They’re pricey, sure, but headhunters can help shift your growth plan into overdrive. It’s time to kick it up a notch. You’ve got five stores and you want 20 more, but you’re smart enough to know your own limits. It’s time to scour the industry for a seasoned restaurant pro, someone who can shepherd your chain to the next level, because they’ve been there before.
It might be time to hunt for a headhunter. Executive search firms, as they prefer to be called, are part talent scout, part dating service. “Theywant to match the right person for the right seat on the right bus,” says Julie Carruthers. She used search firms for years at California Pizza Kitchen, before one recruited her as senior director of organizational development with the 520-store Coffee Bean & Tea Leaf in Los Angeles.
Get ready for sticker shock. Scouting out new team members could run you tens of thousands of dollars, before you’ve paid a cent in salary.
Fees are typically a percentage of the first-year salary and bonus. And percentages have risen in recent years, recruiters say, as competition for restaurant talent gets more intense. They run from 15 percent for store-level managers to 20 to 25 percent for middle management, and up to 33 percent at the top. A CEO earning $400,000, with a $100,000 bonus, could net as much as $165,000 for a headhunter, while a lowly unit manager could still cost $5,000 to $10,000.
But recruiters at many restaurant chains say headhunters pay off, if you use them only to fill the most critical jobs.
“The fees can be astronomical,” says Regan Cowan, recruiting manager for P.F. Chang’s China Bistro Inc. in Scottsdale, Arizona, who oversees 157 restaurants. “If I go to search firms and pay a fee, it’s because they can access pools of people I can’t access.”
Warren Boone, human resources director for 60-unit Islands Restaurants in Carlsbad, California, exhausts his in-house recruiters first. “If we don’t draw any interest, that’s when we reach out to an executive search firm,” says Boone. “The executive search firm brings people we don’t know, who may bring more to the table.”
In particular, a headhunter can sniff out prospects who don’t show up on traditional job boards, because they aren’t looking for work.
“We’re typically reaching out to what I would call passive candidates,” says John Hawes, senior executive recruiter for search firm The Lucas Group in Atlanta. “Sometimes the best people are the ones who have their heads down, who are well-regarded where they work.
“We can call directly into a company. It’s difficult for in-house recruiters to do that. They have agreements to stay out of each other’s backyards.”
For a small chain, manpower is another reason to outsource a high-level search. At Lawry’s Restaurants Inc., in Pasadena, California, with 10 units, human resources manager Tiffany Stith runs a department of two. “Recruiting is a large part of what we do, but it probably gets 20 percent of our time,” she says. “Sometimes, you need extra support to bolster your own efforts.”
Whatever the path that leads you to a headhunter, the search process itself is largely the same. It starts by getting into someone’s head—yours.
“We need to know as much as we can about the company, the position and the client’s desired qualities for the search,” says Chris Von Der Ahe, senior client partner in the Los Angeles office of search firm Korn Ferry International. “We make sure we meet with the CEO and directors of other functional areas. It’s important to understand the culture of the company. Our research has shown that most people leave a company because they don’t fit into the culture.”
The central step is working the phones. The headhunter calls contacts throughout the industry, gathering names and backgrounds of possible candidates. Once the searcher narrows in on a likely prospect, they’ll cold-call them at work.
“We try to give them as little information on the initial call as possible,” says Clint Fletcher, senior manager at search firm Pioneer Staffing in DeSoto, Texas. “We’ll tell you the type of restaurant, the compensation and benefits and the growth potential, the key factors that the ‘A’ players want to hear.”
If the exec nibbles at the bait, it’s the recruiter’s turn to ask questions, plumbing not just the resume but the elusive quality called “fit.” Von Der Ahe figures he’s doing well if 100 calls produce six or seven likely fits.
The goal, after reference and background checks, is to submit two to five prospects, each a potential slam dunk. “We never present anyone to a client we don’t believe is capable of doing the job,” says Joan Ray, executive vice president of Elliot Associates in Alpharetta, Georgia. “Then it becomes a matter of chemistry.”
The headhunter’s work doesn’t stop once your interviews start. Ray keeps tabs on both candidate and client, and often negotiates the final job offer. “Sometimes it’s the end that is the most difficult,” she says. “We want the client to make a great offer the candidate will enthusiastically accept, and remain strong through the expected counteroffer by the candidate’s company.”
The search firm has its own interest in clinching the deal: getting paid. Top-tier shops, like Elliot and Korn Ferry, collect a third of their fee up-front, as a retainer. They’ll receive the second third after 30 days and the remainder at the end. Other firms work on contingency, meaning they get their fee only if one of their candidates gets hired.
“We just consider it a cost of doing business with that person for the first year,” says Boone. “Hopefully, if you bring in a guy like that, you’ll see a return on investment in the first six months.”
The real ROI, of course, is knowing that you’ve found the best person for the job, says Clive Solomon, managing partner of search firm Recipe for Success in Ft. Lauderdale, Florida. Says Soloman, “If you can determine the search firm can produce a better quality hire, though on the surface the cost may be higher, you’re going to get someone who contributes more to your company.”
5 things to ask a headhunter
Haven’t used one before? Start by quizzing colleagues at other chains who they recommend. By joining the Association of Hospitality Recruiting Executives (www.ahre.org), you can send out one query and get lots of responses from other members. Once you get past the obvious topics, like fees, here are five questions you shouldn’t miss:
- What’s your niche? Elliot and Korn Ferry specialize in “C-Level” searches, like CEOs and CFOs. Lucas focuses on mid- to senior-level titles, while Pioneer goes from store managers up to veeps. Fees run higher for higher niches.
- Who are your prior clients? Look for lots of restaurant experience, but few direct competitors, who might be off-limits for their calls.
- Who will I be dealing with? Your contact at the firm should be the person actually running the search.
- How do you source your candidates? Anyone can keep a database or collect resumes. The best headhunters work the phones and network at industry events, or put on their own.
- What’s your guarantee? You won’t get your money back, but most firms offer a free replacement search if the new hire doesn’t work out. Guarantees can be as short as 90 days or as long as a year.
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