Hire a Search Firm or Handle Hiring In-House: How Do You Decide?

By October 14, 2016 No Comments

Editor’s note: Today I’m happy to share with you the words and wisdom of Peter Gerard, a Texas-based human capital executive and “change agent” with a reputation for turning around distressed organizations. He’s the guy you want on your team when the organization is growing rapidly or is in transition.

I had a chance to catch up with Peter the other day and posed the question: why do some companies still rely on in-house sourcing of candidates for top-level positions instead of retaining recruiters?

His answer may not surprise you, but I think you’ll learn a thing or two from the discussion. I asked him to sum up his insights, and the results are below.


The Scenario

You are the top HR executive in your organization, and your CEO has just notified you that the Chief Compliance Officer has decided to retire. This was not unexpected, but the timing is less than ideal. This critical role needs to be filled quickly in order for a successful transition to occur. You have no internal candidates for the role, and the resume file is looking pretty empty.

You have two choices: hire a retained search firm – or send the requisition to the in-house recruitment team for sourcing.

Which path do you take – and why?

To answer these questions, we first need to understand the differences between your two choices.  And they are very different indeed.

The Facts

Retained search firms are external companies that specialize in recruiting for specific types of mid-level management to executive level management positions. They typically specialize in the areas of finance, human capital, compliance, IT, legal, sales and operations. They work exclusively for your company on a case-by-case basis.

In-house recruiters are an internal department within your organization, typically run by the Human Resources or Human Capital team. They are typically generalists tasked with recruiting for basic entry-level hourly positions all the way up to management-level positions. Their efforts traditionally are geared toward posting positions on internal and external websites, sourcing candidates using a variety of paid professional sites and responding to online applications.

That’s just a snapshot. The real differences between in-house and retained search go much deeper:

The Details

In-House Recruiters

  • Typically juggle more than 20 internal requisitions at a time and often devote more time to lower-level searches, which usually yield more candidates.
  • Sometimes still use old-fashioned cold-calling to identify candidates.
  • Use an internal career center and/or external websites (CareerBuilder®, Monster®, Indeed®, etc.) to post open positions. They also search for candidates using professional networking sites (LinkedIn®, SHRM®) to reach out to and screen candidates.
  • Have limited time to follow up with candidates who aren’t a “perfect fit,” often leaving candidates to wonder if their resumes ever reached a hiring manager.
  • Are compensated as part of your annual recruitment budget and are often assigned additional HR responsibilities such as company reorganization, resizing, etc. They typically are highly skilled and efficient in these areas.
  • Have intimate knowledge of a company’s culture and values and can accurately portray the working environment to candidates.

Retained Search Firms

  • Traditionally fill high-level executive positions, usually focusing on only one search at a time.
  • Have built relationships with potential candidates and have cultivated those relationships through regular contact over a period of years.
  • Have access to “passive”candidates (those who are not currently looking for a job), and are able to reach out with job opportunities without disclosing the company name until the prospect is accepted as a candidate for the position.
  • Often obtain new clients when a company’s in-house efforts have failed to yield a qualified candidate after six or more months of posting job ads and scouring networking sites.
  • Tend to be “narrow and deep” by specializing in specific areas of expertise.
  • Have valuable insight and experience when it comes to marketing the company to a candidate, writing a job description and negotiating the terms of an offer.
  • Invest all of their resources to an assignment, including locating candidates with unique backgrounds and qualifications.
  • Average 200 man hours per search, using a minimum of two researchers in addition to the head search consultant.
  • Guarantee their candidates for a minimum of 90 days.

The Verdict

So, when it comes to sourcing a replacement for your soon-to-retire Chief Compliance Officer, the decision seems pretty easy now, doesn’t it?

And yet – there are still companies whose first instinct is to start the process by giving the in-house team a shot at it.

Why? The answer can be summed up in one word: money.

Retained search firms cost money, and companies often say they can’t afford to use one. I say the question you should be asking is, can you afford not to? Can you afford the time it will take to source a candidate by relying only on internal resources — and are you willing to risk the impact a wrong hiring decision could have on the future success of the company?

Your decision may not seem like an easy one, and there are many aspects to a hiring strategy. But I urge you not only to assess the depth of available resources, but also your company’s overall business objectives. And if you agree that mitigating risk and meeting your goals requires having the best possible people occupying all the specialized and high-level positions, then spending money to make a good hire is just good business.

You have options. And now you have the facts. Ultimately, the choice is yours.

peter-gerardPeter Gerard is a global human capital executive and change agent who builds high performing, revenue-generating organizations by effectively aligning human capital with overall business objectives. As an adaptive change agent, he has a proven track record of success in turning around distressed organizations, through targeted initiatives, restoring vitality and profitability while reversing negative trends. As a trusted strategic partner and advisor, he has contributed to the success of companies such as Marriott International, Sodexo North America, Market Center Management Company, Heartland Automotive Services and United Allergy Services. Peter has a reputation for consistent delivery of timely, desired results, within budget, while exceeding quality standards. Peter is a graduate of Benedictine College and lives with his family in Arlington, Texas.

Published by Conselium Executive Search, the global leader in compliance search.  

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