Pick the Right Search Firm.

Featured in Business Insurance

You are an independent insurance agency owner faced with today’s grow or perish “environment”.  You understand that to succeed in this market, you must attract, recruit, and retain the top employee talent available. The end result is that you are working with an executive search firm to locate a producer, chief financial officer, or other top-level position, and you find yourself wondering, how do I manage the relationship?

     As the owner of an executive search firm that specializes in risk and insurance management recruiting, I am frequently asked this very question. My answer is simple. First of all, it is important to understand that the goals of both the executive search firm and the agency are the same. After you have come to this realization, you can work on becoming what search experts refer to as a “smart client”.

     Let’s first establish that your end goals are truly the same, and then I will cover seven simple steps that will put you on the road to becoming a smart client. To establish that both parties have identical goals, we need to look at the reality of the situation. Both parties want an executive who can be successful and who has upside potential, and both parties want the insurance brokerage client to be satisfied, as this will create future search assignments.

1. Pick the right search firm.   Do your homework up front. Does the search firm have an expertise in your field? Look carefully; insurance company experience does not necessarily carry over to the brokerage community and vice versa. Does the firm have a history of recruiting in you geographic area? Does the firm have a large number of other client relationships that will prevent it from recruiting at the companies you deem desirable? Most firms have a hands-off policy for one to two years after last working with a client. Have the firm supply a list of satisfied clients and candidates. Ask for a company history, a staff review, and an ethics statement. Most importantly, understand who at the search firm will be conducting the work. Did you buy the services of a senior partner only to get a junior recruiter?
2. Agree to and sign a fair proposal.   This will protect both sides. It will spell out both the search firm’s fee schedule and its guarantee period. If you are a first time client, a letter of engagement should accompany this document, outlining how the work will proceed and estimating timetables.Consider two important points here. First, move to negotiate and sign a fair proposal quickly, so that the search firm will view you as serious about the project and as a capable employer. Second, understand the level of the search; don’t look to pay the same fee or percentage for the recruitment of a Senior VP as you would for a lower-level staff position. It’s not the same process. The agreement also should indicate a high degree of responsiveness and candor on both sides. Finally, note that a win, win agreement will motivate the search firm to try to do business with you. You will be made aware of the local talent pool before other employers and prior to top talent making its next move.
3. Establish goals, not job descriptions.  Meet with and talk to you search firm about the goals you would like this position to encompass. Use the search firm’s expertise in the local market to help you define and create specifications. This will ensure they understand critical issues. For example, say the insurance agency needs a senior Account Executive VP. A number of insurance brokers have their account executives act as the senior technical resource, while others view this as strictly a production position. If this difference is not established early, you will have wasted time, energy and money. The search firm also can help most brokers avoid a sometimes critical mistake at this point, one where the employer looks only for candidates in his or her own image. Most successful managers and owners have a strong egos and thus believe they can handle any position within their firms. For this reason, they sometimes tend to look for mirror images of themselves in senior search assignments. The search firm will draw on its experience to point out that different positions take different personalities and traits, thus helping to ensure a successful hire.
4. Give full disclosure. Be honest about your company’s position. Did the incumbent retire, decide to leave the brokerage on his or her own, or was she or she released? Whatever the case, why did it happen? The insurance brokerage industry is a small world, and ultimately, the recruiter will be asked to address these issues by prospective candidates. It is best to be upfront; this will give the recruiter the information needed to make a full and logical presentation to qualified candidates. Top-level candidates will feel manipulated if they are not dealt with honestly, which will result in a lower success rate when presenting offers. Think of it this way; you, as the brokerage owner or manager, would not want a potential new producer to misrepresent his or her book of business, similarly, the producer will look for an honest overview of the structure and traits of your agency.
5. Have the search firm get to know you. Invest the time to have the search understand your company culture. Does your agency view itself as a consulting firm or as a straight broker of business? Does your agency target small, mid-or large size accounts? Does your agency focus mainly on P&C or Group coverage? Have you developed niche programs that separate you from the competition? Can you compete on a national or international level? What makes you stand out against your competition?This process of getting to know your company can be accomplished only by having the search firm meet with various department heads, such as your sales manager, marketing manager, group manager, and most importantly, your human resource manager. I’ve seen a number of searches go bad due to poor working relationships at this level. The knowledge gained through this process will enable the search firm to create an attractive “sales plan” that can be presented to qualified candidates. Note that as search firms are moving quickly into specialization, you can also use these firms to learn about your marketplace. In other words, it’s smart to keep the lines of communication open.Create a partnership during the process. In short, take joint responsibility for the successful completion of the search. Move quickly to review each candidate, make time for a potential meetings, and put your best foot forward during the initial interviews. Remember that the search firm contacted these candidates; they did not answer a classified ad, and that they are most likely happy with their current situations. Thus, they need to be sold just like a new account. Give the search firm timely in-depth feedback on each candidate, and don’t let candidates dangle. When it is applicable, narrow the list of candidates and refocus on their core skills…this will take you to your most qualified prospect. 
6. Close the deal. Remember, the recruiter can interest the candidate, bring them to your door, and even sell your company along the way. But in the end, it’s you, the employer that must close the deal. Search firms will try to align themselves with agencies that have a clear vision of what they want to accomplish and the mettle to get it done.