Headhunters Can Prevent Headaches

Looking for a way to improve the quality of the new managers joining his El Monte instrumentation firm, Steve Olson insisted that every prospective employee be interviewed and rated by five of his company’s current supervisors. While this policy helped screen out some potential problems, Olson, then president and chief executive of Signet Scientific, eventually turned to a small executive recruiting firm for help.

“I think it’s been money well spent,” said Olson, who now heads a Seal Beach merchant banking firm bearing his name. And today, although he has fewer than a dozen employees, he still relies on the same recruiters to bring him the best people.

When there are 250 people in an organization and you make a mistake in hiring, it doesn’t make much difference, said Olson. “But, when you have five people in a company, the impact can be significant.”

Olson and others said many small-business owners are reluctant to bring in professionals to help them find managers, relying instead on personal contacts or advertising. Entrepreneurs resist the sales pitches of recruiters by saying they can’t afford the fees or fear losing control over hiring.

To a small business, spending $30,000 to find a new $100,000-a-year executive vice president may seem steep, but search consultants suggest that the fee be considered as an investment in the company’s future.

“Start-ups can’t afford the wrong players,” said Jay Berger, a principal in the Pasadena search firm of Cowen, Morris, Berger. “They need the right people to put together the dream.”

Different Roles

Berger said most business owners hire new managers on the basis of a gut feeling, “but if the person doesn’t have the right skills, the chemistry will wear thin.”

He said business owners may be confused about the kinds of services an executive search firm provides. Unlike employment agencies, which charge fees to job seekers, search firms are paid by a company looking for middle- and upper-level employees.

While some firms are beginning to offer flat fees, most search consultants charge between 25% and 33% of the salary being offered the prospective employee. They also bill the client for travel and out-of-pocket expenses, including telephone calls, mailings and entertainment.

Finding the right kind of search firm for your business can be daunting. There are more than 1,200 companies nationwide, with 10 large firms dominating the industry. Small business owners are advised to seek out a smaller company that can give them the personal attention they need.

A good recruiter will keep going for as long as it takes to find the right person.

After nearly five years in the search business, Cowen, Morris, Berger has only given up on one search, according to partner Kristine Morris. That failure was in dealing with a family business where the husband and wife could not agree about what kind of person to hire.

“They finally hired their son for the job,” said Berger.

Smaller search firms are also willing to adjust their fees and take risks when they believe in a client.

Morris and Berger found the president for a newly organized high-technology firm. They accepted stock in the company as their fee instead of cash. But, the Silicon Valley company never got off the ground, leaving them with a worthless stock certificate.

Create Job Description

Company owners and recruiters said it is important to view the relationship as a partnership. The first thing a competent search firm does is learn as much as it can about your company and style of doing business.

Next, recruiters should sit down and help managers create a clear job description for the position they are trying to fill. Then they should interview all the people who will work for or with the new employee.

At some point in the relationship, they sit down with the management team to design a human resources strategy, listing exactly what kind of people are needed to meet the goals.

“What evolves here is a partnership,” said Gary Kaplan, a 10-year veteran of the search business who specializes in the entertainment and communication industries. “A search consultant becomes part of the company.”

Kaplan, who heads Gary Kaplan & Associates in Pasadena, said his job is to “identify the best and the brightest” employees for his clients.

Before hiring a search firm, Kaplan suggests asking for a list of their other clients. This is important because as a matter of policy search firms do not raid their own clients when they are looking for job candidates. This means that a large firm with hundreds of clients may find its hands tied because all those firms are considered off limits.

Once the search consultant has all the information in hand, he or she usually launches a nationwide search for the best candidates, usually seeking out people working in similar jobs for competing firms.

After reviewing resumes, candidates are initially interviewed by telephone. If they become serious contenders, the consultants meet with them in person. After the interviews, the client is usually given a detailed, written report about the job seeker. The finalists for each job meet the management and check out the company.

Search consultants also check references and educational claims, because according to Morris, 85% of job applicants lie about some aspect of their educational background.

Course for CEOs Set for Laguna Beach

The Management Course for Chief Executives, sponsored by the New York-based Center for Entrepreneurial Management, is scheduled for Aug. 7-9 at the Ritz-Carlton Hotel in Laguna Beach. The session includes intensive case studies, discussions and special seminars for spouses of “hard-driving CEOs.”

The cost, excluding hotel accommodations, is $1,250 for the chief executive who is a member of the Center for Entrepreneurial Management and $250 for spouses. Non-member CEOs pay $1,600 and spouses $350. For information call: (800) 247-7642.

U.S. Wants Suppliers for Japanese Mission

The Commerce Department is looking for manufacturers and suppliers of sportswear, leisure wear, camping equipment, boats and fashion jewelry to travel to Japan on a trade mission in September.

Japan is the most lucrative market for U.S.-made sports and leisure products, according to a department spokesman. The California Lifestyle Matchmaker Trade Delegation will provide appointments and introductions for people who participate. Meetings with Japanese firms and business people will take place Sept. 23-30 in Tokyo and Osaka. The cost is about $4,000 per person.

For additional information call Sherwin Chen or Allison Hirsch at the Commerce Department’s Los Angeles District Office, (213) 209-6718; or fax in a request: (213) 209-6711.

HIRING A SEARCH FIRM

If you are thinking about hiring a search firm, here are suggestions from business owners and consultants :

Find people you feel comfortable confiding in and working with. This is important because the search firm will represent you and your company to prospective employees.

Find out exactly how much the search firm will charge for services. Insist on a careful explanation of charges and expenses so there will be no surprises.

Ask who actually will do the search work for your firm. In many larger firms, the principals are out signing up new clients, leaving less experienced associates to find the candidates.

Find out if the company has worked for companies your size and in your field. Many search firms specialize in serving certain professions or industries.

Ask for a list of clients and call them for information. Ask if the search firm was responsive. Find out if they brought in good candidates and how long it took to fill each job.

Los Angeles Times