Hire a Search Firm or Handle Hiring In-House: How Do You Decide?

The Scenario

You are the top HR executive in your organization, and your CEO has just notified you that the Chief Compliance Officer has decided to retire. This was not unexpected, but the timing is less than ideal. This critical role needs to be filled quickly in order for a successful transition to occur. You have no internal candidates for the role, and the resume file is looking pretty empty.

You have two choices: hire a retained search firm – or send the requisition to the in-house recruitment team for sourcing.

Which path do you take – and why?

To answer these questions, we first need to understand the differences between your two choices.  And they are very different indeed.

The Facts

Retained search firms are external companies that specialize in recruiting for specific types of mid-level management to executive level management positions. They typically specialize in the areas of compliance, legal, sales and operations. They work exclusively for your company on a case-by-case basis.

In-house recruiters are an internal department within your organization, typically run by the Human Resources or Human Capital team. They are typically generalists tasked with recruiting for basic entry-level hourly positions all the way up to management-level positions. Their efforts traditionally are geared toward posting positions on internal and external websites, and responding to online applications.

That’s just a snapshot. The real differences between in-house and retained search go much deeper:

The Details

In-House Recruiters

• Typically juggle more than 20 internal requisitions at a time and often devote more time to lower-level searches, which usually yield more candidates.
• Sometimes still use old-fashioned cold-calling to identify candidates.
• Use an internal career center and/or external websites (CareerBuilder®, Monster®, Indeed®, etc.) to post open positions. They also may search for candidates using professional networking sites to reach out to and screen candidates.
• Have limited time to follow up with candidates who aren’t a “perfect fit,” often leaving candidates to wonder if their resumes ever reached a hiring manager.
• Are compensated as part of your annual recruitment budget and are often assigned additional HR responsibilities such as company reorganization, resizing, etc. They typically are highly skilled and efficient in these areas.
• Have intimate knowledge of a company’s culture and values and can accurately portray the working environment to candidates.

Retained Search Firms

• Traditionally fill mid-level to high-level executive positions, usually focusing on only 2 or 3 open requisitions at a time.
• Have built relationships with potential candidates and have cultivated those relationships through regular contact over a period of years.
• Have access to “passive”candidates (those who are not currently looking for a job). This represents about 85% of top qualified candidates.
• Often obtain new clients when a company’s in-house efforts have failed to yield a qualified candidate after several months.
• Tend to be “narrow and deep” by specializing in specific areas of expertise such as compliance professionals.
• Have valuable insight and experience when it comes to marketing the company to a candidate, writing a job description and negotiating the terms of an offer.
• Invest all of their resources to an assignment, including locating candidates with unique backgrounds and qualifications.
• Average 300 man hours per search, using a minimum of two researchers in addition to the head search consultant.
• Guarantee their candidates for a minimum of 90 days.

The Verdict

So, when it comes to sourcing a Chief Compliance Officer, the decision seems pretty easy now, doesn’t it?

And yet – there are still companies whose first instinct is to start the process by giving the in-house team a shot at it.

Why? The answer can be summed up in one word: money.

Retained search firms cost money, and companies often say they can’t afford to use one. I say the question you should be asking is, can you afford not to? Can you afford the time it will take to source a candidate by relying only on internal resources — and are you willing to risk the impact a wrong hiring decision could have on the future success of the company? A poor hire typically costs a company 3 to 4 times the professionals annual total compensation should you have to replace the underperforming professional.

Your decision may not seem like an easy one, and there are many aspects to a hiring strategy. But I urge you not only to assess the depth of available resources, but also your company’s overall business objectives. And if you agree that mitigating risk and meeting your goals requires having the best possible people occupying all the specialized and high-level positions, then spending money to make a good hire is just good business.

You have options. And now you have the facts. Ultimately, the choice is yours.

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Maurice Gilbert  is Managing Partner of Conselium Compliance Search and founder and former CEO of Corporate Compliance Insights. Contact Maurice at 214 213-8875.