Insiders’ View of the world of headhunting

[Unfortunately such is the sensitivity of the head-hunting profession that it is rarely possible that the names of the Insiders’ clients can be divulged.]

Just checking we are paying our senior people enough

In the last column I related how I was given an interesting research project by a new client who believed it was under attack from other companies in its sector. It sought to highlight the pay packages of people at its peers working at the group board level and those at regional board level. The objective was to identify their long term incentive plans (LTIP) and to ensure their own people’s packages were competitive.

Having earlier identified the target individuals to contact it was time to begin making phone calls to them after lunch when we know the senior group board people will have likely cleared their desks of emails and made any urgent calls. By 8pm when we’d hoped to have contacted half of those on our list we’d made no contact with anybody at all.

A call from the client was fraught as we’d clearly made very little progress. They were nervous about our capabilities – despite knowing that our task was always going to be tougher than we’d ever envisaged. We’d been commissioned out-of-sector, with the client company operating in the construction industry. Little did we know that there were effectively only two key head-hunters in this sector, which meant most senior people had no reason to return calls to an unknown operator like us! And for less senior individuals their next job came from a chat down the pub with their mates rather than with a head-hunter.

Still in the dark about all this, a conference call was convened with the senior parties at the client who was keen to find out exactly how we were contacting the targeted individuals. We made the decision after the call to change tack somewhat and go for the regional board people. Hey presto, we had more success and started having conversations, but even then it was clear that people in this industry were uncomfortable talking to head-hunters about personal information. What was also surprising was the number who did not know the details of their packages.

Under extreme pressure, as we’d taken on the job and wanted to complete it successfully and had a planned conference call with the client on Friday, we managed to make sufficient progress with all the people we needed to contact – at the regional board level.

Are you following?

For the group board level people we decided to gather the information from their company’s annual reports. We had to call on our accountant for help as the complexity of some of the LTIPs was staggering. Even a Chartered Accountant struggled to decipher the underlying packages.

We had a clear enough picture of the group level packages, combined with the interviews from the regional directors, to compare our client’s incentives arrangements versus the rest of the construction sector. The outcome was that they are all tied into incentive agreements paying tens of millions of pounds over the next 10 years. Their employers had looked at their key executives post-recession and sought to tie them in for a few years when it was hoped they would contribute during a period of returned growth.

What we found was the incentive packages in this sector are enormous when compared to others including retail and hospitality. And critically as a head-hunter it was interesting to see how the construction sector does not freely return calls. The reason I guess is that they typically don’t have any interaction with an end-customer so the senior figures are in the main not used to communicating with people who they don’t know. It was an interesting – if somewhat pressured – assignment that highlighted how very different it can be dealing with individuals in different sectors.