Then the phone rings.
Your caller says he's an executive recruiter filling a major position in your industry at a level you realize you'd have to wait at least two, and maybe five to seven, years...or longer...to achieve in your present company. Are you interested?
Perhaps you should be.
But only if the opportunity stands up to some important questions you can raise over the phone and only if the recruiter himself passes your savvy scrutiny.
Your caller may be working on a retainer search...or on a legitimate contingency listing...to fill a job that could advance your career. On the other hand, he may be "trolling" for resumes by describing an extremely attractive but nonexistent opening...or an actual and widely-publicized opening which he has not been requested to fill.
He may be calling because he's heard great things about you through one of his dependable contacts who knows you. But it's equally possible that he's calling you "cold," just because you're at the right level in a company he's "targeted" to explore, in which case he has no idea whether you're terrific...or just two weeks away from being fired for gross incompetence.
He may even be soliciting you and your company as a possible executive search client under the guise of approaching you personally with some non-existent "opportunity."
And, despite a dizzying dose of doubletalk that may be administered when you try to figure out what the relationship is, there are only three possibilities. Let's review them, and then let's take some phone calls.
1. A Retainer Search
This is the ideal relationship from your point of view. You're too late to reach the employer ahead of the recruiter, and maybe get the job without competition from recruiter-supplied candidates. Now a recruiter is being paid $30,000+ to look. Therefore, you're best off as one of his "finds."
If the caller is on a true retainer assignment, you'll want to cooperate.
2. A Valid Contingency Listing
This is a good, but somewhat less-desirable, relationship, as far as you're concerned.
If the caller has a contingency listing directly from the employer on the job he's describing to you, then you may wish to cooperate. Generally speaking, however, you're not obligated to do so.
There is only one narrow set of circumstances in which you're morally obligated to go ahead with a contingency recruiter...or forgo the opportunity. We'll cover this subject later.
3. No Relationship at All
This is a lousy situation from your point of view. The recruiter couldn't get either type of relationship with the employer...retainer or contingency...so now he wants to tie you up!
If the caller...whether normally a retainer or a contingency recruiter...has no direct arrangement with the employer on the job he's calling you about, you do not want to cooperate.
So much for the ground rules. Now "Let's go to the phones," as they say on TV. First, an easy one.
YOUR CALLER: "Hello, I'm Joan Chase from the executive recruiting firm of Randall Radley Associates, and I'm calling because I have a situation that might be of interest to you or perhaps to someone you might wish to recommend."
YOU: "Oh, I know your organization. It's one of the fine retainer firms. I've met a man named Stevens in your company; do you work with him?"
CALLER: "NO, Bill's in our Atlanta office, and I'm calling you from Cleveland. But of course we know each other."
Enough already!
You know the firm and its fine reputation as a retainer recruiting organization. This woman is obviously with them, because she knew Stevens and volunteered his correct location. So let her go on, and listen open-mindedly. She appears to be entirely on the up-and-up, and doing exactly what she says she's doing.
"But," you say, "couldn't she be who she is and still be calling about a job on which she hasn't been in touch with the client, intending to 'float' my resume?"
Not likely. She seems to be a rank-and-file recruiter in a well-known retainer firm, just grinding out one of their regular assignments in the regular way. Remember that retainer-only firms hardly ever jeopardize their "pay-me-to-look" status by offering resumes they haven't been paid to find. Let's put your conversation with Ms. Chase "on hold" for a while, so you can answer a more challenging call.
This time we'll listen as you smoke out the intentions of someone who really is planning to "float" your resume. Ironically, this caller is someone you've known and been friends with for years...a contingency recruiter specializing in your industry, who helped you find one of your early jobs, and whom you've used occasionally to recruit subordinates during your rise to $100,000+.
CARL CONTINGENCY: "I suppose you saw in the trade papers that Andrea Williams left Colonial to become President of TransWestern. That means they'll be needing a new President over at Colonial, and I don't think there's anyone inside who's up to the job. As you know, Blake Stevens, their new VP-Marketing, was just promoted to that level from head of the field sales force a few months ago. He's certainly not ready for the presidency. And they surely won't give it to some Finance or Manufacturing person in such a marketing-driven company. What do you say, Bill? Would you like me to put you in the running for the presidency over there?"
What an easy example!
You're immediately skeptical. You're surprised that Carl would be seeking a President. As far as you know, his mostly-contingency practice...while widely and justifiably respected...hasn't been filling positions at quite that high level.
Moreover, Carl is being perfectly straightforward. He isn't saying he's been requested to seek candidates for the presidency of Colonial. Indeed, he makes it clear that he's merely reacting to what he's read in the trade papers and drawing his own conclusion. No search has been assigned. Or if one has been, it's obvious that Carl doesn't have it. He hasn't been briefed by the CEO of Colonial. If he had been, he'd have told you so.
Since Carl is referring to an opening publicized in the trade papers, it's a situation that everyone in your industry knows about. Indeed, you've probably already been thinking about writing or calling the Chairman of Colonial. You know her slightly, because you were on a panel she chaired at your industry's trade convention two years ago.
Have you missed your chance to go ahead on your own, just because Carl's phone call reached you before you made your move?
Absolutely not.
Let's see you take it from here:
YOU: "Thanks for the call, Carl. In fact, I've been thinking along those same lines. I've intended to call up Gloria Wing, the Chairman over there, or send her a letter and a resume...I haven't decided which. I was on a panel she ran at the trade convention in o Las Vegas a couple years ago. Now, Carl, I gather that Mrs. Wing hasn't put you on retainer to find her a President, has she?"
CARL: "Well, no she hasn't talked to me specifically about this situation. But I've filled quite a few jobs over there during the past several years. I'm perfectly sure I can present you."
YOU: "Thanks for offering, Carl, but I'd rather not. I'd prefer to be in touch with her on my own. I'd rather handle it myself."
Simple as that! You figured out that Carl has no mandate. So you turned down his offer to interpose himself between you and the employer. He offered. You politely refused. The only explanation you needed to give was:
"I'd rather handle it myself."
Now, you're just as free to get in touch with the Chairman directly as you were before Carl called. If Mrs. Wing hasn't yet engaged a recruiter, she may decide to meet you and perhaps one or two other obvious prospects. Indeed, she may make her choice without ever feeling the need to hire a retainer recruiter, or to put out contingency listings. On the other hand, perhaps she already has hired a retainer recruiter. If so, you're still free to be part of that person's project, without the handicap of an extra price-tag applied by your friend Carl.
However, don't become overconfident. Carl wasn't really trying very hard. He helped me help you, by delivering a classic pitch designed to demonstrate the basics.
Now let's take a much more challenging call. This one's from a prominent retainer recruiter whom you know and trust. You'll have to be more alert and probing, because Randy's not going to send you the obvious signals Carl and I contrived for you in the previous example. Randy's going to give you the full treatment.
RANDY RETAINER: "I'm not sure if you're aware of it, but I've done several recruiting projects over the years for Pete Pinnacle, the Chairman over at Acme Consolidated. He's got an opening at the top of his Industrial Products Division, what with Jason Evans leaving to become Chief Executive of Trombley Consolidated.
You'd be absolutely perfect for that spot, now that you've got a few years' experience under your belt as number-two in an operation that's almost their size and, if anything, is doing even better than they are. What do you say? Would you like to be a candidate on it?"
YOU: "Maybe, Randy. I've been thinking it's time for me to take over my own show, and I've been wondering what they'll do to fill Jason's job. I thought maybe they might promote somebody from one of their own divisions. If they stay inside the Industrial Division, I'm afraid I have to agree with you...nobody there would be as good for the top job as I would be. Matter of fact, I was thinking of maybe dropping the Chairman a hint that I might be interested...possibly through one of his outside Directors I know pretty well, or through another friend of mine, who's one of their biggest distributors.
"Tell me, Randy, has the Chairman definitely made up his mind to go outside to fill that job, and has he put you on retainer to do the search?"
RANDY: "Oh yes; he's got to go outside. It doesn't make any sense at all to take somebody like Nancy Stein...who's doing a great job, by the way...out of their Maritime Division and put her into Industrial Products. And the same goes for Clem Smith, who's Executive Vice President of their Defense Systems Division. He's a great guy and certainly ready to run his own operation. But it ought to be something closer to his field. He's never sold to any customer but the Pentagon. Really they don't have anybody over there who'd be as appropriate as you would, to take charge of Industrial Products.
"Why do you think I called you? Not just because we haven't talked for awhile. Today we're doing business. I want you to be a candidate. In fact, I think you'll be the strongest of all the candidates I'll be presenting. What do you say?"
YOU: "As I said before, I might be interested. But I didn't quite get your answer to the other part of my question. Have you personally got a retainer search assignment to fill this position? Because, if you do, then I'd like you to tell me a lot more about what the Chairman has told you he's looking for. Has he put you on retainer to solve this thing?"
RANDY: "Well, not exactly. Not quite yet. But I'm sure that if I let him see someone as ideally appropriate for his Industrial Division presidency as you are, that'll make it obvious to him that he shouldn't stay inside. What do you say? Would you like to go for it?"
This time you had to work a lot harder. And you were up against a tough adversary...a well-known retainer recruiter, whom you certainly wouldn't have suspected of "floating resumes." Randy knew plenty of detailed information. Moreover, you were well aware that he had previously done high level recruiting within that company.
But even this retainer recruiter you've known and trusted for years failed to pass your savvy scrutiny, now that you're challenging every headhunter who calls you, to find out whether he has a client assignment and what the exact nature of that arrangement is.
Now you're faced with a choice.
Randy has previously worked for the Chairman on retainer. Maybe he'll be asked to do so in this instance, too. If so, he may not be enthusiastic about your candidacy...on this or any future job...if you're uncooperative now. On the other hand, the Chairman doesn't always use a recruiter when he hires a high-profile person from outside. And even if he does assign a retainer search, he may not choose Randy this time.
Indeed, if Randy were confident of getting a retainer search to fill this opening, he'd have waited to get his mandate before contacting you or anyone else. Maybe he suspects the Chairman will promote from within...or "go it alone"...or choose another recruiter. Maybe the Chairman already has chosen another recruiter.
You've decided to remain your own person. I thought you would. You didn't get where you are now by allowing people to manipulate you. Now let's see how gracefully and inoffensively...yet firmly...you handle this situation:
YOU: "Thanks for offering, Randy. But I'd rather not have you bring me up with the Chairman until you've got a firm search assignment from him. Why don't you take the next few days to get in touch with him and see if he wants you to take charge of finding someone on the outside for the presidency of that division?" (You know this won't be easy for Randy...if it were, he'd have done so before calling you; but he can't say that.)
"Please don't tell him that I might be a candidate. I want to keep my options open. If the Chairman does assign a search, there's nobody I'd rather see get that project than you. But if you don't, I want to still be in a position to go after him through informal connections, or to be contacted by the recruiter he does select, or maybe just to drop the whole thing. I'm going to be away on Wednesday and Thursday. Why don't you call me on Friday and let me know how you made out? I won't do anything until I hear from you."
See...it wasn't all that difficult. You caught Randy proceeding when he didn't have the proper basis to do so. But you didn't make a fuss. You didn't back him into a comer. And you also didn't allow him to comer you, which was the purpose of his call.
Congratulations again. You matched wits with a master...and you came out ahead.
By now it's easy to see the central truth that you should always keep in mind when answering every headhunter's call: You don't know for sure whether your caller has a definite arrangement with an employer, and you don't know what the exact nature of that arrangement is. Since both points are important, you'd better clear them up before agreeing to anything the recruiter proposes.
And you're able to find out...as you've just proved. You caught a prominent retainer recruiter, whom you personally know and respect. He was about to put a price-tag on your head in one of his exceedingly rare departures from his professed way of doing business. Firmly, but gracefully, you stopped him. If you can do that, surely you can figure out what just about everyone else who calls you is up to...and react strictly according to your own self-interest.
But before we leave Randy Retainer, let's speculate on his motives. He may have a strong relationship with Pete Pinnacle, the Chairman of Acme Consolidated. Maybe Randy's altruistically concerned that the Chairman will make a less-than-optimum appointment from the inside, if not confronted with unasked-for resumes from outstanding outsiders. It's far more likely, however, that Randy has a weakening, marginal, or defunct connection with Mr. Pinnacle, and suspects or knows that another retainer recruiter will be the one officially looking for the next President of Acme's Industrial Division.
No retainer recruiter will ever attempt to submit you on contingency if he can readily get himself hired on retainer to look for you. And the likeliest reason he can't get hired is that somebody else already has been. If so, you'd better be the other recruiter's "find"...or the employer's. Otherwise, you probably won't be hired.
It's no accident that the two people you've caught intending to forward your resume without a proper employer-mandate have both been people who know you well...not strangers. If you're a senior executive, that will usually be so.
And when a true retainer recruiter is involved, that will virtually always be so. The reason, once again, harks back to his normal fee arrangement...to get paid for the act of looking, regardless of whether anyone is hired. Therefore he normally never offers resumes without first being paid to find them. If he did, the employer would think, "Why pay him just to look, when he'll submit candidates without being paid, just like a contingency recruiter does?"
Therefore, a true retainer recruiter breaks his operating pattern...if at all...only on very rare occasions when he has no shot at a fee unless he does something drastic. And even then he won't, unless he knows the potential "candidate" on a personal basis well enough to hide behind this excuse:
The retainer recruiter can never admit he actually looked for new people that he's sending over on a contingency basis, because to do so would destroy his claim to be strictly a retainer recruiter.
The contingency recruiter, on the other hand, has a different problem. He isn't usually asked to fill extremely high-level positions. Therefore, he lacks credibility when he claims to have a high-level executive tied up, and accessible only through him. He almost has to say:
The further down you are from President, General Manager, or head of function such as Finance, Manufacturing, Marketing, R&D, etc., the more numerous are the positions in which every organization can use your talents, and the more frequently...perhaps even continuously...the organization has an opening at your level that urgently needs to be filled.
Under such circumstances, suggestions of potential candidates tend to be much more welcome, regardless of source. Contingency listings may be handed out to virtually any headhunter who asks. And resumes which case I can perfectly understand why you aren't comfortable in being specific about the client."
CALLER: "Rather than concern ourselves any further at this point about who the client is and why I can't give you that information, let me just tell you this...it's a client we have served many times over the years, and one I personally know very well. But right now let me tell you a little more about the job so we can see whether it's an attractive one for you to consider, or whether you would prefer to recommend someone else."
You now let the recruiter drone on, and you pursue the full line of questioning for screening any "opportunity" that's pitched to you over the phone. However, the tone of this conversation so far has been sufficiently mysterious and evasive to let you know that you may well be dealing with a headhunter who, at best, has a non-exclusive job listing, and indeed may not have any direct commitment from any employer. You will proceed with caution.
If Ms. Findham had been a retainer recruiter with an assignment conferred directly by the employer, she would have immediately told you so, explaining that her secrecy was not because of a tentative mandate, but rather because of specific reasons why it would hurt the employer if his search became known.
Of course, if he's a retainer recruiter being paid to look for you, you want to be one of his "finds." You hope he will introduce you. If he refuses, you can ignore his "wet blanket" and go directly to the employer. He'll resent your action, and "blackball" you for all future searches by his firm. But he can't stop you from getting hired. Therefore he normally never offers resumes without first being paid to find them. If he did, the employer would think, "Why pay him just to look, when he'll submit candidates without being paid, just like a contingency recruiter does?"
With the contingency recruiter, the shoe is on the other foot. He'll seldom say no to you. He wants to submit you...with his price-tag attached, of course. But you may prefer to go directly to the employer without his tag. Can you?
If the contingency recruiter hasn't identified the specific employer and job to you, you have no obligation whatever to let him apply his tag and send you onward to an undisclosed recipient. You're just as free after his call as you were before it, to canvass any and all employers you wish and offer your services.
Even if he did tell you precisely the employer and the job on which he wants you to be his candidate, and even if he has a valid listing, you're still at liberty to contact the employer directly if some other source of information...apart from his phone call...has also made you aware that the job is open and likely to be filled from the outside.
But be forthright; otherwise the recruiter will think you took advantage of his call and sneaked around behind his back. Just tell him that you're already aware of the opening through other sources, and that you may or may not wish to follow up on your own. The contingency recruiter won't be pleased with your decision, but there's nothing he can do about it. You have every right to refuse his offer to make an introduction that you prefer to make yourself.
Suppose the contingency recruiter just happens to be someone you don't like or respect. You don't want him to know whether you're willing to be a candidate or not, and you don't ever want to be submitted to any employer by him. Just say:
Needless to say, you must really dislike the contingency recruiter to take this approach. But it's your prerogative. Any recruiter...contingency or retainer...merely offers to introduce you. He doesn't own you.
You know what's fair and what's not. Let your conscience be your guide. When the opening is not public knowledge, and you learn about it only from the recruiter, then you are morally obligated...and perhaps legally, too...to pursue the opportunity only through an introduction made by him.
Similarly, if the existence of the job was known to you through other channels, but the recruiter told you about attractive hidden features which caused you to go ahead when you wouldn't have otherwise, then too, fairness demands that you pursue the position only through the recruiter.
When a contingency recruiter has a valid listing, the employer has agreed to pay the recruiter if he hires someone the recruiter places before him. So, if the reason you know enough to contact the employer is because the recruiter has contacted you, then the recruiter has done his job and has earned his fee.
Moreover, in my opinion, that's true even if the recruiter doesn't specifically identify the employer, but drops clues enabling you to guess the employer, or presents the job so tantalizingly that you canvass all the employers in your industry attempting to hit the job the recruiter has told you about.
It would be highly improper for you to "go around" the contingency recruiter under any of those circumstances, in an attempt to make your-self less expensive for the employer to hire. If you were to do so, any ethical employer would consider your behavior sleazy in the extreme. He should forgo hiring you on the basis of low moral character. And if, by chance, the employer were to be sufficiently devious himself to applaud your actions, his own moral character would be such that you'd be better off not working for him. Or, perhaps, you'd deserve each other.
There's no simple "litmus test."
But the calls you've taken throughout this chapter have all helped sensitize you to "contingency vibes" and "retainer vibes."
An aura of secrecy is one of the strongest clues that your caller may be approaching you from the contingency direction. Often a contingency recruiter will be highly vigilant that you not figure out who her employer/client is unless and until you agree to be a candidate...and maybe, even then, not until just before you go to see the employer.
That's because your knowing creates several hazards to her earning a fee: You may go directly to the employer. You may start grapevine rumors that send other candidates to the employer. And those same rumors may send competing contingency recruiters to the employer. Your call from Mae Findham was a classic example of "contingency vibes," telegraphed by a secretive manner.
So, as early as possible in any phone call from a headhunter, you may as well, ask the ultimate question:
"Are you on retainer to submit candidates for this job, or are you working on contingency!"
The recruiter on the other end of the line may be a bit shaken by your highly aware and direct question. If so, that momentary discomfort may be your answer.
On the other hand, if he's glib and experienced, chances are he'll give you a side-stepping answer:
"Oh, I regularly send this client outstanding people."
OR
"We have a long-term relationship with them, going back to 1985, when we recruited the person who's now General Manager of their Catalog Marketing Division."
OR
"We have a standing order to send them people we feel would be right for the businesses they have."
The variations are endless. But the theme is consistent. Previous contact is invoked to suggest a definite arrangement to fill the job the recruiter is phoning about. Unfortunately, in the words of the immortal Gershwin tune: "It Ain't Necessarily So."
If in doubt, call "time out."
Another thing you can do to "qualify" the recruiter on the other end of the line is to interrupt your conversation, offering to call back later. Meanwhile you have time to do a little investigating.
The best indication that a U.S. recruiting firm doesn't operate on contingency is membership in the Association of Executive Search Consultants (AESC), the professional association founded and supported by retainer firms. You can call them at their headquarters in New York City.
Unfortunately, the AESC has less than 100 members out of an estimated 1,000 or more qualified U.S. retainer firms. However, many of the largest and best-known firms do belong to the association. Not being in AESC says nothing negative about the firm you're trying to check on. But membership definitely is a positive indication, because there is a peer review procedure prior to entry, plus continued emphasis on ethical and professional practice.
The most expedient technique you can use to determine whether a recruiting firm operates on contingency...or more often contingency and retainer...is simply to call the firm's switchboard and ask what kind of arrangements it offers an employer interested in using that firm to find an employee. Ask the receptionist or secretary who answers:
"With your firm, is it necessary to pay even if nobody you supply is hired? I know some firms operate that way...'on retainer,' they call it...but that's not the kind of arrangement I have in mind."
The telephone-answerer may conceivably give you a more straightforward response than you'll get from an executive of the firm, who'll be trying to size you up and will speak much more cautiously. The receptionist may say:
"Well, I know we prefer to work on retainer, but we also work the way you have in mind. Let me put you through to someone who can tell you more."
The next couple pages discuss relatively new (and perhaps transitory) wrinkles in the retainer recruiting business. They're here because this is where you will find them most interesting and relevant.
The recession of the early '90s hit the retainer executive recruiting industry fully as hard as any other part of the economy. Even some of the largest and most prestigious firms took steps to cut overhead and to compete far more aggressively for business than they would ever even have considered doing during the booming, expansionist '80s.
One survival strategy: negotiate "preferred supplier" deals with large corporations still doing quite a few searches per year (down from lots of searches in the boom years). If a company would guarantee X number of searches or Y dollars of fees during the year, the search firm would reduce its fee from the traditional 33% to a lesser percentage. This "cheaper-by-the-dozen" approach (1) undercut competitive firms on price and (2) put all or most of the client's search budget beyond the reach of other firms.
At the same time, some companies with multiple searches to give out used their "clout" to drive a very hard bargain with the retainer firms. After squeezing the fee percentage as much as possible, they applied this coup de grace: "We'll pay the first 2/3 or 3/4 of your fee as a retainer regardless of whether we hire any of your candidates, but we won't pay the last third or quarter unless we hire"
In the sunshine of the '80s, the giant retainer firms would have said "get lost" to any prospective client making such a demand. But when approached by a mega-client with a fist full of searches during the recession they said, "What an interesting and creative idea; let's try it."
Apple Computer, for example, caused quite a stir by imposing just such an arrangement, and many of America's leading retainer firms clamored to get on Apple's list of "Approved Suppliers" under those rules.
Watch and see. As the economy, and with it the retainer recruiting industry, return to '80s-style prosperity, those hold-something-back-'til-we-hire deals will be just as shunned as they always were.
So what, if all 100%...or merely 75% or 66%...of the traditional fee is paid regardless of whether anyone is hired? Still the employer is paying the retainer recruiter as a consultant, not merely a broker. Any client powerful enough to impose super-onerous terms on a retainer recruiter will certainly continue to enforce the "don't-take-my-people-for-at-least-two-years" and the "don't-present-my-candidates-to-anyone-else" rules. So as far as you as a potential candidate are concerned, the contingency vs. retainer distinction is unaffected by making the last third or quarter of the fee contingent.
Do you want a price-tag on your head? When and why should you go straight to the employer and steer clear of the recruiter? How do you play the recruiter game to win? These are the questions you care about. And they depend on the 2/3 or 3/4 of the fee that's nailed down...not the third or quarter that may be flapping in the breeze.
