The Creation of the Retained Search Firm
When it comes to the creation of the first retained search firm, we can look back to Thorndike Deland's firm created in 1926. Thorndike Deland Associates is credited as the first retained search firm in documented history dedicated to finding executives in the retail industry. The concept of retained search, however, has a much deeper rooted history.
Originally, retained search came about as a result of management consulting. What was once the norm to promote internally, transitioned into hiring experienced executives that usually only skilled consultants had the ability to find. As a result, retained search was formalized into the dedicated service that we consider it to be now.
While the fundamental principles of a retained search firm haven’t changed over the years, the buying process—how a company chooses a firm—has.
1960s: The ‘Rolodex’ Era
Thus, when a company needed help finding a key hire, they would retain one of these new search consultants. Early on, finding one of these consultants was done strictly through referrals, often through the management consultant you were already working with or through word-of-mouth from a colleague. Over time these consultants grew from independent operators into the retained search firms of today.
In its day, the referral from a management consultant was reasonably sound. After all, they work alongside you so they should have a base knowledge of your company and the requirements for the role you're looking to hire. Word-of-mouth referrals on the other hand often did not hold much weight.
Now, one thing to keep in mind is that specialization is crucial for key hires. For example, finding a VP of Operations for a Manufacturing Company in Ohio is much different than a CEO of a Retail Company in New York. It soon became apparent that just because a firm did well on your colleague’s project, doesn’t necessarily mean they would do well on your project.
Also around this time is when industry organizations would start to pop up in the executive search industry. These organizations quickly became another way for companies to find retained search firms if they didn’t otherwise have a referral. However, these directories at best indicated where the firm was located, not their specialization.
1980s: The Big Players in Search Emerge
Over time the popularity of retained search continued to grow and some firms grew to become quite large. Size in particular is a pivotal factor to note since a retained search firm’s value in their offering is largely dependent on the size of their candidate database. With this in mind, mergers and acquisitions to pool candidates became a common practice. This approach eventually built nationwide recognized brands in the industry, some of which are still in business today.
The perceived advantage to buyers was straightforward: surely if anyone could find the right hire, the biggest firm in the country could. Indeed, in many situations, going with the biggest firm was seen as a way to cover one’s accountability if the hire didn't work out.
On the contrary, the larger in size a firm gets to be then the more problems they tend to accumulate. The partners that built a reputation for the firm tended to shift focus to finding more business and doing less day-to-day search work. Despite the reputation that their size would garner, the work would usually get delegated to staff.
The large firms also had a tendency to shift towards being generalists. They would take on any project regardless of seniority, department, industry, company size, or location. As mentioned above, specialization is key and most often a small firm that specializes will outperform a large firm on that particular type of search.
Although there is value in a large candidate database, there is also much more to the retained search process than a database query. For one, attracting a gainfully employed executive to leave his current company to join yours is not easy. A retained search firm that specializes knows how to position your role and the opportunity.
2000s: The Rise of LinkedIn & Automation
LinkedIn and other recruiting tools helped to ‘democratize’ the candidate database that the large firms possessed.
On the one hand, the promise here was to ‘level the playing field’. By having access to tools like LinkedIn and AI, a firm can access a larger talent pool and do a better job at finding exactly the right candidate. For the buyer of retained search, it would seem your best bet is to hire a firm that leverages these technologies.
On the other hand, these tools also represent an opportunity for companies to conduct a search on their own.
The problem with both is that there’s much more to the Retained Search Process than just research. Before the research even begins, a strategy must be created in conjunction with the client based on the candidate they're looking for. After research commences, a recruiter then needs to think about the best outreach strategy to contact potential candidates. Subsequently, a deeper analysis must be conducted in the assessment stage so the recruiter can prepare their client to make a final decision.
It's really just a different way to solve the candidate research problem the large firms from the 1980s tried to address. And because there is much more to executive search than just research, buyers of retained search continued to rely on either a referral, an industry organization, or the brand of a large firm.
However, it's at this time when a new option for selecting a retained search firm emerged: Google.
Today: Selecting a Firm Based on Data & Performance
Today is the dawn of a new era in selecting a retained search firm. A key hire is a crucial investment in your company’s future success. Likewise, engaging with a retained search firm is a costly endeavor and a big time commitment. You can’t afford to get it wrong.
Companies today know that a referral might not be the right fit for their specific hire. They know that picking a name off a directory is like using the Yellow Pages: you don’t know what you’re going to get. They also know that a good brand doesn’t necessarily equal good work for their specific search. And they know that, while Google can present a list of search firms with the right specialization, they don’t have data on their performance.
Buyers today want a retained search firm that specializes in the exact hire they’re trying to make and they want to be certain that firm is the best at it.
That’s what the Clockwork Network does. We take your specific criteria, examine tens of thousands of retained search projects, and find the firm with the best track record of completing those projects faster than others.
Now you can rest assured you are choosing the right firm for your company knowing they're a top performer in their field with the ability to find you the perfect candidate.