Should You Use a Search Firm for Your Next Nonprofit or Start-Up Hire?

11409306-the-creation-of-adamYour organization faces an important staff transition or initiative that requires a new hire. Should you engage a search professional?

This question comes up often among our clients, who need to make mission-critical hires (executive directors, development officers, senior management personnel) but worry about the costs of bringing professionals into the process. The answer, however, is clear. For any mission-critical hire, an organization should consider engaging a professional search firm. There are several reasons:

1. The cost of error. Bad hires can dramatically impact the bottom line. This infographic, from Jorgen Sundberg’s Undercover Recruiter website, illustrates this point. The hiring costs, compensation costs, disruption costs, and other frictions associated with a poor hiring choice can fatally undermine a small organization and can set back a thriving organization for years.

2. The cost of mediocrity. Even if a candidate commits no huge blunders, an organization will suffer tangible financial harm from a poor hire. Andi Cullins, a search professional with The McCormick Group, explains, “Let’s assume a critical hire does not make any obvious financial errors, but simply doesn’t work out after the first year. The company is now out a year of compensation and a year of benefits. If that person then leaves, the organization then faces a new search, a new hire, and another year of compensation and benefits while this new employee learns the ropes.”

3. Expertise and efficiency. A nonprofit board or senior management of the small organization does not generally have any experience in posting for job positions, screening candidates, or even determining the critical components of a potential new hire. Search professionals, by contrast, have performed such tasks repeatedly.

4. Better connections. Search firms have networks to draw upon from prior engagements. As Y Scouts puts it, “The golden egg of recruitment through an executive search firm is having access to unidentifiable parts of the labor market. Search firms expand this access by building a network of previous relationships to call upon when businesses need” to fill mission-critical positions. A small organization or nonprofit board cannot hope to have similar connections.

5. Reality check. Search firms can tell an organization what they should expect to pay for an executive with particular qualifications. This can help an organization determine who they can afford and how many candidates to expect.

6. Objectivity and dispassionate advice. Mission-critical hires should not be based on the luck of the draw or the existence of prior relationships. A board or management group may find itself pressured to make a convenient or “inside” hire because of social or political pressures. A search firm provides a buffer and a sounding board that can minimize those threats.

7. Speed. Search firms ordinarily perform much faster than internal HR departments or search committees of volunteers. Indeed, the interests of search firms and the hiring organization are consistent this way: the faster the hire, the faster the search firm gets paid. Although this might create a perverse incentive to propose unqualified candidates for hire, established search firms recognize that their reputation and future business depend on solid, successful placements.

No doubt, search firms cost money. But as with many decisions, penny wise is often pound foolish. If it means a lot to your organization, pay for it. Most search firms will negotiate their payment schedules, and many may be willing to provide favorable terms to nonprofits and start-ups. The resources listed below provide solid advice about what to consider and how to approach the engagement of a search firm.

Do you have questions? We can provide timely advice about how to evaluate opportunities and threats relating to the executive search process. Give us a call.

Additional resources:

How to Work with an Executive Search Firm (Inc. Magazine)

A Nonprofit Organization’s Guide to Engaging an Executive Search Firm (The Bridgespan Group)

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