Choosing the Right Third Sector Executive Search Firm
When choosing an executive search firm from the third sector, it is important to focus on suitability rather than on reputation; you should take into account the level of the position being filled, the size of your charity, whether you plan to make another appointment in the next two years, and whether the people you need are currently looking. Firms that appear interchangeable during a presentation show quite different behaviour when faced with these four questions.
The article discusses the various types of firms in the market and the purpose of each. If you’ve already decided on the kind of firm you require and are considering specific agencies, then the post which lists the questions to ask before appointing an agency is the more useful one.
Five kinds of firm, and what each is for
| Board practice in a large multi-sector firm | Chief executive and chair appointments at large charities, and roles needing commercial or public sector crossover | Retained, invoiced in stages | Cost, and a charity brief handled alongside much larger commercial mandates |
| Third sector search boutique | Chief executive and director roles where deep sector networks matter most | Retained, invoiced in stages | Narrower reach outside the sector, and rarely useful below director level |
| Consultancy with a dedicated charity division | Director and senior manager roles, and charities that hire across several functions | Contingency or retained, often no upfront fee | Depth varies, so check the charity division is staffed rather than badged |
| Interim and fractional provider | Cover during a search, or a defined piece of work with an end date | Day rate with a margin | Higher weekly cost, and a habit of becoming permanent by accident |
| Advertising led, sifted in house | Well known roles with a competitive salary and an active candidate pool | Advertising cost plus staff time | Reaches only people who are already looking |
The process usually begins at the top of the list and proceeds downwards until a cost that can be afforded is reached. It is better to start by considering the appointment. A chief executive position at a charity that has a well-known name and involves a complicated funding structure should be handled by a board practice or a specialist firm in the sector, whereas a director of fundraising at a charity earning a few million should not, since paying the standard board practice fees would bring about more prestige than actual outreach.
The one category that is often ignored is the third. A consultancy which has a real charity division carries out director and senior manager appointments at the level at which most charities typically recruit, and is generally able to deal with the positions either side of them. The test to carry out is whether the charity division is made up of people who work on charity roles throughout the week or whether it is merely a section on the website with a shared consultant. You should find out who is in the division and what they worked on last month.
Match the firm to the appointment, not to the brand
Four questions are a more reliable way of settling it than any credentials deck.
What is the current job of the person you are looking for? In the case where they are carrying out a similar kind of work and have no intention of changing positions, you will need a firm which carries out mapping and makes contact. When your position is well known and well paid, an advertised process will generate a large number of applicants and search additions will add to the cost without increasing the reach.
To be honest, what level is the position? In the case of appointments for chief executive or chair positions, it is worth carrying out a retained search. For a head of service or a senior manager, however, this is not necessary, and a company that considers every engagement to be a retained search is in fact selling its process rather than addressing your issue.
Will you be hiring again in two years? The majority of charities will be. In the case where the position of fundraising director is followed by that of finance manager and then by an executive assistant, a company which only deals with the board level has to begin a new relationship every time and pay for each briefing.
How much of this process can your team manage? Advertising may have the lowest fees but requires the most staff time. If no member of the charity is able to go through two hundred applications, then the savings in question are not real.
The continuing relationship question
The best reason for employing a firm with a charity division rather than one that only carries out board searches is continuity, and it is important to be exact about this point. The most time-consuming stage in any search is the initial briefing, since the consultant has to get to know the organisation from the beginning. A firm which already knows your governance, your funding structure and the way in which your board reaches decisions can begin a further search several weeks earlier than a new firm would.
The argument doesn’t hold true in all cases. When you appoint a director once every five years, there is no opportunity to establish a relationship and it makes sense to choose a specialist boutique for a one-off arrangement. However, the need for continuity is important when appointments are regular and cover a number of functions.
Commercial checks most boards skip
Any employment agency carrying on business in the UK must comply with the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003, both of which require that the terms of business should be agreed in writing before work starts and prescribe the way in which fees and information about candidates are to be handled. You should ask for these terms before the pitch, not after it; if an agency produces them only after you have already met the candidates or if they delay producing them, this is a signal to you.
Beyond that, four things are worth confirming and take one email:
- Whether or not a person is a member of the Recruitment and Employment Confederation or APSCo and whether or not they are subject to the relevant code of practice.
- With current certificates, professional indemnity and employers’ liability insurance is provided.
- The identity of the named consultant and the effects on your search if that person leaves during the process.
- The terms regarding rebates or refunds in writing are different because a free replacement, a sliding scale rebate and a full refund represent three distinct options that are all described using the same word.
Candidate data, which almost nobody asks about
A search firm deals with a large quantity of personal data concerning people who have never applied for any position, this being the aspect of executive search that is most at odds with data protection laws. The Information Commissioner’s Office has produced guidance on employment practices with regard to recruitment and selection which applies not only to employers but also to recruiters, headhunters and consultancies, relating to the entire process from advertising a vacancy right through to the deletion of candidate information and pointing out that recruitment data frequently contains sensitive information about health, diversity or criminal convictions.
Since the charity is assessed according to the way it treats people, the question of its reputation is just as important as the question of compliance. There are three points that deserve to be asked, and the answers to them are enlightening:
- Instead, request the privacy notice that they provide to candidates and not the one on their website. If they are unable to produce it quickly then they are not likely to be issuing it.
- Inquire as to how long the data of candidates they have approached who have declined is kept and on what grounds.
- Inquire of the panel as to whether the diversity monitoring data is separated out from the rest of the data that the panel sees. It ought to be, and a company which gathers the data and then passes it directly to the panel has not given the matter any proper thought.
What separates two firms that look identical
When you have three firms each with the relevant qualifications and similar fees, their qualifications have ceased to be of any use; what sets them apart is less than the boards anticipate.
It is the consultant, not the company, who secures senior positions in charities by being able to enter into a convincing dialogue with a current director regarding your organisation. You should meet the individual who will actually be carrying out the work and, if the presentation is made by someone who will then hand the responsibilities over, politely say no.
As to whether they will say no, a firm that takes on every engagement without hesitation, including those which have a salary range below the market or a job description that covers three different positions, won’t give you any difficult information later on either.
What happens when a search comes to a standstill? Simply ask: what occurs in week seven if the longlist is small? A solid response entails going back to the mapping and the brief. A poor one consists of expanding the advertising.
Where The Maine Group sits
Maine Group is a recruitment consultancy and has a special division focused on charity work called Maine Charity, which has been working with not-for-profit organisations for over 25 years. The company has been providing recruitment services to employers in London since 1987 and has five divisions dealing with charity, human resources, business support, sales and marketing, and consultancy, so a single relationship can include a director appointment together with the other positions connected to it.
The company uses the same search approach—what it terms The Maine Method—in every job situation and doesn’t limit it to board-level positions; it visits clients at their own workplaces before a search is launched; it does not charge any fees initially and provides a financial guarantee for appointments covering a period of 100 days at 100 per cent. This combination is well suited to charities that need to hire people across various areas. A charity making just one appointment for a chief executive at the top end of the sector might be better off with a specialised board practice, and we would admit that.
If you would like to discuss an appointment, please call 020 7734 7341.
Frequently asked questions
What is the distinction between an executive search firm and a recruitment agency?
Search firms target individuals who are not already applying, using a market map, and bill customers in stages even if you decide not to appoint them. Recruitment agencies advertise and make use of their existing database, and generally charge only when a placement has been made. Some consultancies apply the search method under agency terms.
What is the cost of executive search carried out by the third sector?
Retained fees are generally quoted at a rate of between 20% and 30% of the first-year salary and are billed in instalments, charity rates being generally lower than commercial rates. The contingency amounts are smaller and are paid upon placement. For interim coverage the charge is made on a per-day basis with a margin.
Would it be appropriate for a small charity to use an executive search firm?
Most of the time this is not the case when the position is below director level. Where the salary is competitive and the job is well known, advertising will be able to reach an active candidate group at only a small part of the cost. Search receives its fee when the person you need is already employed elsewhere and not seeking work.
Can a single company take on both the role of director appointments and that of providing support roles?
So, only if it has real depth in relation to those areas rather than just a charity page and a generalist consultant. The benefit is that the firm is already familiar with your organisation, which in turn saves weeks on each search after the first one.