The ultimate goal of working with a search firm to fill your key hire is to place the best candidate as quickly as possible. Yet many search firms have decided to focus on things that don’t really measure success against that goal. A ton of extra, sales-type metrics have crept in: calls made, emails sent, resumes received—these are simply means to an end. And while it’s certainly acceptable to track these activities, it’s not okay to define success by these metrics.
At the end of the day, you don't care about those metrics. At best, they are excuses (“Look at all the activity I did!”) that only come up when the firm you've hired is not placing candidates quickly. There’s a difference between working and getting the job done. Activity does not equal productivity. Ultimately, how effective and efficient the firm is at placing candidates defines their success—not how much effort it takes. The two key metrics to uncover a firm's effectiveness and efficiency are the Placement Rate (PR) and Days to Placement (DTP) , respectively.
Simplicity is key.
Determining Placement Rate is as simple as asking a yes or no question: Was a placement made? Either a search firm placed a candidate (yes), there was an internal hire (no), or the firm was let go (no). Placement Rate is calculated as follows:
Placement Rate = Total Placements / Total Projects
Average Days to Placement measures how long – on average – it takes to make a placement. It’s calculated as follows:
Days to Placement = Total Days of Placed Projects / Total Placed Projects
These two simple metrics offer a true measurement of effectiveness and efficiency. Asking a Search Firm what their PR and DTP are goes a long way in determining if they'll actually be able to help with your search.
Evaluating a Search Firm Based on Their Response.
Let's say you're a software company and you're looking for a new VP of Marketing. You ask a few search firms for help and ask each what their PR and DTP are for similar searches.
Let's say one firm responds with an answer like "Based on 31 placements similar to your project, our average Days to Placement is 86 days. Our Placement Rate for this type of search is 94%." This response not only lets you know that they have a track record of success, but also indicates that they use data as the true measurement of performance. It may seem radical, but in reality, it is simply focusing on the right metrics.
Let's now say another firm responds with an answer like "Somewhere between three and six months." A response like this one doesn't convey any meaningful information about whether the firm can actually do the work. Even worse, it can also indicate that internally the firm has a lax attitude towards performance.
Quantifying Your Risk.
These two key metrics also help quantify your risk. Filling a key hire is time consuming, and because it is an important role, any delay represents a substantial cost to your company.
Our Executive Search Performance Benchmark Report examined over 23,000 retained search projects and found that the industry average PR is 71% and the industry average DTP is 123 days. Finding a search firm that can beat these averages represents a savings—one that can more than make up for the search fee.
Using a search firm that performs average or below can be a disaster. Consider that on average there is a 29% chance of no placement. Also keep in mind that DTP represents the days to placement. Too often, failing search projects linger on for months beyond the average DTP. You cannot afford to hire an underperforming search firm. And after they fail, you then have to go through the process again, on average another 123 days with a 71% success rate.
A Warning When Shopping for a Search Firm.
Speaking of finding a search firm, here is a word of caution when using these metrics to compare different firms. Make sure the PR and DTP are for the same search criteria as the role you need filled. Successful search firms, especially retained search firms, specialize. For example, they're good at finding a VP of Sales for manufacturing companies in the Midwest. Sure, their PR and DTP is great, but does it match the type of search you're looking to do? Make sure you're asking for these metrics specific to the Industry, Seniority, Department, Company Stage, and Region of your search.
The Clockwork Network has hundreds of successful retained search firms across these criteria. Request a free analysis and we'll help you find an Outperformer. Get a head start at quickly filling your key hire with a great candidate today.