An Introduction to Executive Search Firms for Nonprofit Leadership
Published at www.OnPhilanthropy.com
9/3/2004
This will come as no surprise: the “war for talent” has moved from the for-profit to the nonprofit sector. Most nonprofit leaders are now aware that it is becoming increasingly difficult to identify, recruit and retain exceptional staff. While some nonprofits have begun to look to executive search firms to get an edge on their competition, the process, and its suitability for the nonprofit market, is often unclear. Here’s a guide through some of the questions you may have:
I. The Benefits and Special Considerations Regarding the Use of Search Firms: What’s in it for Nonprofits?
Increasingly, nonprofits have taken a lesson from the for profit world on the value of engaging executive search firms. What might these firms offer?
- Identifying, recruiting and screening candidates who may not be in the job market or may not be easily drawn to the job
- Consulting on the design of the position to make it more productive and market “savvy”
- Ability to engage leadership and key decision makers who can help recruit and support the successful candidate
- Helping to screen, interview and select the candidate(s) who best fits the position
- Efficiently managing the process; and thus freeing leadership to focus on its primary work.
- While nonprofits share these benefits with the for profit world, some special issues indeed differentiate the practice of executive search from the two sectors. Consider just a few:
- Compensation disparity –nonprofit salaries are generally lower than those of their for profit counterparts; so are benefits, such as stock options or similar compensation incentives. This may limit search firms’ activities; their fees are usually based on a percentage of compensation.
- Volunteers often play a role in the selection of senior nonprofit staff; this both enriches and complicates the process.
- Organizational mission and value always plays a larger role in the search process.
II. Matching the Search Opportunity to the Search Firm’s Search Process:
One Size Does Not Fit All
No two search firms work the same way. What works for one search simply may be wrong for another. Consider these two illustrative examples:
Example A:
Here, the nonprofit needs to replace an existing position. This type of job is well established; despite the large number of responses to the paid advertisements, no suitable candidates were found. Naturally, the nonprofit desires to limit the costs of finding a replacement, and wants to find a replacement as quickly as possible.
Example B:
Here, a new or redesigned position exists. There is not yet complete agreement on the design of the position, or on how it fits in with that of its colleagues. Moreover, little knowledge exists about how the market would respond to the initial salary or even its job specifications.
Quite naturally, examples A and B dictate very different search processes. In example “A,” the employer’s priority is the receipt of resumes -- as quickly as possible -- that fit the initial job description; beyond that, the employer will need little, if any, extra consultation services. In example “B,” on the other hand, the employer will need to engage a consultant whose very process provides judgment on the design and recruitment of the position and the ability to frame the opportunity. This search may cost more and take longer.
Typically search firms have strength in either one or the other of the above search processes – matching the search firm’s process to the employer’s opportunity is critical to the success of the search.
III. Clarifying Expectations “Who Wants or Needs What?”
Bear in mind that search firms range in size from home-based solo practitioners to international conglomerates. Some feature nonprofit niche experience, while others typify generalists. While there are “best practices” in the field, executive search is basically an unregulated industry (except for compliance with appropriate personnel guidelines). This lack of standardization makes the clarification of processes, and expectations between the firm and employer, take on added weight and significance, particularly for nonprofit employers who may not have much experience working with search firms.
Be sure to clarify the following issues upfront:
- Assessment and consultation: Some firms assess the opportunity and aid in the design of the position. Others do not engage in defining the position.
- Client engagement: Some firms encourage in-depth client engagement, including help with identifying possible candidates, review of market feedback, salary benchmarking, retention strategies, candidate personality testing, diversity, and benefit design. Other firms operate a “turn key” operation, confining their work solely to the generation of resumes.
- Fees: Most firms charge 25-33% of the first year’s compensation., which may include bonuses and special benefits. Sometimes, fixed fees or hourly rates are negotiated. Conventions also vary as to reimbursement for expenses and billing.
- Guarantees: Many search firms offer guarantees for more senior positions, but vary as to the conditions which need to be met in order for the guarantee to be in force (.e.g performance, ethical behavior, changes in employment conditions.). Other firms do not offer guarantees because they believe too many factors exist beyond their control.
- Niche: Most firms feature one or more search “niches,” such as function (fundraising), sector (e.g. health, education), or geography.
- References for Candidates: Search firms vary on the timing of reference gathering, with some preferring before the interview, others after. Who should conduct it (the firm or the client)? What’s the purpose (to eliminate candidates or to diagnose strengths)?
- Scope of service: Some firms “unbundle” services, so that a particular service, such as reference checking, for example, can be purchased. Most search firms can modify their services, but require a scope of services that spans “beginning to end responsibilities.”
- Staffing model: Some search firms have a “one person does all work” model, while others depend on teams of specialists and outside vendors.
- Time frame: The complexity of the position and the process and culture of decision-making directly affect the time frame. For retained searches, a client will meet good candidates within 4-8 weeks (with the search itself taking 2-4 months to complete).
ON A FINAL NOTE:
Nonprofit boards and management can (and increasingly do) benefit from the use of executive search firms. What’s more, search firms “stock” has risen considerably; more and more exceptional potential job candidates look to such firms for confidentiality and professionalism. By assessing the distinctive qualities and value of their own organization, nonprofit leadership can align their position’s opportunity with the appropriate search process, resulting in the effective recruitment and retention of exceptional talent.
About The Author:
William M. Weber, Ed.D. is President of the Development Guild/DDI, which provides counsel to nonprofit leaders (www.developmentguild.com).