for a C-suite executive, there are several directions you can go to find the best talent. You can choose to use your own network, knowing that your results will be limited. Or, you can choose to extend your pool of talent by partnering with an executive search firm. Even if you know your own network has strong candidates, including those candidates in a full search process will ensure you\u2019re pulling from the widest pool of available talent. Many executive search firms will also work with you on a carve-out fee in case the successful candidate does <\/i>end up being selected from your own network.<\/p>\n

While partnering with a search firm can give you access to a wider selection of qualified C-suite candidates, it\u2019s essential that you ask a potential search partner the right questions<\/a> before you engage them. When private equity firms and portfolio companies vet an executive search firm, a key umbrella question\u2014essentially, \u201cWhat factors or restrictions will limit my access to the best candidate pool?\u201d\u2014often goes unasked. Another way to phrase this might be, \u201cAre you conducting similar candidate searches to mine with other clients at this time?\u201d Failing to ask this and other key questions can lead to slow outcomes and disappointing results.<\/p>\n

This particular question relates to what the market generally calls \u201coff-limits restrictions.\u201d If your candidate access is restricted because of an executive search firm\u2019s process or policies, how do you ensure that you have the broadest access to a candidate pool? (Spoiler alert: You don\u2019t.) Asking the right questions will arm you with the knowledge to help you avoid adverse selection in your search, and will go a long way toward ensuring a successful search process (and creating a lasting partnership between you and your search firm).<\/p>\n

What Adverse Selection Is\u2014and How It Can Impact Your Search Experience<\/h2>\n

The term \u201cadverse selection,\u201d sometimes referred to as \u201canti-selection,\u201d was coined in the insurance industry, but it extends to many industries today, including the candidate and hiring market. Adverse selection happens when one party in a business negotiation or transaction\u2014either the buyer or seller\u2014has information the other party lacks, specifically around risk factors related to the negotiation. This creates an asymmetrical playing field and unfair advantage for the party with more knowledge, and it often leads to poor decision-making from the buyer or seller.<\/p>\n

In the candidate-search experience, when a private equity firm or portfolio company engages a search firm, the \u201cnegotiation\u201d is the candidate search, and the \u201crisk factors\u201d involve the other clients and candidates the search firm is already engaging with. The imbalance of knowledge on behalf of the \u201cseller,\u201d or search firm, happens when other clients are given preference or opportunities that you\u2019re not, coupled with a lack of transparency about it. Adverse selection can be detrimental to private equity firms and portfolio companies that (rightly) expect access to the best pool of candidates for their hiring needs.<\/p>\n

The Early Firm Gets the Worm<\/h2>\n

There are only so many potential candidates for a search. Not unlike the NFL draft, first-round picks for candidates generally offer better options than the later rounds. And in house-buying, getting an exclusive viewing of a house before it goes on the market will likely give you the best opportunity to assess whether it\u2019s the right fit and allow you to be the first to put in an offer. The same is true for recruiting.<\/p>\n

To understand this concept in action, let\u2019s say you\u2019re seeking a candidate for a CEO role, and your search firm partner is already conducting searches with three other clients for a similar CEO role. They must first carve out the candidates they\u2019ve already engaged for other clients, which means that as the fourth client they take on for this search, you\u2019ll likely experience adverse selection. Only after the search firm\u2019s first client has passed on a candidate can that candidate become eligible for another search\u2014meaning that they may never trickle down to your candidate pool.<\/p>\n

The bottom line? Adverse selection means you\u2019re getting short-changed on talent. If you don\u2019t ask your search firm upfront about their policies regarding this type of situation, you may not even be aware this is happening. This restriction can have a real impact on the quality of candidates you\u2019re getting, which is why it\u2019s so important to make sure you\u2019re fully aware, at least in a broad sense, of the other searches your search firm is leading and how that may affect your own search.<\/p>\n

Questions to Ask a Potential Search Partner to Avoid Adverse Selection<\/h2>\n

1. \u201cHow do I ensure that I\u2019ll have the greatest candidate access?\u201d<\/i><\/h3>\n

Madison Gunn stands by a policy of transparency: we believe our potential and current clients deserve to know if we\u2019re already engaging with a client on a similar candidate search. If it turns out we are, we won\u2019t take on their search until our current search has concluded. In this spirit of transparency, we recommend that you ask a potential search firm the following questions (in addition to the one above) before starting a partnership. These questions can help you make informed decisions upfront about the search firm you choose so you don\u2019t find yourself in a position of adverse selection.<\/p>\n

You have a choice between working with a generalist or specialist search firm<\/a>. Though there are benefits to both types of firms, determining which type has more benefits than negatives for your needs will depend on a number of factors. A specialist firm will say that because they know your market well, they have a built-in network of candidates in place that\u2019s aligned with your goals, and that they\u2019re able to quickly tap into that network as needed. These have the potential to be strong advantages, but you must determine whether these advantages outweigh the negatives of partnering with a specialist firm.<\/p>\n

These potential negatives may be uncovered by asking these follow-up questions:<\/p>\n