60 BriefingHeadhunters The EconomistFebruary 8th 2020
2 sulting experiences of my career” because
he viewed the questions as irrelevant and,
worse, there was no food.) So recruiters
have acquired tools to make it more scien-
tific. They administer psychometric tests.
Questionnaires gauge candidates’ norms
and values. Synthesis, an advisory firm in-
spired by the recruitment of elite units in
the Israeli army, even has shrinks dissect
candidates’ answers to seemingly innocu-
ous questions about their life stories.
Boards or headhunters sometimes out-
source deeper probing to specialists such
as Hakluyt or StoneTurn, two British firms
staffed with former spies, journalists and
cops. (Paul Deighton, The Economist
Group’s chairman, also chairs Hakluyt.)
These corporate sleuths aim to tease out
how bosses do deals, how they behave un-
der pressure and whether they have ever
crossed any ethical lines.
Simulations are also becoming increas-
ingly popular with clients (if not with can-
didates). Frontrunners might, for instance,
be sent reports about an imaginary com-
pany, then asked to run mock board meet-
ings, calm down emotional managers of
troubled divisions or weather earnings
calls with aggressive analysts.
In the end, though, closing a big deal
still often requires the human touch. Jill
Ader, the chairwoman of Egon Zehnder, re-
calls taking an ideal but hesitant candidate
off-site for three days to discuss the pur-
pose of his life.
For the headhunters, their candidate’s
signature on a new contract equals success.
For their clients, it’s more complicated.
Plenty of data exist on would-be ceos. Korn
Ferry estimates that 87% of all executives
aspire to become bosses; over one-third of
applicants had career blow-ups before
winning a top role, reckons ghsmart, an
advisory firm; and so on. Yet it is trickier to
measure the wisdom of choosing one can-
didate over another; it is impossible to
know whether one of the rejected candi-
dates might have done the job better.
Getting it wrong can be costly. The Con-
ference Board, a think-tank, finds that the
costs of changing bosses (severance,
search, lost productivity during the transi-
tion, and so on) are generally equivalent to
5% of annual profit.
Lacking objective measures on which to
judge headhunters’ performance, board
members often rely on their own impres-
sions. And although some praise the ser-
vice they receive, among others frustration
is mounting.
Plenty of the things that hamper the in-
dustry are no fault of its own. Many compa-
nies make exasperating demands of head-
hunters and candidates. Some, for
instance, want would-be ceos to have a
tête-à-tête with each member of the board,
which in America and Britain typically
numbers at least ten people. They may alsodemand regular testing of in-house candi-
dates, which can poison a firm’s internal
politics. Others request assessments that
seem bizarre to candidates. After being
asked to take a graphology test, one con-
tender for the top job at Alstom, a French
engineering giant, asked sarcastically if he
would also be subjected to an intrusive
medical examination, recalls a recruiter.
Another problem stems from contracts
that bar headhunters from poaching peo-
ple from firms they have previously re-
cruited for, usually for at least a year. As the
Shrek firms grow, in other words, their
hunting-ground shrinks. It is clients who
demand such clauses, but it does not stop
those shortchanged by them from getting
irate. “They tell me the candidates aren’t
there,” fumes an executive who has chaired
several companies. “Then I find there’s an
ideal candidate at PepsiCo, but they already
work for PepsiCo so they can’t touch it.”
Some of the big recruiters’ problems,
though, are of their own making. Growth,
especially at the Shreks, also leaves senior
partners with less time for any one client.
They jet around to sign contracts, but leaveunderlings who have less access and expe-
rience to do most of the heavy lifting. More-
over, since the rainmakers pocket the larg-
est cut of the fee, their subordinates have
less incentive to do a fine job. “Clients pay
for haute couture but they get prêt-à-por-
ter,” says a former chief of a Shrek firm.
And although headhunters have grown
less languorous since the easy-going 1970s,
in one way they remain as lazy as before:
many still seek to score easy wins by re-
hashing past work. A pepartner recounts
being sent the same shortlist for two differ-
ent finance-chief searches. A dispropor-
tionate share of ceos are old-timers from a
handful of blue chips, not all of which have
had a stellar run (think of ge, several of
whose past executives went on to Boeing).
Senior headhunters admit the industry
is sometimes too quick to recommend the
safe option when boards are reluctant to
gamble on unconventional candidates. De-
spite progress in recent years, just 38 of the
bosses of America’s 675 largest listed firms
are women, and 59 non-white. It has grown
harder for bright young things to get a look
in. The average age of incoming ceos has
risen sharply, to 58, since 2005 (see chart 3).
A survey by aesc, which represents 16,000
search professionals, ranks “attracting di-
verse talent” as the seventh-most-pressing
issue for their firms in 2019, behind such
things as “attracting digital talent” or “cre-
ating a culture of innovation”.The search within
Growing doubts about the value headhunt-
ers bring has led some clients to take the
work in-house. An expanding list of cor-
porate titans, including all of the tech
giants, are building private squads of head-
hunters—often by poaching from the
Shrek firms. Having focused at first on ju-
nior hires, these are working their way up
to the c-suite, says Ms Garrison Jenn.
Some company chairmen may wonder
why they need an outside recruiter at all,
when the ideal candidate is often staring
them in the face. A recent Conference
Board survey of executives and corporate
secretaries found that 73% thought there
was no need for a firm with a strong inter-
nal candidate for ceoto conduct an outside
search. There appears to be no shortage of
such talent within. Last year almost four-
fifths of new s&p500 bosses came from in-
side the firm, including that of Intel, a
chipmaker. ibmrecently picked the head of
its cloud division to replace Ginni Rometty.
Yet most large companies will continue
to use search firms—even if they do not
fully buy the science, or harbour other
doubts. That is because external validation
has a value all of its own. Recruiters can be
crucial in helping build consensus when,
as is so often the case, boards are split. It is
as diplomats that the best headhunters
earn their keep. 7Meet the oldbossSource:CristKolderAssociatesAverage age
athireDiversityofchief
executives,%oftotalFortune 500 andS&P 500 companies340455055602005 10 15 19Chief executivesChief financial
officersFemale010203040502004 10 15 19Minority