What Drives the Need for Interim Management. by Tom Englander

“Do more with less.” “We can’t afford to hire anyone right now.” “You will just have to shift priorities; we need to get this done quickly.” “I don’t care how, you just do it.”

We have all heard these comments during our work lives, but today we are hearing them more frequently and louder. The squeeze is on and has been for some time as companies demand more results from a downsized staff. And with the uncertainty of the near-term, let alone the long-term future, they are unwilling to add expensive talent to get needed tasks accomplished.

The economic downturn is into its third year for many companies. And while there are signs of an uptick, hiring is still being restricted. Yet there are demands to increase business, and create new product/service offerings with existing employees who are pushed beyond any type of normal bounds. The economists call this “productivity gain;” those of us affected call it “unbearable.”

One alternative to hiring, while still achieving the increased demands, is to use a very qualified (often, sensibly over-qualified) interim employee to do the work. Interim Managers/Executives can step in and be productive very quickly, doing the work, not just figuring out what needs to be done.

An interim executive can take the place of a permanent employee, but for a defined period of time – No long-term commitments. No expensive fringe benefits. No participation in the company bonus pool. Just hard-working expertise that helps the company achieve desired results. Interims do not merely give advice and suggest alternatives, they get their get their hands dirty by leading, managing and doing the work. They are an active part of the leadership team, albeit for a limited period of time.

So, when your company needs to get more accomplished but can’t or won’t hire more talent, using a qualified interim executive or manager may be the best solution: you get the results you want and, when the assignment is completed, the interim leaves without impacting your unemployment rate, your internal reputation or the morale in the organization. Is now the time for your company to consider interim management?

Tips on Selecting the Correct Interim Executive. by Edwin Beall

Today’s business challenges and economic conditions are forcing companies to re-examine their leadership team’s bandwidth and ability to positively impact the bottom line. Responding to ever-changing challenges and opportunities in business is not new. However, the speed in which companies must make high impact changes or additions to their leadership teams is becoming more crucial.

Increasing shareholder value in today’s business climate presents significant resource challenges for many companies. Too often, this gap is being filled by high risk external recruitment of permanent staff or consultants.

To address the resource challenge quickly and mitigate risk, companies are increasingly calling on interim executives to fill crucial roles, round out leadership teams, deal with a crisis or assist with a business restructuring. Boards, investors and executive teams are turning to seasoned executives, working on an interim basis, to navigate their companies through turbulent times. Whether a company is merging, acquiring a competitor, re-structuring operations or simply redirecting its supply chain strategy, high impact interim executives are increasing being used by companies to supplement executive teams on a short-term basis.

Finding the interim executive with the right skills, experience, personality and track record can be a daunting task. For companies in the midst of a crisis or an executive absence, hiring the wrong interim is costly and the last thing they need.

The most important criteria for evaluating an interim executive for your company are:

• Specific, relevant skills. Do you need a supply chain expert or a team builder? Will you be pursuing additional financing or making tough workforce decisions? When hiring an outside expert, be sure to get an exact match on the skills you need. Sometimes, the best fit is from with interim executives outside your industry. Relevant skills are frequently more important than industry experience to achieve high impact results.
• Experience Level. The key here is not to get one of the best names in the industry. What’s more important is that the candidate’s experience matches your specific situation and requirements. The right candidate is sensibly overqualified. Better than you need for the job, but not so over- qualified that the engagement will not be challenging for the interim executive.
• Personality. The candidate’s personality/chemistry must complement your existing leadership team. Work style, ego and cultural fit must all be considered when selecting an interim executive.

Before you launch your search for an interim executive you must identify your needs and determine the scope of the assignment. This should include:

• What are you trying to achieve that can be best done by an outsider?
• How do you expect an interim executive to add value to your company?
• Decide the caliber of person you need. Do you need an advisor and report writer? In this case, you might choose a consultant. Or, do you want someone to run things and be accountable? In this case, you should choose an interim executive. An interim should be able to do both.
• What are the qualities you are seeking from an interim executive? Determine the balance of expertise and experience the job requires.
• Define the nature of the assignment or project, the key tasks and the time-frame.

If you and your team have concluded there are issues you cannot fix, engaging an interim executive to make it happen is a logical decision.

What is Interim Management? by Vince Papi

Interim Management: The temporary provision of management resources and skills. Interim management can be seen as the short‐term assignment of a proven heavyweight interim executive to manage a period of transition, crisis or change within an organization. In this situation, a permanent executive may be unnecessary or impossible to find on short notice.

A Short History

The roots of interim management can be traced to the mid 1970s, when employees in The Netherlands were protected by long notice periods for lay‐offs and companies faced large costs when terminating employees. Employing managers on an interim basis presented itself as an ideal solution as it offered a flexible way to acquire additional resources.

In the 1980’s interim management spread throughout Europe, especially in the UK. It has since seen annual growth rates of 20%. In fact many Europeans in their 30’s now embrace interim management as a viable career option.

In the United States the use of interim management first gained headway to fill the seat of a CEO, COO, or CFO who suddenly left a company. Interims were needed to step‐in and provide critical leadership on short notice, while a permanent replacement was recruited—a process that often took months.

Today interim management in the US is expanding, offering an ideal solution to a wide range of corporate situations. These include project management, restructurings, business closings, acquisitions, mergers, and start‐ups. Interim managers go into organizations for a short time, make significant contributions, and then move on.

Why aren’t interim executives more widely used?

The concept of ‘interim management’ is not widely understood. As a result many companies, when they require additional management resources, still seek permanent replacements or utilize consultants.

The wide spread downsizings and reorganizations that occurred during the most recent downturn have changed the business landscape. Companies recognize that, in today’s volatile economy, they must respond rapidly to changing markets and new business opportunities. As a result they are now beginning to view interim management as a viable solution.

So what are interim executives?

Interim executives are seasoned managers who can quickly establish themselves as a strategic resource. They are typically utilized for a three to twelve month period to focus on specific programs or projects, a shortfall in management depth, a need for mentoring, or a rapid change in business performance and culture.

Interim executives understand the importance of company values and culture. Without the concern about internal politics or job security, they can provide sound business advice and take the appropriate actions. An interim executive’s value also comes from taking advantage of vast experience that may be missing internally in an organization. Often a business cannot justify hiring a person since the assignment may be required only on a one‐off or occasional basis.

With experience that allows them to be productive immediately they are responsible and accountable to company managers and are often “sensibly overqualified”, working one to two levels below the positions they once held in their professional careers.
Interims provide effective short‐term solutions for a variety of situations. These include:
• Managing key projects
• Dealing with supply chain issues
• Filling a position while the search for a permanent person is conducted
• Back‐filling positions for managers out on other assignments or special projects
• Coaching and developing senior executives
• Introducing new products
• Integration of acquisitions and mergers into the organization
• Managing a business downsizing or restructuring
• Labor Negotiations

How does a consultant differ from an interim executive?

A consultant reports to his or her employer firm and is generally retained to make recommendations that would then be acted upon by the hiring organization’s management team.

An interim executive reports to a senior manager within the client’s organization and can both recommend and implement the agreed upon strategies.

They are being recognized as a best practice for companies of all sizes and for a wide‐range of situations. Organizations that have experience with interim executives find that they are an effective and lower‐cost way to implement change or transition. Because of these factors these organizations often become multiple users of interims.

The Disposable Worker from Business Week

On a recent Tuesday morning, single mom Tammy DePew Smith woke up in her tidy Florida townhouse  in time to shuttle her oldest daughter, a high school freshman, to the 6:11 a.m. bus. At 6:40 she was at the desk in her bedroom, starting her first shift of the day with LiveOps, a Santa Clara (Calif.) provider of call- center workers for everyone from Eastman Kodak (EK) and Pizza Hut (YUM) to infomercial behemoth Tristar Products. She’s paid by the minute—25 cents—but only for the time she’s actually on the phone with customers.


By 7:40, Smith had grossed $15. But there wasn’t much time to reflect on her early morning productivity; the next child had to be roused from bed, fed, and put onto the school bus. Somehow she managed to squeeze three more shifts into her day, pausing only to homeschool her 7-year-old son, make dinner, and do the bedtime routine. “I tell my kids, unless somebody is bleeding or dying, don’t mess with me.”


As an independent agent, Smith has no health insurance, no retirement benefits, no sick days, no vacation, no severance, and no access to unemployment insurance. But in recession-ravaged Ormond Beach, she’s considered lucky. She has had more or less steady work since she signed on with LiveOps in October 2006. “LiveOps was a lifesaver for me,” she says.


You know American workers are in bad shape when a low-paying, no-benefits job is considered a sweet deal. Their situation isn’t likely to improve soon; some economists predict it will be years, not months, before employees regain any semblance of bargaining power. That’s because this recession’s unusual ferocity has accelerated trends—including offshoring, automation, the decline of labor unions’ influence, new management techniques, and regulatory changes—that already had been eroding workers’ economic standing.


The forecast for the next five to 10 years: more of the same, with paltry pay gains, worsening working conditions, and little job security. Right on up to the C-suite, more jobs will be freelance and temporary, and even seemingly permanent positions will be at greater risk. “When I hear people talk about temp vs. permanent jobs, I laugh,” says Barry Asin, chief analyst at the Los Altos (Calif.) labor-analysis firm Staffing Industry Analysts. “The idea that any job is permanent has been well proven not to be true.” As Kelly Services (KELYA) CEO Carl Camden puts it: “We’re all temps now.”


Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School, says the brutal recession has prompted more companies to create just-in-time labor forces that can be turned on and off like a spigot. “Employers are trying to get rid of all fixed costs,” Cappelli says. “First they did it with employment benefits. Now they’re doing it with the jobs themselves. Everything is variable.” That means companies hold all the power, and “all the risks are pushed on to employees.”


The era of the disposable worker has big implications both for employees and employers. For workers, research shows that chronic unemployment and underemployment cause lasting damage: Older people who lose jobs are often forced into premature retirement, while the careers of younger people are stunted by their early detachment from the working world. Even 15 years out of school, people who graduated from college in a recession earn 2.5% less than if they had graduated in more prosperous times, research has shown.


Diminishing job security is also widening the gap between the highest- and lowest-paid workers. At the top, people with sought-after skills can earn more by jumping from assignment to assignment than they can by sticking with one company. But for the least educated, who have no special skills to sell, the new deal for labor offers nothing but downside.


Employers prize flexibility, of course. But if they aren’t careful they can wind up with an alienated, dispirited workforce. A Conference Board survey released on Jan. 5 found that only 45% of workers surveyed were satisfied with their jobs, the lowest in 22 years of polling. Poor morale can devastate performance. After making deep staff cuts following the subprime implosion, UBS (UBS), Credit Suisse (CS), and American Express (AXP) hired Harvard psychology lecturer Shawn Achor to train their remaining employees in positive thinking. Says Achor: “All the employees had just stopped working.”


In a typical downturn, the percentage decline in payrolls is about the same as the percentage decline in gross domestic product. But in the recessions that began in 2001 and 2007, the decline for payrolls was much steeper—1.8 percentage points more during the latest downturn. Worse yet, only about 10% of the layoffs are considered temporary, vs. 20% in the recession of the early 1980s.


PERMA-TEMPSAll that cutting has been good for corporate profits. Earnings rebounded smartly as companies kept payrolls down after the 2001 recession; by 2006 profits had hit a 40-year high as a share of national income, at 10.2%, according to Bureau of Economic Analysis data. The credit bust sent that figure plunging to 5.6% during the final quarter of 2008. But over the past year corporate profits’ share has rebounded to 7.4% of national income, equaling the 40-year average.


The trend toward a perma-temp world has been developing for years. Bosses are no longer rewarded  based on how many people they supervise, so they have less incentive to hang on to staff. Instead, the increasing use of bonuses tied to short-term profit performance gives managers an incentive to slash labor costs. The Iowa Policy Project, a nonpartisan think tank, estimates that 26% of the U.S. workforce had  jobs in 2005 that were in one way or another “nonstandard.” That includes independent contractors, temps, part-timers, and freelancers. Of those, 73% had no access to a retirement plan from their employer and 61% had no health insurance from their employer, the Iowa group said.


Temp employment in the U.S. fluctuates wildly, by design. The whole purpose of bringing on workers who are employed by temporary staffing firms such as Manpower (MAN), Adecco (ADO), and Kelly Services is that they’re easy to shuck off when unneeded. While the number of temps fell sharply during the recent recession, the ranks of involuntary part-timers soared. The tally of Americans working part-time for economic reasons—that is, because full-time work is unavailable—has doubled since the recession began, to 9.2 million.


Companies that seized on the recession as an opportunity to make drastic organizational changes for greater efficiency and flexibility aren’t likely to reverse those changes once the economy begins growing again, says David H. Autor, a labor economist at Massachusetts Institute of Technology. In other words, most of the jobs shipped to China will stay in China. And companies that turned labor into a just-in-time, flexible factor of production won’t return to an old-fashioned job-for-life arrangement. “For the last 10 years, I and others have been saying that these trends aren’t just for a fringe workforce but increasingly are for the mainstream,” says Sara Horowitz, founder and executive director of the Freelancers Union, a 130,000-member advocacy group for contract workers. “This recession has shown us that the future is here.”


Boeing (BA) typifies the companies that are taking advantage of flexibility. In 2009, it cut 1,500  contingent workers from its commercial division. Says spokesman Jim Proulx: “The first imperative was   to reduce all of the contract and contingent labor that we possibly could to shield our regular employees from those layoffs.” Boeing says less than 3% of its workforce is contingent. It has also reduced its dependence on costly permanent staff in the U.S. by making new hires abroad. Last March it announced a research and development center in Bangalore that will “coordinate the work of more than 1,500 technologists, including 100 advanced technology researchers, from across India.” Bill Dugovich, a spokesman for Boeing’s white-collar union in the U.S., the SPEEA, complains that the Indian workers “are basically contract labor.”


For years Microsoft (MSFT) has been an avid user of temporary-staffing firms such as Volt Information


Sciences (VOL) for a variety of short-term projects, including writing chunks of software, says Microsoft spokesman Lou Gellos. “Our contingent workforce fluctuates wildly depending on the different projects that are going on,” Gellos says. “Somebody does just part of a project. They’re experts in it. Boom, boom, they’re finished.” Temps are especially appealing to companies in cyclical industries. “We have been able to get really good talent. Off the charts,” says Jeff Barrett, CEO of Eggrock, a manufacturer of pre-built bathrooms based in Littleton, Mass. It has brought on dozens of plumbers, electricians, and administrative workers through Manpower to handle a spike in orders.


With the economy expanding again, and employers loath to add permanent workers, temp employment is one of the few sectors of the labor market that is growing rapidly. Stock prices for the big temp firms have doubled since last March, while analysts surveyed by Bloomberg expect profits to double in 2010 at  Robert Half International (RHI) and to jump about 50% at Manpower. LiveOps is among the biggest beneficiaries of the just-in-time labor trend; its revenues grew by a double-digit percentage in 2009 and the company is planning an initial public offering. “We want to do for the world of work what eBay did for commerce,” says LiveOps CEO Maynard Webb, a former chief operating officer of eBay (EBAY). “You  have access to the talent you need. And when the need is gone, the talent goes away.”


“LEADERSHIP ON DEMAND”The world of temporary work used to be the domain of sneaker-footed admins. No longer. Last year, Kelly Services placed more than 100 people—including lawyers and scientists—in interim stints that paid more than $250,000 a year. At the forefront of the “leadership on demand” movement in the U.S. is the Business Talent Group, whose roster of 1,000 executives has done jobs at companies like mobile-phone content provider Fox Mobile (NWS), health-care company Healthways (HWAY), and private equity firm Carlyle Group. BTG says its client demand rose 50% in 2009.


Sydney Reiner, of Southern California, has had five assignments in five years as an interim chief  marketing officer at companies like Coffee Bean & Tea Leaf and Godiva Chocolatier. “I got a call from Godiva on a Wednesday asking if I could be on a plane to Japan on Saturday,” says Reiner. “I was.” For   the past two months, she’s been the interim chief marketing officer at beverage maker POM Wonderful. Reiner prefers the challenge of working in short, adrenaline-packed chunks. But like Smith, the University of Chicago MBA has no access to employer-sponsored health insurance and other benefits. Says Reiner: “To some extent I end up working as hard as a permanent employee, without a lot of the benefits.”


Reiner relishes the flexibility of the free-agent lifestyle. While there are others like her, many upscale, white-collar workers aren’t contingent laborers by choice. Matthew Bradford, who is 38 and married with three young children, could scarcely believe it when he was laid off in early 2009 by a national law firm in Cleveland. He eventually set up as a one-man “legal professional association” in Akron, handling overflow from other lawyers while he slowly builds up his own practice. Meanwhile he’s responsible for his own health insurance and a share of office overhead, things he never considered when he was on track to making partner back in Cleveland. “I never would have thought this would have happened,” says  Bradford. “I thought, ‘Hey, I’ve got a law degree and an MBA. I’m not going to be out of work.’ It’s just not the case anymore.”


During the boom-time 1990s, employers sold the move away from secure full-time jobs as pure upside for workers—a step toward greater flexibility and freedom. To compete with dot-coms, corporations like IBM (IBM) started replacing some fixed pay with variable compensation: stock options, bonuses, and other cash incentives that have to be renegotiated each year. It was attractive for awhile, but the Great Recession is showing workers the downside of that deal. Employers’ unspoken message to employees,  says Cornell University labor economist Kevin F. Hallock, is this: “You can absorb more risk, or you’re going to lose your job. Which would you prefer?”


At the bottom of the ladder, workers are so powerless that simply getting the minimum wage they’re entitled to can be a struggle. A study released in September and financed by the Ford, Joyce, Haynes, and Russell Sage Foundations found that low-wage workers are routinely denied proper overtime pay and are


often paid less than the minimum wage. It followed a Government Accountability Office report from March 2009 that found that poor oversight by the Labor Dept.’s Wage & Hour Div. leaves low-wage workers “vulnerable to wage theft.” Some companies have been fined for misclassifying employees as freelancers and then denying them benefits. Meanwhile, the George W. Bush Administration made it easier for people earning as little as $23,600 a year not to be covered by overtime-pay rules.


Workers hired for temporary or contract work face a higher risk of developing mental health problems like depression, according to research presented in 2009 by Amélie Quesnel-Vallée of McGill University. A lack of job security and health-care benefits, as well as social ties to the rest of the workforce, increase stress levels for temps and contractors. A survey conducted in September by the National Alliance on Mental Illness found that people who experienced a forced change in their employment during the last year were twice as likely to report symptoms consistent with severe mental illness as individuals who hadn’t experienced one.


The situation is especially difficult for young people, many of whom haven’t been able to get a first foot on the career ladder. The percentage of people 16 to 24 who have jobs has plummeted by 13 percentage points since the beginning of 2000, while the share of workers 55 and over who have jobs has edged up over the period, despite the recession. Some young people are so desperate to get a start, they’re working for free as semi-permanent interns. “Companies that used to use only one or two interns are now asking me for five or six at a time,” says Lauren Berger, who runs a company that matches interns with entertainment, marketing, and media companies. Berger also reports a rise in the number of “adult interns,” who work for free while trying to break into a new career.


Those internships might look like plum spots in years to come, for the gloomy trends in the labor market show no sign of abating. Consider some statistics. In the 2001 recession cycle, the economy lost 2% of its jobs and took four years to get them back. This time it has lost more than 5% of its jobs. Even after the recession is history, employers are likely to continue to offshore and automate jobs out of existence. If they don’t, they’ll lose out to competitors that do. In a November update of previous research, Princeton University economist Alan S. Blinder estimated that 22% to 29% of all U.S. jobs will be offshorable within two decades. Of course, even working in a job that’s not offshorable—say, landscaping—is no guarantee of job security or decent pay. That’s because people in those jobs must compete with the millions of former factory workers and such whose jobs have already been offshored, notes Josh Bivens, an economist at the Economic Policy Institute in Washington.


IBM may strike many people as the quintessential American company, but 71% of its workforce was outside the U.S. at the end of 2008, a figure even higher than the non-U.S. share of its revenue (65%). In 2009 the company reduced its U.S. employment by about 10,000, or 8%. It also announced a program offering certain employees the opportunity to move their jobs to emerging markets; in turn, the company will foot some of the relocation costs.


PAY CUTSWhen employment in the U.S. eventually recovers, it’s likely to be because American workers swallow hard and accept lower pay. That has been the pattern for decades now: Shockingly, pay for production and nonsupervisory workers—80% of the private workforce—is 9% lower than it was in 1973, adjusted for inflation. Sure, back in the 1950s pillars of the economy such as General Motors paid generously, because they could. Contracts between GM and the United Auto Workers set a pattern for pay throughout the economy, says Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues. But while unions covered 36% of private-sector workers in 1953, the figure plunged to less than 8% by 2008. “Today, working conditions are set either by trends in the global economy or by nonunion firms in the U.S.,” says Shaiken. He points out that while GM was the largest

U.S. employer in the 1950s, “today that role is played by Wal-Mart (WMT), with very different consequences.”


The best solution to relieve the pressure on workers would be rapid economic growth sustained over a long period, possibly enabled by some technological breakthrough. The Internet boom pushed


unemployment to less than 4% in 2000. But few economists expect such a renaissance anytime soon. That’s why labor unions and politically liberal economists argue for New Dealesque public jobs programs and against free-trade pacts like the North American Free Trade Agreement. In 2007, Ralph E. Gomory, former head of IBM’s research department and later a senior vice-president at the company, declared before a U.S. House panel: “In this new era of globalization the interests of companies and countries have diverged. In contrast with the past, what is good for America’s global corporations is no longer necessarily good for the American people.”


Conservative economists, in contrast, say the real problem is too much government intervention in the economy. Employers who might be adding jobs are frozen in place by uncertainty over the impact of pending legislation on health care, global warming, and other big-ticket items, says economist Steven J. Davis of the University of Chicago’s Booth School of Business. “I can’t think of another time during my professional lifetime when there was so much riding on policy decisions that could get made in the next year or two.”


For a glimpse of where things might be headed in the U.S., look at Europe, which makes a lot more use of temporary and part-time workers than U.S. employers do. That’s in large part because of Europe’s famously rigid labor laws; rather than hiring permanent workers, employers turn to temps and contractors who can be let go more easily during a downturn. In Spain, 85% of recent job losses in this recession were by temps or contractors. One big difference: Most European countries cover temps and part-timers with government health insurance and require that they receive wages and benefits comparable to those for permanent employees doing similar work.


Look far enough into the future and it’s possible to see better times ahead for labor. A decade from now the retirement of the baby boom generation could cause labor shortages and hand some bargaining power back to younger workers, says Robert Mellman, a senior economist at JPMorgan Chase Bank (JPM). If  that happens, woe unto employers. A survey in 2009 by the benefits consultant now known as Towers Watson found that top-performing employees will be ready to jump ship as soon as a better offer comes along. Says Wharton’s Cappelli: “The idea of loyalty—’I will stick with you and you will reward me’—that is effectively gone.”


But those are issues for another day. Right now the face of American labor is more like that of Jamila Godfrey, 35, of Seattle. A licensed naturopathic physician, she ran an alternative medicine practice but decided to scoop up another degree, this time in nursing, for greater job security. Though she graduated  in June, and health care is the strongest sector in the economy, she hasn’t been able to find a job because hospitals can’t spare the money for three months of on-the-job training. To support herself and her 12- year-old daughter, the single mother has been working as a temp for the past several months, but that project ends in several weeks. “I’ll be jobless again,” says Godfrey. “I thought the [RN] qualification would make it easy to find a job, but it’s not working out that way.”


With Carol Matlack in Paris


Business Exchange: Read, save, and add content on BW’s new Web 2.0 topic networkCensus Gigs Are Going FastA decade ago in Minnesota, when the economy was strong, the U.S. Census Bureau had to recruit at high schools and jack up pay to recruit enough temporary workers to conduct the decennial population count. For this April’s count, the agency is already halfway to filling its quota of applicants, even though it has done little recruiting and Minnesota has a below-average unemployment rate, says a Jan. 4 article in the Minneapolis Star Tribune.To read the Star Tribune story, go to http://bx.businessweek.com/corporate-layoffs/reference/

How Recruiters and HR Can Work Together by Liz Ryan

In the business world we have a short list of traditional sources of interdepartmental friction. One of these “hot zones” is the intersection of HR and third-party recruiters, who can easily find themselves at odds.

HR departments often view third-party recruiters as obstacles, while recruiters know that if they can get their best résumés in front of a hiring manager, they’ve got a shot at making a placement. If recruiters are held up by HR bureaucrats whose own need to control the candidate flow overshadows their desire to bring talent in the door, headhunters are sunk. As a result, it’s common to find tension between internal HR people and outside recruiters. Is there a path that allows internal HR and

In my experience, the greatest service a third-party search partner provides to the organization, besides the strength of his or her candidate database and relationships, is the intermediary role a search pro performs during offer negotiation. I pride myself on good listening and negotiating skills, but if I’m inside the company, I won’t have the same credibility with a candidate that his ally, the outside recruiter, has.

So it makes sense to let the recruiter handle the delicate job of negotiating between the employer (“our offer is good enough already!”) and the candidate (“they’re dreaming if they think I’ll take this job for that salary”) when the stakes are high. We do it when we buy or sell a house. We know that our trusted Realtor won’t be as emotionally bound up in the negotiation as we very well may be. It’s the same in a high-level offer negotiation process—a place where the middleman can get us more quickly to a handshake and save egos in the process.

As a CEO, managing partner, or division president beginning a high-level search in your organization, it’s critical to sit down with your chosen search partner and your HR chief and work through the common issues that divide these two players. What can easily happen in the absence of such a kickoff meeting is that the search consultant creates a tight one-on-one communication bond with the business leader so that the HR person feels left in the dust.

A Profitable Partnership

Feelings are one thing, but the bigger issue is that without the input of your organization’s Minister of Culture—a/k/a HR chief—your search will be hampered by a lack of a critical perspective. At every stage of the process—initial screening of candidates, the interview process, or the delicate negotiation phase—the quality of the hire you end up with will be affected by the level of participation of your HR chief, the one person most likely to know more than anyone else (including top management) about how things work on the human side of the business.

When I was a corporate HR person, I learned to invite my search partners into the office once every six months or so for a check-in meeting. In this way I learned that partnering with trusted search colleagues is one of the highest-yield moves an HR leader can make. Search pros will tell you things that candidates never would (e.g., “no one will work for Jane Smith any more—she’s a terrible manager”) and will fill you in on the state of the local job market with a level of detail you’d never have time to acquire on your own.

To cultivate a partnership, however, an HR chief has to let go of many an HR leader’s favorite office tool: the presumption of control over the process. The fact is that in a typical, intense, high-level search, the HR chief won’t be the conduit for much or most of the information that is exchanged. If your No. 1 candidate is suddenly presented with a competing offer, your search pro is going to reach whomever he can reach first—whether that’s the HR leader, the CEO, or the CEO’s assistant.

Cooperation is Key

In an effective senior-level search, the time-honored paradigm, “all information passes through HR on its way to the hiring manager,” won’t hold. Communication has to take place instantly, and important decisions may happen on the fly. With a high level of coordination and respect for individual talents, this can work to an employer’s advantage. When hierarchy and bureaucracy creep in, typical responses run along the lines of, “I don’t care what you and our CEO discussed. All new VPs get three weeks vacation, and we’re not budging for this candidate.” And believe it or not, negotiations with candidates can fall apart over things as seemingly small as a week or two of vacation.

HR chiefs and recruiters can be pivotal in one another’s success. As one executive recruiter said to me, “Like most HR people, you chat with candidates maybe one or two hours a day. The rest of the time you work on other things, like executive comp or performance management or employee communications. All I do is cultivate talent and sell your company and my other clients to the talent marketplace. Isn’t that worth my fee?” With the right partner, it is worth the fee—and more.

Excutive Search Consulting Demystified by Keith Kulper

First of all, here is a brief working definition of executive search consulting: Executive search consulting is a professional service provided to companies and organizations that need to attract, hire and develop leaders who will hold responsibilities that are key to achieving planned and evolving ‘actionables’ of the client company or organization. The service is paid for by the client company or organization–not by the hired job candidate. Potential job candidates are identified, qualified and presented to the client company or organization by the executive search firm based upon degree of alignment with a written or verbal Job Specification developed in conjunction with the client representative(s). Assessing degree of potential fit of the candidate with the job specification is a key “deliverable” for the search firm since the most common reason a search consultant is engaged by a client company or organization is to save time and effort involved with identifying, qualifying and reviewing potential candidates for specific leadership positions.

It is commonplace for a potential candidate to be identified by the search firm by way of telephone call. Opportunity knocks..sometimes at the most interesting times! Often the phone call is the result of a recommendation from someone inside the existing network of the search firm. Quality oriented search firms work hard at cultivating and continually updating their network of contacts so that when a search assignment is awarded they will be ready to start qualifying potential candidates. Another key way to identify potential candidates involves search firm “research” —contacting targeted people in specific companies who appear to fit the job profile in some logical manner. Some of the best candidate referrals come from people who could be candidates for the job themselves but for any number of reasons are not interested at that particular time.

A good thing to understand about the etiquette of search is that the person being called will appear much more sophisticated, in the eyes of the search consultant, if he or she tries to be of help to the search firm even if that means that there is no apparent immediate personal benefit for doing so. Like in all things in life the “golden rule” applies—what goes around comes around—so try to be generous and helpful, as it will eventually come back to you at some point. If you help the search person calling you there is a distinct possibility that the next time the search firm calls it could be to tell you about an opportunity that you will want to follow up for yourself…so, practice the “golden rule”.

CONTINGENT and RETAINED SEARCH: useful definitions
When a search firm operates on a contingent basis it means that the firm will only earn a fee for service rendered if the firm is responsible for identifying and presenting the hired candidate to the client. A contingent search may or may not be structured contractually with the client. Typically, the fee is 100% “back end” loaded based upon a percentage of the hired candidate’s first year cash compensation. In contingent search there is no exclusivity to the arrangement; the client is free to work with other search firms or source candidates on his or her own, which explains why more than one Contingency Firm may be calling you about the same assignment! Contingent search tends to be less oriented toward candidate assessment and “fit” and more about getting the potential candidate’s job resume in front of the client so that the client can make his or her own assessment. “Headhunting” is a euphemism most often associated with contingent search because the bulk of the effort is spent on finding potential candidates and getting them in front of the client as quickly as possible. Usually, in a contingent search, the job

specification tends to be less structured–more fluid– allowing for a greater breadth of candidates who could potentially “fit”. More effort though, is expended by the client in assessing fit with the job and other aspects such as reference checking. The danger for a mismatch can be high in contingent search due to a lack of clarity on what the client really wants, the degree of “fit” with the position spec and candidate understanding of what it takes to be successful in the position. Be very careful if you decide to respond to a contingent search firm since you may be get a verbal description of the job by the recruiter that ultimately differs with what the client really has in mind. This sort of situation can result in a good candidate getting hired for the wrong reasons..in this case, nobody wins.

Retained Search means that the search firm has structured a contract signed by the client defining what will be provided in the way of outcomes and responsibilities for both the search firm and the client. The contract in a retained search typically calls for exclusivity for the search firm much the same way a company might expect to experience when retaining an accounting firm to perform an external audit or a law firm to handle a particular legal matter.

In retained search the firm and the client strive to ultimately achieve a very clear understanding of what the job is about as well as the attributes, style and work experience of potential candidates who will be a good fit in the current or developing culture of the client company. The Search Process is highly structured—see attached KULPER & COMPANY “SEARCH PROCESS” for more details about how the search is actually conducted by our firm Repeat business from existing clients assignments is the goal of the firm; key to making that outcome happen is the development of mutual respect and trust from working together on the assignment. We like to think that this comes about from real teamwork and great outcomes, (i.e.) a hired candidate who is happy in their new assignment meeting/ exceeding expectations
! The real objective is to attract a hired candidate who will be happy and productive in their new job because he or she knows what it takes to succeed in that specific position–be it at the CEO, Director or any other level. As a result, the ability of the search consultant to correctly assess fit of the potential candidate is a key skill that the client rightfully should expect and rely upon. We believe that the lead search consultant is best evaluated by asking about hiring outcomes as well as Client Satisfaction and Candidate Satisfaction ratings. In essence, the search firm has to be “referenceable” in the marketplace among people who the client can easily call; at KULPER & COMPANY we provide both clients and hired candidates as our references because we want our prospective clients to get a full picture of what it is really like to work with our firm.

When speaking with prospective candidates, an experienced retained search consultant will be eager to share detailed information about the search assignment–including client name–planned compensation and other salient facts– once it is determined that a potential candidate may be a fit with the job specifications. Typically, the search firm will provide a detailed Job Specification to the potential candidate because the search consultant is looking for an in-depth reaction to the opportunity from the potential candidate. It is very important for the potential candidate be scrupulously honest in all his or her responses to questions posed during the qualification process; particularly with respect to work history details supplied on their resume. The purpose for doing this should be obvious by now: the client only wants to meet with candidates who are highly qualified for the position and the candidate should only want to seriously consider and accept a job offer that he or she has very good shot at successfully fulfilling—truly a “win-win” scenario. The adage of client saying: “don’t worry –just show me candidates—I will know a good one when I see one” is something that we do not endorse; for the same reason that “blueprints” are required when attempting to construct a sound structure. We believe in the importance of good “Search Process” (so much) that we have become an ISO 9002 registered search firm—the first in the State of NJ to do so. For more information about our SEARCH PROCESS visit www.kulpercompany.com

Candidate Interviews and Reference Checking

In retained search the consultant usually will meet face to face with potential candidates and provide a written assessment of degree of match of candidate with the job specification to the client. In addition, the search consultant will also complete in-depth reference background checks after receiving written permission from the candidate to do so. References are very important because they provide a real picture of the behavioral pattern of the candidate. It is our experience that a person’s behavioral patterns change very little over time–good or bad–so a great deal of stock ought to be placed on the information gathered from references about the potential candidate. Interestingly, we have found that hiring managers are sometimes overly skeptical about the information contained in Candidate Reference Reports since

there is often the perception that a candidate can somehow skew or “game” what is being said by their references. It has been our experience that if we speak with three or more listed reference contacts provided by the candidate and ask “open ended” questions in a friendly manner about the candidate’s personal character, the nature of their working relationship, examples of problem definition and solving ability, ability to drive change, etc., a valid picture of the candidate’s preferred work style and true ability to get things done –does in fact emerge. We like to then compare these findings with what is presented on the candidate’s resume or what we have heard from the candidate during the interview process. We have found that the story about the candidate that emerges from this cross checking process does represent information that is highly reliable and helpful in painting a clear picture that is often predictive of the how the candidate will behave and, ultimately, perform in their new job. A solid reference check is a reason for KULPER & Company’s strong hired candidate track record —and of course high client and candidate satisfaction ratings.

Making the Job Offer

Once a decision to hire is reached by the hiring manager, the lead consultant communicates the verbal job offer to the finalist candidate so that any bargaining/haggling can be handled by the search firm and take place at “arms length” between the client and candidate. Once the verbal job offer is accepted, the client prepares a written offer spelling out compensation terms, any contractual arrangements, start date and the like which the candidate acknowledges with his or her signature. The search assignment is now complete and the real work for the hired candidate and hiring manager begins! Generally, a retained search should take about 90 -120 days to be completed; sometimes the process moves much faster. We have found that the process moves the fastest when the hiring manager and team are closely aligned on their expectations about what they really want to see in the hired candidate—so a good position spec that everyone supports and endorses at the outset is crucially important.


Executive search consulting can be a valuable professional service for clients and potential candidates to understand and benefit from in a very meaningful way. Time and opportunity cost savings for client companies/organizations and career development for candidates occur regularly for clients and candidates who learn how to effectively utilize and work with executive search consultants.