Your company is considering engaging with an executive search firm to help you find your next COO (Chief Operating Officer). With so many firms from which to choose, how do you find the one that will best serve your needs?
This article, along with the checklist we have created will help guide the process so that you cover all the necessary bases.
Do you prefer a search firm that your company will put on a retainer? Or do you believe that a firm that does searches for a contingency fee is better suited for your company?
A contingency recruiter earns a fee only when your company makes the hire.
A retained search consultant, on the other hand, is paid in advance to conduct a search that provides you with candidates, one of whom in all likelihood, you will hire. The retained search is usually recommended for an executive-level search because the firm will undertake an exhaustive process to find you the right person to lead your company. These firms maintain a database of candidates. A successful consultant is always cultivating contacts in the sectors in which he or she works. Their focus is on helping clients identify, attract, and hire the most qualified individuals. A retained search recruiter will also pre-select the candidates carefully so that you do not waste your time looking at people who do not fit the opening.
If the executive search consultant has been a COO in the past and now specializes in recruiting for the COO role, that is a big advantage. You want to hire a consultant who understands the importance of the position and who appreciates your culture.
Make sure that the executive search firm understands your business. Does the consultant understand the operational and financial importance of the open position? Also, how involved in the hiring do you want the consultant to be? Some firms will oversee the process from signing the contract to the onboarding of the new hire. Is that what you need? Or, if you’re a CEO that wants to take on a more hands-on approach, perhaps your company does not want such personal handling.
Determine what process you require from your consultant before you sign the contract with the firm
How will candidates be presented to your top management? Will there be one-on-one meetings with the CEO? Do you expect some group meetings with senior leaders, so that each executive can have a look at the candidate?
Also, if you have a limit as to how many candidates you and your senior team want to interview, spell that in advance. He or she should only bring you the best, and it’s the consultant’s job to pare down the choices.
Ask the consultant how many days the search will take to close. Mark those dates in your calendar, so you know which dates you should expect your senior leaders to be available to interview candidates.
How often should you expect communication between your company and the search consultant? What is the frequency with which you should do update meetings? Should they be regularly scheduled, or at certain intervals?
Expect a guarantee from the consultant. What happens if a new hire quits after a short period of employment? Will the search firm offer a replacement guarantee? Ask the search firm about their first 12 months. What is their typical retention rate? Research has found that the cost to replace a high-level executive is 120-130% of that employee’s annual compensation. If your search consultant has a good retention rate, that is important.
What is the fee for a retained consultant? How is it expected to be paid: in one lump sum at the start, at milestones, or at the back end? If a secondary hire is identified during the search process, what is the cost of that hire? If you decide to hire this same firm for another search, will it give you a lower rate for your repeat business?
Also, discuss in advance any additional expenses that may be billed by the firm at the close of the search, such as mileage, meals or travel.
Request relevant client references from the consultants you interview. Should you know one of the people, don’t hesitate to pick up the phone to call for a private assessment of the search consultant. Your company has a lot on the line, and you want to feel secure in your investment in the search firm and their judgment.
Check out our Abridged Guide to Hiring a Chief Operating Officer, containing top considerations for CEOs and Business Owners when hiring a COO.