The Hunt Is On With today's tight labor market, employers are calling in the sharpshooters to help find talented executives.

Douglas Dolton wasn't looking for a new job when he found himself in the crosshairs of the McLean executive search firm Dinte Resources. Photo by Mark Rhodes

By Maura K. Singleton
Douglas Dolton usually ignored calls from headhunters. Countless times, he had listened to the same cold-calling shtick: A recruiter had a senior-level job that might suit him. Was he interested or did he know of anyone who might be? While he was glad to know he was in demand, Dolton was happy in his position as senior project manager at a Washington, D.C.-area consulting firm. He wasn’t interested in making a move. Then one day in 1994, he got a call from Dinte Resources that made him think twice.

"They had done homework on me before they called," Dolton recalls. "It impressed me." The McLean-based search firm had gotten a lead on Dolton through its networks in the financial services industry. The job piqued his interest.

Dolton sent Dinte his resume and references and followed up with more calls. Ultimately, both he and the search firm agreed he wasn’t the best match for the job. Things didn’t end there, though. No headhunter lets this kind of prey slip from the radar screen.

A month or two later, Dinte called again in hot pursuit. Servus Financial Corp., a Herndon company that creates and markets consumer-loan programs, needed a chief operating officer. Everything fell into place. Within two weeks, Dolton had a written offer. Financially, he says, it was a lateral move. A year later, however, Servus Financial’s chief executive officer moved on and the now 42-year-old Dolton took the helm.

In today’s tight labor market, Dolton’s experience is common. A shortage of executive talent has led to a bonafide body chase. The biggest demand for management expertise is in advanced technology companies. In Northern Virginia there are more e-commerce companies being created than there are CEOs to go around, recruiters say. Regional technology groups estimate that there are about 30,000 fewer workers than available jobs in the Washington, D.C., metropolitan area. The nation’s economic surge also has fueled demand for senior managers in financial services, health care and pharmaceutical companies.

Businesses are getting more sophisticated in their recruiting, and they’re increasingly relying on search firms to find the right candidates. In addition to salary warfare among employers, incentives such as stock options are being used to attract and retain the right people. But money isn’t everything.

Management-level employees want to become more skilled and gain broader experience. They want the right cultural fit. Having the right expertise is maybe 40 percent of the equation, recruiters say. More important are chemistry, a company’s management style and the flexibility and autonomy given to employees. Workers want an organization aligned with their outlook.

"Today people have one eye on their current job and one eye on the marketplace," says Dinte Resources’ president, Paul Dinte, who lured Dolton into another career.

At Servus Financial, Dolton says he saw new challenges and a creative corporate culture — "extremely fast-paced, extremely entrepreneurial" — that suited him better than the consulting firm where he worked. As CEO of Servus Financial, he can list Apple Computer, BankOne and IBM among his clients. Today, his company services about $1.5 billion in loans.

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The body-search business is sizzling. "It’s a great time to be a headhunter," says Michael Kirkman, managing director of the Tysons Corner and Washington, D.C., offices of search-firm giant Korn/Ferry International. The Los-Angeles-based company has 72 offices worldwide and revenues totaling $373 million.

National search firms headquartered in New York, Chicago, Los Angeles and Boston never before bothered with a branch office in Virginia. In the past few years, however, search firms wanting to expand have had Tysons Corner at the top of their lists. Everyone is eager to tap the emerging client base there.

In the hyper-competitive tug-of-war for executive talent, the sales pitch has to sing. "Every good person will have multiple opportunities, so you have to have a good story and attractive compensation and an environment in which they want to work," Kirkman says.

Recruiters offer many reasons for leaving it to the professionals. The best-qualified people don’t scan the employment section; they are almost always working. Many won’t answer ads because it risks exposure. Unlike human resource departments, which sift through the resumes they receive, headhunters go out and find the players. They tap candidates that a company wouldn’t otherwise approach. Search firms screen and evaluate candidates and essentially prequalify them — all confidentially. Many also act as negotiator between the company and the prospective employee in working out details of compensation.

If the economy has created boom conditions for headhunters, so has the changing outlook on job tenure. Sobered by the downsizing of the ’80s and worried about becoming obsolete, workers are more willing to job-hop to pick up skills that will leverage them for future employment. "We’ve seen people who have said they will take an opportunity — even if a lateral move — because it will give them that piece of expertise they don’t have," Dinte says. They’re worried that a year from now, if they don’t have a particular skill, they could be passed over.

The emphasis has shifted from corporate security to individual security. People no longer expect to stay with the same company until retirement. "The gold watch club is dead," says Andrew Sutherland, a search consultant with Dinte.

After the search firm Kershner & Co. stole some of his company’s talent, Reid Nagle, the head of SNL Securities, figured he’d better broker an alliance. In 1998, the Washington, D.C.-based search firm became an affiliate of the Charlottesville-based financial information company and now shares its office space. The partnership allows Kershner access to SNL’s databases on more than 23,000 financial institutions and real estate investment trusts, and so greatly expands the firm’s search capabilities.

"Our research time is effortless," says Bruce Kershner, the firm’s president. "It’s just a matter of punching in a few keys and getting potential sources."

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According to Kennedy’s Directory of Executive Recruiters, there are some 4,500 executive search firms in North America. Although the search industry has grown increasingly specialized, the tools of the trade remain pretty universal. In addition to a network of contacts, headhunters glean information from a variety of sources, including proprietary computer databases, the Internet, conference lists and alumni directories.

Search firms are paid in one of two ways — on a contingency basis or by retainer. Those that operate on a contingency are paid only when a candidate they submit is successfully hired. This pay-for-performance structure allows a company to work with several recruiters at once.

A search firm that operates by retainer is paid regardless of the outcome. The employer enters into an exclusive agreement with the executive search firm, paying a portion of the fee in advance and the remainder upon completion. The retainer method is more common for senior-level positions: The advantage is that the recruiter gives the search his complete attention.

Many companies see search firms as an investment rather than an expense. They treat them as business partners, like extensions of their human resources department.

Dolton, Servus Financial’s CEO, is now a satisfied client of Dinte Resources. He has used the firm to fill several key executive positions within his company. He advises companies to use search firms for most management-level positions. He learned the hard way that newspaper ads generate uneven results.

"The folks we’ve hired through the newspaper we inevitably have the biggest problems with," he says. "If we added up how much it cost to get them, we end up spending the same amount as we would to use a search firm."

Hiring a headhunter isn’t cheap. Expect to pay between 20 percent to 35 percent of the executive’s first-year salary. It’s also important to learn a firm’s "completion rate" — what percentage of searches were successful.

Does size matter? That depends on whom you ask. Korn/Ferry, the largest search firm in the world, stresses its global database of job candidates and the large number of industry specialists within the company. "Because we are a brand name, we can get people to the table," Kirkman adds.

Smaller firms argue that a recruiter’s tenacity and resourcefulness are better yardsticks of success than the size of the office staff. "I tell clients that when they choose a search firm, they should use just as much finesse or care as they do in the hiring of an employee," Kershner says. "We’re the ones who are going to be their eyes and ears and voice in the marketplace."

It’s best to choose a firm that has experience with similar assignments. The most persuasive headhunters have an insider’s view of a particular industry and know what gets a candidate’s attention.

Andrew "Drew" Callan, who spent almost two decades on Wall Street before turning headhunter for Kershner & Co., says candidates respond better if you know their world. "I worked in the investment world for 18 years," he says. "I know what they think, I know how they talk, I know how they look for business plans and what companies they want to get involved in."

When executives are flooded by job offers almost daily, a headhunter’s ingratiating personality and skill can help close a deal. The personal touch means a lot. Callan compares his job to a counselor’s; candidates often share intimate details and, as they develop a rapport, come to feel the recruiter has a vested interest in their future.

"At the levels we deal with, candidates are very diplomatic and professional," adds Sutherland, the Dinte recruiter. "If the search firm shows the same level of diplomacy and professionalism, nine times out of 10, the candidate will respond to that."