What does IBM have to do with retained search?

We recently took on a Country Manager search for a client who had already spent nine months with a global retained search firm. That firm had been paid two thirds of its fee and the search had not closed. Within three weeks of starting, we gave the client 12 qualified candidates.

I want to be fair to the other firm. A few months before we were engaged, I spoke with the client and I backed them. I've competed against that firm several times, won some and lost some, and I had no reason to think they couldn't do this search. When we did start, their coverage was pretty good. But there were quite a lot of candidates we found and added to the long list that they hadn't covered.

I've been doing executive search in Japan since 2003 and that still surprised me. I don't think the problem was the firm's ability. I think it was how the fee is structured, and clients should understand that before they sign with anyone.

How the traditional retained model is paid

Most global retained firms split the fee into three. A third when you sign, a third at an agreed point such as the shortlist or after 30 days, and the last third when the person starts. By the time a shortlist is presented, the firm has been paid two thirds of what it will earn. This applies to any retained search, not only Country Manager roles.

That structure rewards winning the mandate and reaching the shortlist. It doesn't reward closing the search to the same degree. If a search stalls, most of the money is already in, and the consultant's time is often better spent winning the next mandate. That isn't true of every firm or every consultant, but the incentive is there and it's worth knowing about.

What a year without a Country Manager costs

This client started the search more than a year ago and has now been without a Country Manager for six months. Nine months of searching with no hire costs far more than any search fee.

While the seat is empty, nobody owns the Japan number. The regional leader carries it on top of their own job, usually from Singapore or Sydney, and Japan gets whatever time is left.

Large deals slow down. Japanese enterprise customers want to know who is accountable locally before they commit, and an acting manager doesn't give them that.

Partners notice too. Resellers and system integrators put their effort behind the vendors whose leaders they can work with.

The team waits. Most companies won't hire the next layer until the Country Manager is in place to choose their own people, so growth stalls. Senior staff without a boss start taking calls from recruiters, and some of them leave.

When the hire is finally made, the new leader starts behind on all of this.

Nobody ever got fired for buying IBM

There's an old saying in IT that nobody ever got fired for buying IBM. If the project went wrong, you had chosen the vendor everyone knew, so the blame went to IBM and not to you.

Executive search works the same way. Choosing a global brand feels safe, because if the search fails there's someone else to point to. But that doesn't get the person hired, and the business is the one that pays for the delay.

What a boutique firm does differently

A specialist firm lives on repeat clients and referrals, so closing the search is what matters to us from the first day. We only do executive search, only in Japan, and mostly for technology companies and technology consulting firms. Our engagement fee comes off the final fee, which is paid when the person starts.

The partner you meet is the one doing the work. There's no research team behind a logo and no hand-off after the pitch.

How to choose the right firm

Boutique or global is only part of the decision. The more useful question is whether a firm has done your kind of search before, and whether it can prove it. Ask for two things.

Success cases. Which companies has the firm placed for, in which roles, and how recently? A wall of logos tells you very little. Ask who was placed and how it went.

References. Ask for names you can contact yourself, not a single unattributed quote from “a VP at a global software company”.

Our track record is open

We're fully transparent about our past placements. Anyone thinking of working with us is welcome to contact any client or company listed on our website and check what we did for them. We'd encourage you to ask every firm you speak with for the same.

If you're planning a Country Manager hire in Japan, I'm happy to talk it through.