The CQ: 👍 or 👎 for Executive Recruiters?
They're expensive, but they can be worth it for the right hires
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Buzzing at the Forerunner Office…
Mastering when and how to partner with executive recruiters can accelerate your business
By Annie Wickman, Head of Talent and People
@anniewickman
If you ask a founder what’s keeping them up at night, more often than not, “hiring” will be on that list. Hiring is consistently one the most demanding and important tasks for a founder. This is increasingly true when building a management team that’ll lead a company through the next stage of growth and inspire and build the broader team. When making these hires, founders will no doubt consider whether or not to partner with an executive recruiter. This topic is especially top of mind with annual planning in full swing and increased pressure on budgets.
Cost is typically the primary concern when it comes to executive recruiters. Hiring an executive recruiter is a significant investment and can be one of the largest individual expenses founders have in a given year. At Forerunner, we encourage founders to take an analytical approach and consider several factors when weighing whether or not to use an executive recruiter.
Below is the step-by-step process that we recommend based on our work with over 150 founders. The tips below are for retained searches.
Step 1: Weighing working with an executive recruiter
Identify key hires: What are 2-3 key roles will materially change the trajectory of your business. Where do you need to build an advantage to win the market? Is there a special mix of skills or experience you hope someone will have? Executive recruiters are ideal for filling these types of roles, which will unequivocally pay dividends in years to come that outweigh the recruiter costs.
Clarify knowledge gaps: How well do you, your team, and investors know what you should be looking for in a candidate? How well networked are you, your team, and investors in the function? If this is the first leader you hire for a significant portion of your business, an executive recruiter will help you scope the job and profile you should look for. You can lean on the recruiter to refine your thinking throughout a search process.
Team diversity: Building a diverse leadership team is critical for the success and culture of the company. Think about the diversity of your current leadership team – where are the gaps and opportunities, and do you have access to the talent to fill these? An executive recruiter can build a robust and diverse pipeline of candidates for your consideration to dramatically accelerate these efforts.
Gut check bandwidth and timing: How much time does your team have to dedicate to the search, and on what time frame are you aiming to fill the role? Founder plates are chronically full with competing interests. Many founders hire recruiters to keep focused on their existing priorities while allowing recruiters to play to their strengths: bringing in high quality candidates quickly.
If you think an executive recruiter sounds like the right fit, the next step is to find the best recruiter to partner with.
Step 2: Choosing the optimal executive recruiter
Aim for specialization: Prioritize recruiters with a deep knowledge of the industry and role for which you are hiring. They’ll be the best at helping you define the profile for success and bringing in a deep network of strong candidates. Question them about your industry and their knowledge of your business. They will have to sell candidates and you want to be confident they are well versed and aligned.
Check track record: Understanding the successes of the executive recruiter will be enlightening and validating. Ask for a list of recently closed searches and references from other founders. Has the recruiter placed candidates you hope to see in your pipeline?
Develop rapport: Get to know the recruiter you will be working with. Ask who else on their side will be supporting the search and what role those people will play. You’ll want to make sure the partner you choose to work with is the one you’ll actually be doing most of the search, instead of them handing off the bulk of the work.
Negotiate terms: Negotiation is expected. You might get sticker shock the first time you receive a proposal for an executive search. First, remember that you get what you pay for – the best recruiters command more. But especially in this market, there’s room for negotiating. Some levers you can pull are on rate, equity, carve outs, and additional fees.
Once you find the right recruiter, the work has only just begun. You will play an active role throughout the search process.
Step 3: Partnering successfully with an executive recruiter
Take on an active role: Schedule regular check-ins with the recruiter. Align on expectations and timeline at the beginning. If you haven’t seen a list of candidates in the time frame promised, push for clarity and accountability. Prioritize meeting with candidates to ensure you can close on them before another does.
Provide detailed feedback: As you see candidates that you’re not moving forward with, offer detailed feedback about what you would prefer to see. This will help the recruiter continue to iterate and refine the process. The more information and detail you’re comfortable sharing with your recruiter about your company and trajectory, the better equipped they’ll be to sell your company to the strongest candidates *and* filter for the perfect matches. The best recruiters have a high bar and screen candidates with quality over quantity in mind.
Partnering with a retained search firm can be a powerful strategy for accelerating team growth while also staying focused on the key business initiatives.. The high costs of a recruiter can be outweighed by meaningful upside in the right situations. The opportunity cost of taking too long or hiring the wrong person without the support of an expert can be significant. Ultimately, your team is your biggest asset and company-defining hires are always a worthy investment.
This Week’s Top 10 Consumer Insights
By Forerunner
@ForerunnerVC
With high inflation, younger consumers are happily flashing AARP cards to score discounts. After travel blogger Zach Abel posted a TikTok about how younger people could join, the AARP said about 150,000 new members signed up.
App subscriptions have gotten confusing. Consumers are craving clarity on pricing in app listings before signing up, including exactly what’s available in the free version, the length of the trial, what features they’ll get in the pro version, and the least expensive subscription option.
Historically, during economic downturns the tech industry prioritizes technologies that focus more on consumers’ needs. “Now is a time when companies are shifting their attitudes and strategy from ‘what can we do?’ to ‘what do we need to do?’”
Three business models are losing steam—the movers (Uber and DoorDash), the streamers (Netflix and Spotify) and the creepers (Snap and Meta). These companies have lost two-thirds of their market capitalisation on average over the past year. They are each facing similar headwinds: a misplaced faith in network effects, low barriers to entry, and a dependence on someone else’s platform.
New reports from Narvar show that retailers will invest more in frictionless returns. The researchers say consumers would be willing to shell out for online returns if they’re convenient.
According to Zebra Technologies’ annual Global Shopper Study, self-service technology leads to higher customer satisfaction: 76% of consumers say they want to get in and out of a store as quickly as possible.
Teens are turning to TikTok for answers on their mental health struggles. Many are self-diagnosing themselves after seeing bite-sized lists of symptoms. “Kids are searching for a community, and are using their current struggle with mental health symptoms as a way to find like-minded people.”
Walmart introduced Netflix Hubs to 2,400 of its stores that will create a Blockbuster-style experience. The section will sell music, apparel, collectibles, games and seasonal items from top shows and films.
Following the path of other ecommerce retailers, GoPuff and Instacart have launched healthcare offerings. These investments come as 80% of respondents said they plan to maintain or increase spending on health and fitness-related categories in the next year, according to a September survey from Accenture.
Roblox has become a compelling marketing channel for retailers looking to reach younger audiences spending more time in the metaverse. Gap, American Eagle, Forever 21 and Nike have all recently launched unique Roblox experiences. Roblox has also become a popular pathway for luxury brands, including Ralph Lauren, Givenchy, Tommy Hilfiger and Gucci.
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Weekly Wisdom
“There's this fear that founders have, which is understandable, but you need to be willing to let go of some of your customers that are not optimally profitable. It's not the grow-at-all-costs mode anymore. It's about building sustainable growth. And if someone is only showing up because you're giving away the dollar for $0.90, they're not ultimately the customer that you want.”
— Brian O’Malley, Partner, speaking about building a sustainable customer base on the Acquired podcast.
Forerunner Highlights
Brian O’Malley discusses the outlook of consumer investing in 2022 with Ben Gilbert and David Rosenthal on the Acquired podcast.
Kirsten Green shares the frameworks for identifying brands early, how to build deal flow, and the shift in power between buyers and sellers with Patrick O’Shaughnessy on Invest Like the Best podcast.
Portfolio Highlights
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TechCrunch recounts the founding story of Josh Fabian, CEO of Metafy.
Forbes details Faire’s growth in the specialty food and beverage category.
AdWeek discusses how Hims & Hers’ marketing continues to build its user base.
A Refinery29 editor tests out the Oura ring, saying she “likes that it encourages me to be active in a non-shame-y way.”
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