How to Protect Your Firm from a Dead-End Retained Search (and Not Overpay)
In today’s virtual hiring climate, private equity firms are facing a unique set of hiring needs, and, living and working in the midst of a pandemic has only further complicated the hiring process. Virtual interviewing has limitations that require creative solutions; remote work calls for new technologies, strategies, and leadership styles; and a firm’s expectations versus a candidate’s current limitations aren’t necessarily aligned, which introduces fresh challenges as firms work to fill executive roles.
Challenges of Retained Search
To combat existing gaps or newly created vacancies on an executive team, many private equity firms turn to retained search to find an executive candidate replacement. The problem is—for the reasons mentioned above and a host of others—filling an open executive position often ends up taking much longer and becomes much more convoluted than a firm originally expected. This has a significant impact on firms’ bottom lines and ends up costing them a lot of lost time and productivity when they’ve put all their proverbial eggs in the “retained placement” basket.
This isn’t to say that a retained-only search isn’t ever the right option. Our clients frequently find great success placing retained executives. However, being limited to a retained search by an executive placement firm can sometimes lead to unintended consequences. One such consequence is that private equity firms can be forced to pay twice, or “double-dip,” by paying one firm for a retained search and another for an interim search.
This happens often when a private equity firm is conducting a retained candidate search and the search doesn’t produce the desired outcome within the ideal timeframe. As the search extends beyond a planned date and the firm struggles to fill an urgent vacancy, the company may rethink its strategy and seek an interim executive while they continue to conduct the original retained search. The problem? They end up paying twice: once to a firm for a retained search (because that firm only does retained search) and again to another firm for an interim search (because that firm only does interim search). The company is also forced to go through the entire search process twice, from the beginning, and waste valuable time—all while its crucial leadership role remains unfilled.
This expensive process uses an inordinate amount of resources, energy, and time—all of which could be better spent by bringing in the right executive candidate in a much smaller window of time. Thankfully, this scenario doesn’t have to happen. In fact, the team at Madison Gunn created a new model of search borne out of this problem, to ensure that it doesn’t happen.
How the Hybrid Placement Model Addresses Today’s Challenges
Madison Gunn is proud of our proprietary retained search process and the comprehensiveness we’ve created to best serve our clients—from the discovery of candidates all the way through selection and onboarding. In addition to our retained placement offerings, we’ve created a unique hybrid model of executive placement that addresses and removes the frequent obstacles we’ve seen private equity firms grappling with. Our hybrid model was designed to fill the void left from a candidate search limited by term and scope.
During a hybrid method of executive placement, our team of experts simultaneously searches for an interim resource to manage a firm’s company operations, as well as a retained executive placement—all for one fixed fee. We specialize in both interim executive and retained search, and combine our expertise to give our clients the best of both worlds. This flexible and agile method enables our team to find exactly the type of candidate the private equity firm needs, without the client being forced to make a tradeoff in terms of timeframe, use of resources, or quality of candidates. It’s a comprehensive approach designed to provide a more complete and inclusive solution for the unique challenges that private equity firms face. Plus, there’s no additional fee for clients who choose to convert their interim executive into a permanent seat. Our goal is to give our clients and candidates the flexibility to make the decisions that are best for them, independent of cost.
The entire process of finding and bringing on an interim executive—which includes an intake call, phone interviews, discussions with the client, face-to-face interviews, and an offer letter—generally takes about two weeks. By day 15, the executive is in place and ready to dive in to their temporary role.
At that point, a robust retained search immediately begins, and the chosen retained executive is typically made an offer by day 120. At the four-month mark, the retained executive starts and then works with the interim executive for their first 20 days to ensure optimal onboarding. By day 180, a firm is usually ready to have their interim resource cede control to the retained executive, whom Madison Gunn has helped to find and hire.
Interim Executives: The Unsung Heroes of Leadership Teams
In these uncertain times, a hybrid executive search model enables firms to cast the widest net to find the best candidate for their changing needs. Under the hybrid model, our clients don’t have to wonder whether a retained or an interim search would best fit their needs, since we conduct both types simultaneously and charge a single flat fee. And, there’s no additional cost to a client who chooses to turn an interim executive into a permanent replacement. Even if a firm wants a retained search and believes it’s what they need, running an interim executive search at the same time gives them the option to fulfill an immediate hiring need.
While you may only be considering a permanent solution for an executive hiring need, it’s smart to think about bringing on an interim resource while your retained search is ongoing. Interim executives are highly capable of taking on financial and operational challenges quickly and efficiently. These types of executives are able to manage your firm’s financial operations and reporting, execute strategic priorities, and navigate specific critical business events while you’re focusing on finding a permanent replacement—and they also can help you bring on the best permanent retained executive.
In addition, interim placements often help to define job scope, assist in the interview process, and are there to help onboard the permanent replacement to ensure a smooth transition. Interim executives are highly skilled in these types of duties and their industry-neutral skills allow them to bring stability and order to a fluctuating workplace. They’re also W-2 employees of Madison Gunn, so we handle the employment details, enabling our clients to focus on finding and hiring a permanent executive.
Although your firm may only be thinking about a permanent solution, consider the many benefits of adding interim resources to your executive placement process. We’ve found that many private equity firms aren’t aware that they need an interim resource until they realize what this type of executive can do to ensure a smooth transition—and then they’re not sure how they went so long without one.
Today, more than ever, you need the ability to be fluid and flexible about the types of candidates you seek when immediate needs arise. Sometimes, a retained executive search is the right choice. Sometimes, an interim executive search is the best way to go. And sometimes, it’s a blend of both. You can count on Madison Gunn’s experts to work with you to determine which method will give you the best possible outcome—every time.