Market intelligence gathering in executive search firms

Abstract

Market intelligence is crucial in ensuring executive search consultants make suitable decisions and deliver informed advice, knowledge and talent to clients. This article examines the types of market intelligence required by executive search consultants and the methodologies and sources used in intelligence gathering. An assessment as to whether the intelligence-gathering process is about who you know or what you know is also provided. The article considers the impact of demands for market intelligence on executive search firms and discusses knowledge management principles and processes as a means of aiding the effective capture, sharing and use of market intelligence. The article concludes with some observations on the skill sets required of researchers in executive search.

Keywords

Business information client intelligence client profile consultancy desk research executive search executive search skills headhunting intelligence gathering knowledge creation knowledge management market intelligence recruitment research sourcing intelligence

Introduction

Executive search, also known as headhunting, is about finding people for jobs (Finlay and Coverdill, 2007). Executive search firms specialize in finding and recruiting the most suitable individuals for senior managerial or board-level vacancies (e.g. non-executive director, university vice-chancellor, chief executive officer (CEO), chief financial officer, chief risk officer, chief information officer and chief operating officer). The sector is a mix of around 20 large, established players, such as Odgers Berndtson, Korn/Ferry, Heidrick & Struggles, Spencer Stuart, Russell Reynolds and Egon Zehnder, with multimillion-dollar fee incomes, employing large numbers of search consultants and researchers, extensive international networks and industry coverage and a large number of smaller boutique firms that specialize in a few sectors (Beaverstock et al., 2012). The industry generated a total global revenue of around $10.57 billion in 2013 (Association of Executive Search Consultants, 2014).

Professionalization, as in other knowledge-intensive occupations, such as management consultancy and project management, has been a key development in executive search (Beaverstock et al., 2009; Muzio et al., 2011) and what was once an industry based on the consultant’s ‘little black book of contacts’ is now driven by a process that involves methodical analysis, planning and in-depth research in order to develop target lists of candidates who represent the best executive talent worldwide for a particular position. We see this in Pielow’s (2010) summary of the executive search process overleaf (Figure 1).

Figure 1.

Ten steps of the executive search process (Pielow, 2010).

We can be in no doubt, therefore, that the 21st-century executive search firm ‘runs on information’ (Association of Executive Search Consultants, ND), where provision of market intelligence is crucial in ensuring consultants make suitable decisions and deliver advice, knowledge and talent to clients. Bulkley and van Alstyne note this with their conclusion that ‘better access to specific information … is likely to lead to more effective framing of client-candidate negotiations … [and] … more candidates, timely recognition of opportunities, referrals and … sales’ (2006, p. 8). In the light of the increasing importance attached to market intelligence in executive search, this article focuses on the specific types of intelligence required by executive search consultants and the ways in which that intelligence is found. The article is based on interviews with researchers in the executive search industry, in addition to the author’s experiences gained from working in the sector.

What market intelligence is needed?

The scope of research needs in executive search is broad, as we see in Table 1.

Table 1.

Overview of market intelligence needs.

Market, sector and economic trends	Synthesized overviews of industry trends, for example, regulatory changes, changing role of technology and wider economic developments. Industry drivers and dynamics. Hiring trends.
Companies	Target companies for business development campaigns. Company/client analysis. Visibility of companies in the press, for example, key business issues and management changes. How companies are perceived in the market. Financial performance, including share price performance and analyst views. Profiles of board and executive committees. Competitive benchmarking/league tables. Company structures, organizational structure, product offering, number of employees, relationships and culture.
People	Candidate/people moves (e.g. who has joined or left which firm?). Executives’ strengths, weaknesses, backgrounds and compensation; to whom does the post-holder report? Team size; budgetary responsibility.

How is market intelligence acquired? Who you know versus what you know

The diversity of the intelligence required means the nature of the research requests can vary, ranging from basic information gathering to bespoke market mapping involving telephone research and creating organizational charts. This, as a result, means a diversity of sources are available –for example, published information located through databases, company websites and the business press as well as information unavailable through published sources that can only be gleaned from networking with key sources and decision-makers in the wider marketplace.

Desk research plays a critical component in building a detailed picture of a client for a fee earner. Preparation of a client analysis is a good example in this context, as it is a core element of the pitch preparation process. It helps the consultant demonstrate a deep understanding of the client’s priorities and challenges and also provides insight that helps the consultant in tailoring the executive search firm’s services to the client. Thus, client analysis will look at the client’s challenges and opportunities and key industry issues likely to affect their longer term goals (e.g. how do industry trends and drivers affect the sort of leaders they will require; are there any skills gaps at board level that need to be filled to ensure a positive response to future challenges, for instance, around regulatory and technological developments etc?). Consultants will also request a briefing document consisting of client’s financials, press/media coverage, market positioning and market messages, people moves and recent hires, biographies of executive team and board, client base and size and structure of the business. An analyst supporting this process needs to integrate various sources, such as press searches, analyst reports and investor presentations, the company’s annual report and so on, into an easily digestible profile of the client.

Desk research also plays a key role at the beginning of the search process as it helps understanding the hiring company and wider sector in which it operates. Both are critical in aiding researchers when pitching the role to a candidate, as one senior researcher working in health care observed:

I read the company’s annual report to see how the company has performed financially, how they have performed against the competition, the type of organization they are (e.g. state or public body), the market space in which they operate, are they expanding internationally, are they expanding aggressively? Once I understand the client and the market space I can then talk about the job [with a candidate] – example, let me tell you about what the organization does, why this job is available and how you fit in. This helps the candidate feel that they would be part of something.

When it comes to identifying target companies and candidates, desk research can be sufficient in industries where candidates may already be highly visible. As a senior researcher observed:

If I’m looking for a chairman of an audit committee and PLC experience and sector knowledge are required, then I need to do desk research to put together a target list of companies and then go through these companies and list the relevant people. In a typical search, I will use Boardex, as it lists all public companies, all directors and their career histories … and I can also find a lot of the relevant people, for instance, on company websites.

Another researcher, however, took the view that speaking with the client can prove valuable in understanding industry dynamics and ensuring suitable companies are identified, that is, critical elements in ensuring the search is targeted and robust:

We began [the search] by talking to the client so that we could find out their operational requirements … and understand the industry. This, as a result, helped us to identify the types of companies we would need to target.

Desk research may only provide part of the picture, and material needed to aid understanding may be scarce. One researcher noted how, in these situations, one simply has to pick up the phone and speak to those in the market:

Some days I’m constantly hitting the phone [talking to sources] … due to limited visibility of market and client intelligence or, frankly, if I need to enhance my understanding of a particular market [that is not readily available through published material].

Another senior researcher echoed this sentiment, describing how, during the course of a mandate, desk research yielded little intelligence of value, as the information on senior personnel in target companies was scarce – not all target companies listed their senior executives or any available information pertinent to the search was at least two years out of date. Hence, he took the view that ‘doing Boolean searches [on search engines] … is not always terribly helpful’. A significant amount of valuable intelligence, as a result, is not available purely from desk research, and any gaps that are left from desk research need to be filled by other methods, such as interviews and approaching sources and candidates directly known as sourcing. One researcher noted the value of sourcing:

Talking to people in the market is very important … as this can provide insight into how the client is perceived, the challenges faced by the client and how they can be remedied … also once you have a snapshot of the industry you can then target the personalities that would be relevant.

Leveraging internal networks, that is, liaising with colleagues internally also proves to be a valuable way for accessing relevant sources and candidates:

I find it important to talk to consultants, partners and researchers in other practices … so I ask them – so, you’ve spoken to so and so … who else should I be talking to? So there is a desire to leverage an internal network as through this there will be other candidates and sources we can leverage but don’t necessarily get access to [through our own external contacts] ….

So, is the process more about who you know or what you know? We can conclude that it is a combination of the two, rather than one over the other, as it is the integration of who and what you know that enables gaps to be filled and ensures the search process is robust and complete. One senior researcher illustrated the importance of combining who and what you know:

The requirements of the role meant that there were not many candidates in the UK with the requisite breadth and scale, which meant we had to look at target organizations globally – in other words, identify organizations [through desk research] that were of a similar scale to the client. Then there was the ‘who you know’: speaking to contacts who could point me in the right direction. I spoke to candidates and sources in Australia, New Zealand, Canada, Sweden and the Netherlands. In the end the search was a combination of who and what you know and … showing the client that we had conducted an international search.

The importance of combining both who and what you know is made all the more evident when we consider an executive search firm’s client-facing business development and marketing materials. Thought leadership papers are a crucial element in showing that the executive search firm understands the client and its market, thus ultimately demonstrating that the firm can act as the client’s trusted advisor. A typical thought paper will combine various sources, including:

the executive search consultant’s own experience,

the consultant’s ongoing experiences and interactions with clients and the market (e.g. catch up calls and business development meetings),

client feedback surveys,

interviews with decision-makers and industry experts and commentators,

previous mandates/assignments, and

desk research, that is, gathering of data and information (e.g. industry statistics) that helps identify what the competition has done and what has already been said on a specific subject. This aids the strategic positioning/angle – in other words, what can we say that is different and innovative?

The above findings show, therefore, that executive search firms are knowledge intensive and new knowledge is created constantly. We have established that the search process involves both who and what you know – what we might term ‘tacit’ and ‘explicit’ knowledge (cf. Nonaka and Takeuchi, 1995) – and we can see that new knowledge is created from the integration of the two. Let us consider, for instance, the process involved in mapping a market for a client, which involves identifying relevant companies and candidates, liaising with market sources and contacts and understanding key industry dynamics (e.g. recent trends and people moves). Nonaka and Takeuchi’s (1995) model of knowledge creation (the SECI model) is an appropriate model to apply in this context, given the dynamic nature of knowledge creation that occurs in executive search firms and the interplay between tacit and explicit knowledge. This is shown in Figure 2.

Figure 2.

Knowledge creation in executive search.

Where:

Socialization is the process of sharing tacit knowledge through shared experiences.

Externalization is the process of articulating tacit knowledge into explicit knowledge.

Combination is the process of converting explicit knowledge into more complicated and systematic sets of explicit knowledge.

Internalization is the process of embodying explicit knowledge as tacit knowledge.

Impact of market intelligence

The need for knowledge management

Executive search is a fast-paced industry, and any significant changes (e.g. candidate moves) must be kept up to date. This emphasizes the importance of having in place systems that enable the continuous updating and refreshing of market intelligence so that both researchers and fee earners stay up to date with changing priorities in the market and can refine their knowledge of important developments. User-friendly knowledge systems are of paramount importance in ensuring intelligence is captured efficiently, consistently and correctly. For executive search firms operating at a global level and with clients on a global basis, knowledge systems are important in ensuring client intelligence (e.g. which fee earner has met which contact at the client firm and the nature of their discussion) is shared and captured appropriately.

The demand for market intelligence has brought with it a need to develop, implement and maintain methods for keeping fee earners abreast of current external information (e.g. candidate moves, developments in client organizations, insights on industry trends and key companies and in highlighting appropriate potential business development opportunities). This, as a result, brings with it a need to coordinate internal and external flow, capture, sifting, collation and dissemination of relevant information to fee earners. This highlights the importance of researchers alerting fee earners to pertinent and crucial information that may need immediate attention and prioritization. In the author’s experience, a fruitful way of achieving this, especially with regard to material uncovered from desk research, can be through weekly news alerts summarizing people moves, company results, industry developments and trends (e.g. abstracts of White Papers and regulatory announcements). Researchers working on client mandates, furthermore, need to produce weekly progress reports to keep clients and fee earners abreast of new candidates, market feedback (who is (not) interested?) and additional candidates added to the search geography. We may conclude, therefore, that research staff in executive search firms act as ‘intelligent filters’ (Attfield et al., 2010), ensuring intelligence is organized and disseminated so that fee earners can digest, internalize and respond quickly.

Professionalization of research

The demand for market intelligence is also playing a role in the professionalization of research, with research staff partnering closely with fee earners and keeping them abreast of people moves, team structures, new candidates coming onto the market and developments within markets and client firms. We see that there is a clear research process, namely, taking a brief, deploying a search strategy involving specialized resources and networking with the market and refining the search strategy where necessary and presenting appropriate findings for client and fee earner. This evidence of professionalization of the research process mirrors the findings of other studies that have identified professionalization as a core theme in the executive search industry (e.g. Beaverstock et al., 2009; Muzio et al., 2011). The work undertaken by research staff in executive search firms also validates Hedin et al.’s conclusion that ‘managing business information, that is, finding the relevant data and processing it into insights that will aid growth-oriented decision-making, has become a distinct area of professional competence’ (Hedin et al., 2014, p. 8).

Some observations on skills and qualities

Readers will no doubt conclude that the activities undertaken by research staff within executive search require similar skills to research professionals in other corporate environments, namely, synthesizing information; inquisitiveness; a good understanding of using Web-based sources, such as online databases (e.g. MINT, Hemscott, Hoover’s, Boardex, LexisNexis and Factiva), when identifying candidates and target companies; a good breadth of commercial knowledge (e.g. knowing how a company functions and how respective functions link with each other); employing search strategies; and the need to acquire new subject knowledge quickly. The writing of White Papers and thought leadership/opinion pieces shows the latter point very clearly. Research staff may well be required to provide significant input to, or lead the writing of, papers on anything from cyber security to CEO succession planning, for example, subjects with which we may not be especially familiar or in which we have no formal training but are nonetheless crucial for business development.

Analytical skills are equally valuable in other contexts, whether it is the thought process behind identifying target companies (e.g. identifying companies of similar scale, revenue and industry coverage) or techniques used to analyse a client and its opportunities and challenges (e.g. SWOT analysis and competitive benchmarking). The context of executive search, therefore, corroborates other research showing that analytical principles are an important element of the information-gathering process (e.g. Patterson and Martzoukou, 2012).

Others (e.g. Nutting, 2012) have noted that technical skills are not enough in corporate environments and tailoring results that will offer the best value to the individual requesting the research is essential. The context of executive search mirrors this finding in that consultants work within very tight time pressures and when presented with findings need to grasp the key points quickly. Researchers in executive search, like their counterparts in other industries, need to cut through the clutter of material to identify salient insights for fee earners, as one senior researcher observed:

A good researcher knows how to glean out the most important information, what to use now, what to use longer term and what exactly to do with that information … you need to know how to use the information you get.

We should not overlook the importance of softer skills, however. Executive search is, by definition, a people-focused industry and so, as one senior researcher observed, ‘you need to be interested in people’. Another researcher highlighted the following qualities:

You need to be personable, engaging and have good judgement in knowing who to talk to, what to say and how you say it … understanding a candidate’s motivation is also vital.

Conclusion

This article considered the intelligence-gathering process within the context of executive search firms. We have seen that market intelligence is among executive search firms’ core offering to clients, for instance, in the form of market mapping and thought leadership, and there is no doubt that executive search firms are knowledge intensive. Given the wide range of intelligence required, the intelligence-gathering process is a hybrid activity consisting of both desk and primary research, that is, ‘who you know’ and ‘what you know’. There is a significant degree of integration of explicit knowledge (in the form of databases, analyst reports, company information and business press) with tacit knowledge (e.g. networking with key figures in the market). In light of that, therefore, it is perhaps more appropriate to see executive search as ‘not about who or what you know – but about what you can find out’, as one senior researcher puts it. Executive search consulting is, ultimately, about using both who and what you know to help solve a client’s problem.

There are a number of areas worthy of further exploration in light of this article’s findings. For example, knowledge management is an increasingly crucial activity in executive search firms, given the constant integration of structured and unstructured intelligence and creation of new knowledge on an almost daily basis. Thus, in light of the fact that delivery of actionable knowledge, insight and advice to clients is a key offering of executive search firms, further in-depth work that examines knowledge management processes and activities within executive search would complement the substantial body of literature devoted to this subject in similar environments, such as management consultancy (e.g. Powell and Ambrosini, 2012; Su and Contractor, 2011; Werr, 2012). Professionalization of the research function has also been highlighted, and further, in-depth investigation of this area would be merited, in light of the wider literature examining professionalization of the executive search industry (e.g. Beaverstock et al., 2009; Muzio et al., 2011).

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