Today’s guest blogger is Jim Lyons, JD, CPC of LHI Executive Search in the New York City area. LHI is an investigative executive search & research outsourcing firm covering the information technology, capital markets, private equity/venture capital, digital & social media, mobile, cloud, big data, and legal business sectors. Jim has been an NPAworldwide member since 2012 and is currently serving as the chairman-elect of the Board of Directors. Below he discusses the candidate-rich recruitment marketplace we are in.
It should come as no surprise to you that we are in a crazy SUPER CANDIDATE’S MARKETPLACE.
Today’s recruitment marketplace no longer distinguishes between “passive candidates” or “candidates in the market.” Top talent, whatever the source, is the order of the day. One might conclude that the key driver in the market is the acquisition of new top talent, right? Not really… the acquisition of new top talent (passive or in the market) is subordinated to the client’s retention of their current talent. Counteroffers, retention bonuses, holiday bonus, equity, accelerated career path promises: you name it, almost everything is on the table…whatever it takes to protect and retain currently-employed top talent.
Specifically, employers are realizing that the retention of top talent is less expensive than the acquisition of new talent. Furthermore, many top candidates, when faced with super-competitive counteroffers, conclude that “It is better to do business with the devil I know, than the devil I don’t.” Thus, contrary to conventional wisdom as to why a candidate should not accept a counteroffer, they accept the counteroffer. Lastly, if a counteroffer does not kill your deal, a top-of-the-market competitor’s offer will. Speed is critical—time kills deals.
Financially, my firm is having a great year. Of course, some of it was carried over from 2020, but I also have some great new-name client business and NPAworldwide partnership transactions. Over the years I have prided myself on an offer acceptance rate of more than 90 percent. Regrettably, in this recruitment marketplace I dropped to around 50 percent. Gratefully, I had a large amount of transactions in play, so my total revenue is fine. However, after seeing three deals go against me, my operational efficiency is way down. Why did this happen? I could blame the client or the market. No, it was my fault… I was being reactive to the greed of the market vs. being proactive and getting in front of client and candidate behaviors. In essence, I got comfortable and forgot all of the tools in my toolkit. Tools I have judiciously used in the past to mitigate risk and manage client and candidate expectations. So below, please find some best practices thoughts and reminders.
Time kills deals!!
- Process as fast as possible, hiring managers should commit to a stated process and timetable
- Remember: hiring manager and recruiter both should be mindful that you never know who is going to call your candidate today or tomorrow about a new opportunity
- Avoid deferred start dates
- Reaffirm candidate financial expectations weekly
- Stay in close candidate contact—assume nothing
Consider the 4As in managing client expectations
- Availability of candidates
- Approachability of candidates
- Appealability of the job offering
- Affordability of candidates
I have created a grid around the 4A’s that helps answer the question: How long will it take to fill your position? I’m happy to send you a copy.
After my 4As assessment, if the deal looks out of market, then I determine if it makes commercial sense to get involved. Whether contingency, exclusive contingency, engaged or retained, the deal has to make sense for today’s recruitment marketplace. Remember, there is nothing worse than a retained or engaged search you cannot deliver on.
In addition, the 4As assessment may force a discussion that leads to a recalibration that benefits both the client and recruitment professional.
Your client must endeavor to make a top-of-market offer
Marginal upside offers are a challenge; clients need to make a proactive statement if they want to hire at the top of the market. Base, incentive comp, draws, equity, virtual office, sign-on bonus, vacation bonus, 6-month performance reviews etc., etc. I just had a law firm promise an associate that he can pick the socially acceptable clients he wants to work on—crazy!
You must have an offering that creates next step (step-up) career motivation (opportunity).
Try to get your client to consider the use of an acceptance letter v. an offer letter. It’s a great tool to clear the air, force transparency and assert candidate control. If you’re not familiar with the concept of an acceptance letter, it indicates the candidate has already accepted the offer and confirms the terms of employment.
This market is a great opportunity to migrate to engaged or retained search
I am now even seeing law firms do engagement fees. Why? Clients, more than ever, need to have the process managed so they can acquire top talent. They need an investigative agent to go after to direct competitor talent. Too many folks in our business are representing the candidate to the market—not the client. It is amazing to me how many clients don’t realize this. Have the discussion! Do you want a vendor relationship or a partner delivery relationship?
Also, by leveraging a network like NPAworldwide, one can make the argument that a dedicated team working on a client’s mission-critical talent acquisition needs is worthy of an engaged partnership agreement.