Layoffs, closures – it’s a lousy job market out there, right? Well, not if you’re one of Vancouver’s top executive headhunters it isn’t.
It’s just after 5 p.m. on a dreary Monday evening, and I’m sitting in the lounge at the Vancouver Marriott Pinnacle Hotel with Drew Railton of Caldwell Partners. Railton has agreed to meet me for a drink in between his last business call of the day, interviewing a CEO candidate, and the start of a fundraising dinner with the Vancouver MS Society.
Caldwell Partners is in the business of finding the most talented people for the top jobs in Canada: CEOs, CFOs, COOs, VPs – leaders who often make more money in a week than the average Canadian worker makes in a year. Started in 1970 by current chairman C. Douglas Caldwell, the firm went public in 1989 and now counts more than 100 employees in seven Canadian cities. Spending an hour answering my questions likely means Railton will have to forgo a shower and jump right into his tuxedo before he makes his way to an exclusive downtown wine bar for the evening of networking ahead. At around midnight, he’ll finally go home, pack his overnight bag and try to get three full hours of sleep before leaving to catch a 5:30 a.m. flight to Calgary, where he’s presenting a candidate for a marketing vice-president position. It’s a short trip this time, but the miles add up. He’s been on the road for 43 of the last 52 weeks – in North and South America and Europe – trying to understand the needs of Caldwell’s clients and convince qualified leaders to move to Western Canada.
The fact is, despite a struggling economy, finding top talent – especially for senior-level leadership positions – is becoming increasingly challenging. According to the Conference Board of Canada, nearly 30 per cent of Canada’s senior executives will be eligible to retire in the next three years, with relatively few people in the pipeline to replace them. The numbers balloon to 50 per cent in key industries such as education, government and health. As a result, the days when organizations could choose from a vast pool of qualified applicants eager to secure plum jobs are gone for good. “Employers used to be in the driver’s seat,” says Jay-Ann Fordy, senior vice-president of human resources at Coast Capital Savings. “Today it’s the other way around. [Hiring good people] is now much more of a sales and marketing role.”
In a 2008 survey – the first of its kind in this province – the B.C. Human Resource Management Association found that nearly 60 per cent of B.C. businesses identify recruitment as one of their three top challenges. And where 15 years ago companies could count on a crop of local talent playing for their hometown team, now a talented executive in Vancouver is just as likely to be recruited by a company in Hong Kong or Mumbai or London. This means big business for recruiting firms such as Caldwell, which have the ability to fish for sharks in ponds all across the globe.
Caldwell is the biggest Canadian search firm, but it’s still a small operation compared to the big multinationals. L.A.-based Korn/Ferry International, for instance, enjoys the largest global market share in the multibillion-dollar industry, with revenues from fees of more than $790 million in 2008, compared to Caldwell’s $17 million. Peter Felix, president of the New York-based Association of Executive Search Consultants, says the executive-search market remains strong despite the global economic downturn, especially in Canada, which has a glut of retiring baby boomers. “At the moment, the Canadian market is surprisingly insulated,” says Felix. “It is being held up by resources, and the government is still very active in the senior executive market. The fact is, there is a great shortage of qualified people in the ‘cusp’ generation” – those born approximately between 1965 and 1974, the ones assumed to take over from the boomers – “and that’s not going away because of the recession.” [pagebreak]
Still, professional recruiting remains a bit of a mysterious world. There are virtually no barriers to entry and just about anybody can call themselves a recruiter – which leads to some less-than-scrupulous practices among low-level job-placement agencies, which tarnishes the profession as a whole. According to watchdog organizations such as the Better Business Bureau, the lower end of the recruiting market is filled with scams, from companies placing fake job ads just to gather personal information from the resumés they receive to fly-by-night firms asking job hunters to pay as much as $4,000 upfront for services that rarely lead to jobs. Even respectable mid-level recruiters often come across more like car salesmen than seasoned business professionals because they’re only really rewarded for putting butts in seats. These types of firms usually see a commission of around 30 per cent of a candidate’s first year’s salary for a successful search.
The individual executive recruiter usually starts with a base salary of between $30,000 and $40,000 and gets around 15 per cent on the overall placement fee. At its highest levels, fees for placing a single successful candidate often reach into the high six or even low seven figures. Considering how essential the service can be in the corporate world, this is often seen as money well spent.
Railton got a degree in political science from the University of Calgary and worked briefly in HR before making the switch to recruiting 10 years ago. At 34, he’s Caldwell’s youngest partner. One of his earliest mentors in the field, he says, was Irene Pfeiffer, managing partner at Russell Reynolds in Calgary. Pfeiffer, also a lay minister, ended up marrying Railton and his wife, Courtney – a fitting turn of events, says Railton, who now considers himself “completely married” to his work. “When you are in this business, you are always, always on because everybody is either a potential candidate or a potential client,” he says. “You don’t take anything for granted because you meet people in the strangest circumstance and they end up being clients.” Once while shopping at a Safeway, he heard a young girl yelling for help; she had locked herself inside the store bathroom and couldn’t get out. Instead of just ignoring the yell as most people did, he helped get the girl out and then to find her father. “Her dad turned out to be a client, and now he calls me every time he needs to add to his leadership group,” says Railton, who won’t divulge details about the father or his company for fear of even a minor breach of trust. “So it just goes to show you it can happen anywhere.”
While Railton is coy about what he earns, Peter Felix says even a moderately successful executive recruiter in North America – someone who conducts 10 to 15 searches per year – should be able to gross $400,000 to $500,000 annually. Railton says he conducted somewhere between 15 to 20 searches in 2008 and that, despite the downward economic spiral in many industries, he still finds himself working 10- to 12-hour days, six or seven days a week – just trying to stay ahead of more experienced competitors such as Betsy Gibbons at Korn/Ferry and Kenneth Werker at Ray & Berndtson. Railton sees himself as part business strategist, part HR professional, part sleuth and part salesman. And success, in his mind, comes down to two key things: a deep understanding of the inner workings of the businesses he represents and the ability to build strong personal relationships with clients and potential candidates.
Because of the sensitive nature of his work, Railton says he and his dozen or so peers in Vancouver are something like the priests of the business community: he needs to know everything, good and bad, about an organization in order to serve it. He’s often privy to intimate conversations and boardroom ramblings and may learn when presidents are going to be fired, how much debt an organization is carrying or when job cuts are coming before almost anybody else. “I’ve sat at dinner parties and listened to people talk about their organization, and all you can do is kind of smile to yourself inside because they’re sitting there and telling you that they’re doing the best thing in the world,” says Railton, “and you’re actually talking to the board about replacing the president because the company is not performing the way they want it to. People share their innermost secrets and ambitions, and you can’t talk about any of it to anybody.” [pagebreak]The key for Railton is meeting talented leaders in person, gaining their trust and understanding why they are or aren’t happy with their current job and what they’re hoping to do next in their career. Contacts are his most valuable asset, with many of those names generated through his volunteer work for organizations such as the MS Society. (“It’s no great secret: the more you give, the more you tend to get in return.”) When he’s convinced he’s found the right person for a particular position, Railton and his team start a long process of benchmarking the individual against the most successful leaders in their field; performing candidate interviews, background checks and reference checks; and, in some cases, conducting psychological or behavioural profiling to determine how that candidate will fit with his client’s needs.
If all is copacetic, Railton then has to convince both client and candidate that they’re not just a good fit for one another but a perfect one. “A big part of our job is to make a job stand out and make it appealing to somebody,” says Railton. “But you can’t misrepresent the position to the candidate or the candidate to the client in any way because the last thing you want is for somebody not to work out. The client is not going to be happy and won’t use you again, and the candidate is likely to end up in a leadership position somewhere else, which closes the door for you there. If you hire the wrong CEO or CFO, the shareholders and the organization can take a huge loss that is very hard to recover from.” Indeed, the cost of failure in executive searches can be profound. According to Bradford Smart, author of the HR guide Topgrading, the average cost of a mid-level mis-hire – factoring in hiring costs, severance packages, opportunity costs, damage to reputation and so on – is more than $1.5 million. For a C-suite suit, that cost is 20 times higher.
Railton isn’t one to make many mistakes, hence making partner at Caldwell in 2007. That achievement is likely driven by the fact that he’s never satisfied with yesterday’s success, constantly pushing himself to meet more people, work longer hours and dive even further inside the business workings of the organizations he represents. Even supposed downtime is a search; on vacations with his wife, trekking through the jungles of South America or river rafting in Alaska, he’s looking for experiences that aren’t so much relaxing as they are character building. However, not even the views from Machu Picchu provide a rush that’s quite as strong as the ones his job provides.
“Not many people in any profession have this level of access, and that is a bit addictive. There are not too many CEOs across Canada who I can’t pick up the phone and say, ‘I am going to be in town, do you want to grab a coffee?’ and most times have them say, ‘Sure, I’d love to see you.’ There is something about that which feeds that undertone of an ego you have to have to be successful in any business.”