Research on Growth Situation, Problems and Countermeasures of Executive Search Firms in China
Liu Meifen
School of Finance, ShandongPolytechnicUniversity,Jinan, China, 250100
Abstract: Executive search firms themselves are human resources consultant companies, providing consulting services for enterprises and searching senior managers and technical personnel. In this article, we have summarized the present situation of executive search firms in China and offered some suggestions.
Keywords:search;executive search firms; search industry; senior managers
1 Introduction
In the highly competitive job market, those job fairs, job sites, media advertising and other information provided in the form of recruitment, have been far from satisfying the needs of businesses and professionals. Therefore, executive search firms generated.
2 Executive Search Firms
Executive search firms are "hunting" company as the goal of talents. Here, they are not real hunters in the traditional sense with a shotgun or a spear to the mountains and remote places to find the beast, but the ones with their own wisdom and modern Internet technology professionals in the world market to search for the ideal human resources. After World War II, the United States as one of the major victors, spared no effort in defeated countries to collect not only machines, weapons and other "hardware", but also the advanced technology and other "software", especially elite talents who mastered the advanced technology. At that time, American way of talent search generally was that they found the target first, and then used various means until the target was captured. This process was like jungle hunting, so called search. With the rapid development of economics, companies want through professional ways to search for top talents to solve the manpower shortage, and high-level talents want new jobs that have more space for development and better treatment, so executive search firms are taking on an important role.
2.1 Maximize the value of individual talent
The greatest waste of human resources is that human resources are not rationally used. Executive search firms form a visible talent market which highlights the supply and demand of human resources and makes human resources to be a reasonable configuration, so that people get a bigger stage to play, reflecting the talent of their own values and respect for human beings; while the companythat has been huntedare awakening as soon as possible, to take measures to keep people, to establish a sound mechanism to keep professionals.
2.2 Help companies find the right people
Companies in the recruitment of senior personnel, if operating improperly, will more or less expose business secrets, and recruitment will take a very high cost. Executive search firms have a wealth of talent information resources in the market, so they can quietly find the target groups needed for enterprises. And because executive search firms understand the market conditions of senior personnel, they can provide enterprises with the level of salary payments and other proposals, and in consultation between the enterprise and talent, help to achieve labor intention. Therefore, the recruitment of high-level positions by the use of executive search firms will save more time and money, while reduce the risk of certain recruitment.
2.3 Expand the capacity of Human Resources Departmentin the enterprise
Executive search firms themselves are human resources consulting firms whose hunters are rich in human resource management practices and project experience. Many major executive search firms put emphasis on the executive search business, human resource management consulting, talent assessment, career development and planning of human resources in the field of consulting services. Executive search firms help clients in program design, project feasibility studies, market decision-making consultation, diagnosis and management of market research and analysis; help clients make recommendations on the employment of program design; provide clients with short-term employment of personnel; handle the relevant procedures and provide pre-service training, which greatly expand the limited resources of the Human Resources Department work.
3 Developments of Executive Search Firms in China
Executive search firms in foreign countries have been developed for decades, while entering our country not long ago. Wearnes Electronics Shenyang Ltd. invested by Singapore in June 1992, set up search department, which created a precedent for Chinese search industry and was considered China's burgeoning executive search. This department specialized in local recruitment for foreign companies, but soon died. In March 1993, the first executive search firm named Beijing Taylor search consulting firm which had independent legal personality was born. Subsequently, the search industry has rapidly developed, currently there are more than 3,000 companies involved in executive search business, mainly in Beijing, Tianjin, Shanghai, Nanjing, Shenzhen, Guangzhou and some other economically developed cities.
The development of the executive search industry in China has experienced three periods. The first period is form the early 1990s to 1998.At this stage with a large number of foreign companies into China they are in urgent need of a large number of high -level personnel. In order to meet the demand the domestic first professional executive search firms produced, although in this time orders are not many, but executive search firms have relatively high profit, this stage is to become the executive search industry's golden age. The second period is from 1998 to the beginning of this century, the search industry has huge profits, so many consulting firms swarm. At this stage professional service capabilities diluted, to grab search orders and gain market share most of executive search firms charge relatively low fees, so the entire search market was in chaos. While the Asian financial crisis, some of the executive search firms were forced to withdraw from the market. The third period is from 2002 to the present, Royal Information Company California, USA worked with an executive search firm in Nanjing, which meant that the world's leading executive search firms began to enter China and split China cake. The Chinese search industry has entered a period of fierce competition.
Currently, from the size and business perspective, executive search firms in the domestic market have three major camps:
The first camp: transnational executive search firms, such as Korn / Ferry International, Heidrick & Struggle, Egon Zehnder, Spencer Stuart, Manpower, China Team International, JOBBANK, TMP, ONSTER and so on. The transnational executive search firms formed a joint venture in China, or set up branches, primarily serving for Fortune 500 and multinational companies to look for senior managers. These executive search firms are China's high-end executive search firms. But as the search service fee is relatively high, China's domestic enterprises are difficult to accept, so these transnational executive search firms in the domestic market share are not high.
The second camp: local executive search firms, such as Taylor, Bang Wei and so on. These local executive search firms are medium-sized and taking the intensive course. These executive search firms generally have dozens of expert consultants who are more experienced. Daily operations in these firms are more standardized. These firms have built up their own talent pool, and have been rooted in several industries they are familiar with. These firms have a clear customer orientation, and their service quality is guaranteed. Therefore, these firms in the search industry have a certain reputation, and are the leaders of search industry.
The third camp: speculative executive search firms. These executive search firms are small-scale and poor professional. These executive search firms accounted for the majority of local search industry. Service quality of such firms is not guaranteed. Such firms are mainly engaged in low-end jobs talent search, not limited to industry. These executive search firms do all sorts of orders, so they are largely affected by the market and customers. These executive search firms do not accept pre-payment, and charge until the business is done. Personal experience, talents and contacts of consultants can become very important to these executive search firms, to some extent even determine whether they can become gradually stronger in the competition, whether they can promote to the second camp.
4 Problems in the Development of Executive Search Firms in China
Most domestic executive search firms have established for a relatively short time, so there are many immature places in the following areas:
4.1 No access rules
As the executive search firms can create high profits, many people realize that money to be made. And access to the hardware threshold of the search industry is relatively low; so many people blindly follow the trend. A variety of consulting companies and intermediary institutions have been involved in executive search business, resulting in many companies short life.
4.2 No clear line regulation
Many executive search firms rely entirely on the experience and awareness in the business, but to provide information. Many executive search firms can not do deep search service, do not search for competitive intelligence research and industry analysis, and do not use the talent assessment tools, which seriously affected the reputation of the search industry.
4.3Low level of operation
Many executive search firms retain only at the primary level. They lack executive search professionals and material resources. They lack detailed classification of talent storage room and search channels. They lack a full search mode of operation. They lack a scientific talent analysis system and a talent search service system.
4.4Lack of good searches
Many searches are without solid foundation, good quality, good professional background, a reasonable knowledge structure and related experience; at the same time their ability to communicate with senior managers is not strong.
4.5Receiving orders blindly
The objects of executive search firms are the senior managers and senior technical staff. But the objects of some executive search firms are low positions whose annual income is less than 50,000 Yuan.
4.6Hostile competition
In order to grab orders, some executive search firms charge very low fees and some executive search firms do not charge the deposit. Even some executive search firms snatch senior personnel who another executive search firms have identified.
5Countermeasuresabout the Development of Executive Search Firmsin China
Executive search firms have a considerable room for development because they are facing a very large domestic market. In this environment, executive search firms should make up for their shortcomings, gain the trust of customers and provide excellent services to customers. So we propose here the following recommendations:
5.1 Operate normatively
The services executive search firms provide should be market-oriented, in line with modern marketing theory, the same as the general companies selling products. Executive search firms should be based on market demand to provide services, give customers the specialized talents needed. For qualified executive search firms, they should operate strictly in accordance with the operation of the international standardization process to search. In general, comprehensive executive search services include the following steps:
5.1.1 Determine the needs
In order to effectively understand customers’ needs, the executive search firms will understand and appreciate their background, culture, teamwork, employee relations, management style, corporate strategy and future development planning, usually by means of communication, field trips and even sending someone to the customers working for some time, etc. In a thorough understanding, the executive search firms will conduct a hunting job analysis, and then together with customers develop hunting job responsibilities, qualifications and the corresponding remuneration. In this process, executive search firms should make their own professional views to customers. It is essential that the two sides reach a consensus. After that, the executive search firms will issue a search project proposal report, including project understanding, needs analysis, search planning, human resources advice and charges.
5.1.2 Search talents
After the conditions such as responsibilities at work and the quality of the ideal person are identified, the executive search firms can begin searching for talents. At this time, the executive search firms usually search for talents from the large talent database they have established to find basic match of talents. If in the current database executive search firms can not find the talents to the relevant requirements, they will turn to corporate libraries, aim at similar companies in similar jobs objectives, and then determine the primary candidates.
5.1.3 Select talents
It is very important that the executive search firms carefully assess the ability and the value of the candidates after they find candidates. Through a series of assessment, the executive search firms will find two or three excellent candidates who are recommended to the customer, selected by the customer.
5.1.4 Help them arrive in theagreement
Throughout the negotiation process of the customer and candidates, the executive search firms should work with the customer and candidates, providing help for both sides, until both sides reach an agreement.
5.1.5 Improve service
After candidates and customers arriving in the agreement, the executive search firms will give after-sale tracking service for employers and employees to solve some of the difficulties and obstacles, such as the resignation of the candidates, the trial run. By this way the executive search firms can ensure the successful completion of the recruitment process and candidates’ reporting for duty across the enterprise transition.
5.2Improve the rules
International Association of Executive Search has been drafted, developed a special unspoken rules of search industry, mainly for the following:
5.2.1Minimum salary rules
In the U.S., the target positions that the executive search firms serve are not less than $ 50,000 annual salary, or only part of talents intermediary market, rather than the search market.
5.2.2 One-way charging rules
The executive search firms only charge customers’ commissions, not charge any fee from the recommended candidates.
5.2.3Deposit rebate rules
When the executive search firm and the customer sign a commission contract, the customer must pay 30% of the total contract amount as deposit. The executive search firm will no longer return the deposit, even if the executive search firm can not complete the search task within the specified time, or the customer is still not satisfied with the candidate after the trial period and do not accept the second candidate.
5.2.4Commission rules
The commission of the executive search firms is equal to 30% of the candidate’s annual salary in the first year, not less than 20%. If you reduce the percentage of commission, the executive search firms in order to save the cost will eliminate some of the steps, thereby resulting in a decline in service capacity and making the executive search firms lose credibility.
These unspoken rules have been implemented on a global scale, but in the Chinese market have not been widely recognized. In order to conform with the world level, our domestic executive search firms should join together to form an industry self-discipline Committee that is responsible for developing industry rules according to Chinese national conditions and economic development in various regions, monitoring the activities of the various executive search firms, assisting national authorities to review the registering executive search firms, coordinating conflicts of the executive search firms. So that search industry can develop orderly.
5.3 Establish information management system
An efficient information management system is one of the most important resources for the executive search firms. An information management system should include the detailed information of famous executives in the world-renowned enterprises, especially the senior technical personnel in the high-tech enterprises. In addition to relevant high-level data, the information management system can be performed on the data collection and analysis so as to put forward some valuable suggestion to the senior managers of some companies. Only with a national and even worldwide information management system, it will become easier when the executive search firms work for customers. The information source of an information management system is very wide. We can hold manpower resource Forum; we can participate in a number of senior clubs; we can attend seminars, large-scale business activities or social activities; we can send out a talent search teams throughout the country to collect senior personnel information.