Executive Recruiting Slow In West Michigan

December 17, 2007
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GRAND RAPIDS — The executive recruiting business in West Michigan has been slow since manufacturing began to wane here a few years ago, and some companies may have made some major hiring mistakes as a result, according to one executive recruiter.

"It all started falling apart about 2001," said John P. Sullivan, of Dunlap & Sullivan Associates.

That was when the office furniture industry first posted huge loses, and several thousand people in West Michigan — from temps and hourly employees to vice presidents — eventually lost their jobs.

"The flood of people out of work peaked in 2002 and 2003," said Sullivan. Now, he said, his business has "kind of stabilized," but, he added, "The number of assignments are definitely down from seven or eight years ago."

"We've seen a slowdown," agreed Bill Waanders of ExecuQuest Inc. "As companies try to cut costs, one way is to (try to avoid) consulting fees" for executive recruitment.

"There are more candidates on the market the last few years, so companies try to do it themselves," added Waanders, whose primary focus is on financial industries.

There is one industry in West Michigan where recruitment is brisk: health care. “There's no shortage of that," said Sullivan. He also noted that recruiting for the financial industries was also busy "until recently." Executive recruiting for retail companies has been "spotty, but OK."

He started Dunlap & Sullivan 12 years ago with a partner, who recently died. Sullivan focused on companies in manufacturing and distribution, which is still his specialty niche.

Sullivan said organizations in the health care industry tend to do their own executive recruiting, or use recruiting firms in Chicago and New York that specialize in health care professionals.

Both Sullivan and Waanders are a rare breed in West Michigan — executive recruiters who work on retainer only, unlike most local employment agencies, which will work on contingency. According to a spokesperson at Kennedy Information, which publishes The Directory of Executive Recruiters — also known as "the red book" — there is only one other retainer-only executive recruiting firm listed in Grand Rapids, besides Dunlap & Sullivan and ExecuQuest.

Sullivan said that unlike retainer-only firms, most employment agencies will take assignments on contingency. Contingency recruiters try to produce as many candidates as they can for the client company to consider, and are paid when one of them is hired, explained Sullivan. Sometimes the individual who landed the job also pays a fee to the employment agency.

Recruiters on retainer, like Sullivan and Waanders, are paid a fee regardless, and they are never working for a candidate, only for the company that pays the retainer.

Sullivan said any candidate he contacts must eventually convince Sullivan that he or she meets all of the job requirements, or the person's name will never even be presented to the client.

"The candidate has to get past me first," said Sullivan.

Sullivan said most of the assignments he gets are from companies that have retained him in the past or have been referred to him by other companies or organizations that know him. He said he generally only accepts assignments for jobs paying $80,000 or more. He has placed many CEOs, COOs, presidents, vice presidents, controllers and directors of all types. Most of his work is for corporations but he has done work for nonprofits; he once found a new superintendent for Petoskey Public Schools.

Sullivan said retainer-only executive recruiters generally charge a fee equal to about 30 percent of the position's annual cash compensation. His fee starts at around $25,000 and goes to more than $100,000 for top executives — but he guarantees his work, for five years, which he said is the longest guarantee he has ever heard of in his business. If one of his placements is fired or quits before five years, he will find another suitable person for that job, at no charge.

"It's only happened five times in 30 years, thank goodness," he said, adding that he has placed "hundreds" of candidates in executive positions.

Sullivan said an assignment can take from 100 to 200 hours from start to finish. The first step is a detailed determination of what the job is and all the specifications required of a candidate.

"I spend a lot of time with the (client) company, drawing up job specs," said Sullivan.

"When a company decides to hire a new executive, they must go through a rigorous needs analysis to describe the specific skills and background required to be successful. This is the single most critical step in the recruiting/hiring process, and it has little or nothing to do with general economic conditions. And candidates must be measured against the candidate specifications — not against other candidates who may be available or interested in the position," said Sullivan.

Next he begins the search by telephone — he said he almost never advertises an opening.

Usually the potential candidates Sullivan contacts are not looking for a job, he said, because they are satisfied with the job they have. Nonetheless, they "always" are willing to talk to him after Sullivan introduces himself on the phone as an executive recruiter.

"Well, there was one who refused to talk to me. Just one in all those years," said Sullivan.

His initial call is to ask that person if he or she can refer him to a professional in that person's field who might be willing to consider employment elsewhere. That discreetly gives the real target the opportunity to express his or her own interest, if there is any.

After a number of telephone contacts with a promising candidate who is willing to consider a job offer, he goes to meet the candidate in person, which may be anywhere in the U.S. In his busier years he said he was traveling "about 30 percent of the time."

As noted by Waanders, Sullivan said one impact of the weak economy here is a decision by some companies to cut costs by doing their own executive recruitment.

"People don't want to pay fees," said Sullivan. "They'll try everything else: advertising; ask their brother-in-law; ask around at the club; talk to their pastor."

"I'm the last resort," he said.

One company, he said, hired an executive on their own, a person Sullivan knew. "A nice guy," he said, but "a square peg in a round hole" in that job — and he did not last.

"While the demand for professional executive recruiting services is down, the need for organizations to be thorough in their selection of key managers is even more critical," said Sullivan.

"Some may look at it as a supply-demand question. They might conclude — because there are more managers and executives out of work — the selection of a new executive will be easier. The opposite is more likely.

“While there are many very capable executives and managers on the job market, it doesn't mean they will match the specific needs of the company. A talented executive in one company will not necessarily be successful in another. Different situations require different talent," he said.

One thing has changed dramatically in the search to fill executive positions.

"I've seen a huge change in the past 10 to 15 years in mobility," he said. People are far less willing to move because of taking a job somewhere else, and the No. 1 reason for that is because the candidate is married to someone who also has a professional career and does not want to give up his or her job.

Sullivan said he knows of executives who have accepted distant jobs that require a commute home every weekend.

"That works for a year, maybe," said Sullivan. Ultimately, long distance commuting on weekends "never works."

Another change is an "attitudinal factor," said Sullivan. Since the late 1980s, he said, "People are much more wary of uncertainties, at all levels." Stories are rife of individuals moving away for a better job, only to lose that job when the company is bought out by another, or downsizes, or closes.

"People are much more rooted now," said Sullivan. "I assume that's true elsewhere, but I don't know that for a fact. But they sure are rooted around here."     

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