Headhunters Thrive on Corporate Chaos : Management: Firms searching for new executives increasingly retain non-staff, professional recruiters.

Pssssst. Have I got a job for you.

That’s how it might begin. Where it ends, who knows? Chief financial officer? Chief executive officer? Chairman of the board?

In today’s throw-the-bums-out era of shareholder anxiety and management accountability, job security has become an oxymoron. Fail to deliver results and you’re gone. The search for a replacement could begin before your desk is cleared out.

Enter the executive recruiter.

Thriving on the corporate chaos that has become de rigueur over the past few years, executive recruiters earn their keep by matching talent with management job openings.

They work largely in secret, rarely ever mentioned by the executives they’ve recruited or the companies that have hired them. The nation’s largest recruiting firms like Korn-Ferry International, Heidrick & Struggles, Russell Reynolds Associates and SpencerStuart are hardly household names.

But the presence of recruiters has grown markedly over the past decade or so. Top headhunters can earn as much $1 million for a single assignment.

“I think it is fair to say that when a change is made at the top and an outsider is brought in, it is a rare exception today when a search firm is not involved,” said Thomas J. Neff, president of SpencerStuart and a recruiter known for placing high-profile CEOs.

Even for lower-level jobs, recruiters play a significant role.

Executive search has grown from a barely respectable business when it first became popular in the 1950s to an almost integral part of managing a company today.

Pressure to deliver results has prompted many companies to embrace recruiting firms. Companies have found that often the best place to look for management talent is outside their own ranks. The recruiting industry has thrived, becoming particularly hot starting in the 1970s and 1980s.

Search firms generated 1992 revenue of $3.3 billion in the United States alone, says Executive Recruiter News, an industry newsletter.

The reason for their success, says Hobson Brown Jr., president of Russell Reynolds, comes down to a simple concept: the power of the individual.

“What companies have now found is that through the introduction of new people you can institute change faster,” Brown said. “The results come on. You bring in different points of view. You can speed change.”

“A person,” he said, “can make a big difference in the right place.” Once that’s accepted, the rest is simply technique.

Executive recruiting is a highly personal business and much hinges on relationships developed over years, particularly with the board members and executives who hire search firms.

Companies often will call the search firms they’re accustomed to doing business with to initiate a search, much like a corporation might call its law firm for a legal problem that’s arisen. Sometimes, a couple of search firms must compete for an assignment.

For high-level searches, so-called retainer firms are generally used.

Those companies, which include SpencerStuart, Russell Reynolds and Heidrick & Struggles, are paid a fee of usually one-third the first year’s salary and bonus for the job to be filled, regardless of the search’s outcome. Contingency firms, used generally for lower-level searches, are paid on successful completion of an assignment.

Gerard R. Roche, chairman of Heidrick & Struggles and a headhunter well-known for placing individuals atop the nation’s largest corporations, says the secret to recruiting is trust.

“I feel a little guilty that the real essence of me being successful is not my great brain, or my great analytical wisdom, or my instant ability to recall names,” he said.

“It’s being able to look somebody in the eye and say, ‘Hey, you can trust me. What’s going on? What’s the real story?’ ”

The ability to persuade an executive to take a new job, often at the cost of leaving a high-level position at another company, is an essential talent for any recruiter.

“Someone will argue that anyone can put together a list for ‘X’ assignment. That may be the case,” said Neff. “But not everyone can gain access to the people they need to talk to in the course of an assignment.”

“That is something you gain over the years because of your reputation and relationships,” he said.

Identifying candidates, as Neff suggests, may be the easy part.

Most large recruiting firms have research staffs and compile electronic lists of possible candidates. Search firms will seek them out, contacting successful executives at many companies. Potential candidates will be screened and interviewed. Russell Reynolds, for instance, keeps a database that contains information on 261,000 different executives.

“The business is increasingly professionalized, and I think that’s good,” said Al Osborne, a professor at the John E. Anderson Graduate School of Management at the University of California, Los Angeles.

“There are more capable people going into the business in terms of experience and background,” he said, “and I think the integrity of the business has never been higher.”

Along with the increasing integrity and status has come the high fees. But, Osborne said, high-priced search firms on the whole seem to be worth their cost.

The value of a top executive to a large company--in terms of potential growth in sales, profits and stock price--can far exceed the cost of even the most expensive searches, he said. Others, however, are more skeptical, particularly of the most expensive, highest-level searches.

“No company should have to pay $1 million to find a new CEO,” said John Sibbald, president of his own search firm, John Sibbald Associates, and author of “The Career Makers: America’s Top 150 Executive Recruiters.”

But if companies are cringing at the cost of search firms, they don’t seem to be cutting back on their use.