A closer look at executive recruiting

At first glance, 2010 should be the golden age of the executive search. When restaurant chains around the country are shutting doors and laying off seasoned managers, it ought to be easy pickings to recruit top talent for your up-and-coming concept.

Not as simple as it looks, say restaurant recruiters and executive search professionals. You might get inundated with resumes, but that makes it harder to pick out the outstanding ones. Says recruiting consultant Clive Solomon of Ft. Lauderdale, Florida, “It can be easier these days to find your Prince or Princess Charming, but only after you’ve kissed a lot of frogs.”

Recession or no, finding the right candidate will cost you, in cash spent on headhunters or in time spent networking. The good news is that it’s never been more practical to mount an executive search on your own. Just as the Internet has leveled the playing field between mom-and-pop retailers and Wal-Marts, it offers small restaurant groups capabilities that once belonged only to mega-chains and specialized search firms.

“There are restaurant companies that are really leveraging the recession,” says Shyam Patel, COO of the People Report, a Dallas analytics firm that tracks service workers. “Smart companies have aligned their recruiting strategies to raise their bars and make sure they’re picking up the talent that’s out there.”

This wealth of new recruitment tools can create a confusing array of choices. When does it make sense to hire a headhunter? When is it better to cast your own net? What part should old-school search strategies play in the age of Twitter? And what are the signs that it’s time to seek management from outside?

How about a headhunter?

Like restaurants themselves, search firms have been stung by the recession. Some have closed their doors, as foodservice operators do more of their own searches for low-level managers. But when a chain needs a vice president or above, professional recruiters are still earning their fees.

Those fees are hefty. A senior management search typically costs a percentage of your new hire’s cash compensation for their first year. A new CEO or CFO will probably run you 30 percent. If the job pays $120,000 a year plus $20,000 in bonuses, you’ll pay $42,000 to the firm that helped you fill it.

But headhunters have to be flexible right now, and many will negotiate lower rates, especially if a chain contracts for multiple searches. “Most individuals I’ve worked with have reduced their fees to continue to have a relationship,” says Steve Silvey, director of recruiting for 57-unit Islands Restaurants of Brea, California.

When is a search firm worth the price? When it can unearth talent you’re not likely to reach on your own. If you’re running a confidential search, or if legal restrictions forbid calling into a competing company, a third party can make contacts you can’t.

The more specific your needs, the more you might need a search specialist. John Hawes, senior executive search consultant with The Lucas Group in Irvine, California, was recently asked to recruit a vice president of operations who could become president or chief operating officer in five years. Says Hawes, “That means going out and surgically pulling someone out of another organization, where they’ve had that kind of experience.”

Where search firms excel is at digging up passive candidates, execs who aren’t looking but might change jobs if the right opportunity comes their way. “We’re looking for the person who has no compelling reason to make a change,” says Ray, “the person who already has a good job and a demonstrated track record.”

Despite the Internet revolution, her basic tool is still the telephone. She dials executives she knows, describes the job and the ideal person to fill it, and asks for referrals. One degree of separation leads to another, and it’s not unusual for a headhunter to make 150 to 200 calls to end up with five prospects.

A crucial part of the call is to probe an executive’s career goals, as well what it would take for them to move. “What people are looking for today is stability,” says search consultant Patti Casas of Laguna Beach, California, “solid companies that are showing growth and not losses. They’re more focused on future rewards than immediate rewards.”

That information comes in handy when you’re ready to make an offer. A headhunter’s job often includes crafting the employment package. And just in case your candidate’s old employer makes a counteroffer, the headhunter sticks around to make sure he says, “No.”

When to seek out outside talent

Recruitment experts note three sorts of situations that trigger executive searches in a small restaurant chain:

  • 1. Private equity buys in. “If investor capital is coming into the concept, there’s an expectation to get from Point A to Point B in a defined period of time,” says Joan Ray, executive vice president of search firm Elliot Associates in Alpharetta, Georgia. “There’s a thought that we should bring someone in who already knows how to do it.”
  • 2. Numbers are lagging the competition. “If same-store sales are growing 2 percent at your competitors, and you’re down 6 percent, something is wrong,” says Chris Von Der Ahe, senior client partner with search firm Korn Ferry International in Los Angeles. “You assess in which areas you’re weak and look for people to strengthen them.”
  • 3. The chain needs broader experience in marketing or finance, which is often found in firms outside the restaurant industry. “There might be other industries that do a better job of developing talent in those functional areas,” says Von Der Ahe. “The large consumer packaged goods companies do an excellent job developing marketing talent.”

When is it not time? When a chain is still debating what the new job will look like or who the executive will answer to, says Ray. “Sometimes I’ll have an initial discussion, and say, ‘You know, I don’t feel you guys are ready to do this yet. Maybe we should revisit this in six to 12 months.’ It saves everybody some pain.” 

Key questions for a headhunter

If you’re searching for a search firm, get recommendations from recruiters at other chains, or through organizations like the Association of Hospitality Recruiting Executives (www.ahre.org). Besides fees, here’s what you want to ask:

What’s your niche? If you’re looking for a CEO, don’t hire a firm that specializes in store-level managers.

What restaurants have you worked for? If previous clients include your direct competitors, the headhunter won’t be able to solicit their executives.

How long will it take? Executive-level searches typically take 90 to 120 days, from launch until a candidate accepts an offer.

What’s your guarantee? If your new hire leaves during the guarantee period, a reputable firm will run another search at its own expense. For senior management, the guarantee should run six months to a year.

Executive search 2.0: using the Internet

At Claim Jumper, a 46-unit casual chain out of Irvine, California, management recruiter Lynn Banks fills only 2 percent of her openings through search firms. “They’re the last source I go to,” she says. “First, I would go to the Internet.”

You probably can’t Twitter your way to a new CEO. But for other senior management jobs, the online world can extend your reach to places only headhunters could touch a few years ago.

The Original Brooklyn Water Bagel Co. of Del Ray, Florida, a startup with one store open and 13 franchises sold, plans to hire 30 positions over the next year. None are coming through headhunters. “We’re getting 20 resumes a month through our Web site from mainstream executives,” says CEO Steve Fassberg. “I put an ad on Craigslist for $25, and I get 100 resumes. Right now, it’s like a kid in a candy store for someone looking to build a company.”

In ancient times—10 years ago—you posted a job notice on your Web site and a few job boards and waited for seekers to find you. Today, social networking can spread that same notice at the speed of a YouTube video. Scott Rosenburg, president of YELLOW DOG Recruiting in Eagan, Minnesota, broadcasts job openings through Twitter to 2,500 followers. “Next thing you know,” he says, “one of them sends the job opening to a friend. He says, ‘I know you’re in Cincinnati. Look at this.’”

Beyond filling immediate openings, recruiters use networks to build longer-term professional relationships. Amanda Hite of Louisville, Kentucky, founder of new media consulting firm Talent Revolution, uses Twitter to schmooze, like a happy hour at a virtual convention. “It’s word-of-mouth on steroids,” she says. “I’ll start out a conversation with 25 people involved. Then all the people in their networks hear, and some of them join in. Then other people in their networks hear the buzz.”

The social network that operates the most like a headhunter is LinkedIn, a sort of Facebook for business people, with 60 million members. Kelly Sullivan, director of human resources for 17-unit King’s Seafood of Costa Mesa, California, connects her LinkedIn profile to those of other executives she knows. They, in turn, can introduce her to executives she doesn’t know, especially when she sends them job openings.

“In recruiting, you’re connecting with people all the time,” she says, “because you never know when you’ll need to hire someone. Maybe you don’t have an immediate personnel requisition. But you’re constantly looking.”

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