1. Guarantee results and share risk. In tough economic times hospitals need to protect their resources, particularly when partnering with an executive search firm to hire a new CEO, says Mr. Self. He says starting CEOs earn from $200,000-$750,000 or more, depending upon the size of the organization and its net revenue. Headhunters are paid 30-33 percent of that first year salary for top tier executive search firms.
"You cannot have a true partnership unless there is accountability and shared financial risk," he says. "Few search firms want to share any risk or guarantee satisfaction with 24-36 month placement guarantees. If the candidate doesn’t do well, the search firm should not collect its full fee."
2. Fully vet all the candidates prior to submission. Mr. Self defines a hospital executive search as getting married after four or five dates.
"There are some things you can do to avoid making huge mistakes and mitigate risks and that begins with having both the candidate and the client hospital having as much information about each other as possible," he says.
He remembers four or five cases in last six months in which major search firms submitted candidates for hospital leadership positions who later were found to have major problems.
"One had a series of DUIs and one had problems in the military," he says. "One had a messed up credit history that would have really rendered him vulnerable. Clients have to take ownership and ask to see reference reports. There are a few search firms that do not show their clients those reports. They apparently believe that their candidate recommendation should suffice. That is fairly arrogant, especially since there is some clear evidence that sharing the details of the reference can enhance the outcome. You can’t afford to make a mistake and arrogance contributes to mistakes."
He recommends contracting with firms that employ outside investigators who conduct criminal background and credit report checks.
He also advises search firms to vet all of the final prospective candidates prior to submission, not just the recruiter’s two or three favorites expected to be selected.
"Usually there are two or three the search firm prefers, but some firms will offer two or three others they expect will be rejected," he says. "We call them ‘filler’ candidates. But clients can surprise you. I know of one hospital CEO that fell in love with a filler and hired him, only to learn that the guy had been fired from his last two jobs. It can happen, but it shouldn’t. That’s why you fully vet all the finalists you present."
3. Involve the search firm’s senior partners and advisors. "Hospital boards should inquire how involved is the partner going to be," Mr. Self says. "Many search firm partners spend most of their time doing new client acquisition and building new business. They delegate junior staff to work the searches and perform due diligence. Be sure your search firm involves a senior partner in this very important search, especially in the critical face-to-face interview."
4. Inquire about the "lock-up list." The "lock-up list," Mr. Self says, is a "do not contact list" that ethically prevents search firms from contacting executives from client lists without their permission.
"If I’ve done a search for a multi-hospital system or network, I should not recruit anyone from that system’s hospitals for other searches," he says. "In my view that is not ethical to steal from your clients and they shouldn’t tolerate it."
5. Provide candidates with detailed information about the job. "We’ve seen many search firm prospectuses with limited information about the jobs they’re seeking to fill," Mr. Self says. "The information is sometimes so limited — the average position description is 8-10 pages — that I can’t believe anybody would take the job. Sometimes there’s little or nothing about the hospital organization’s culture, union, environment, financial, political or regulatory issues the hospital is facing. Candidates usually don’t fail because they lack credentials or experience. They fail because they don’t fit in, come from a different culture, or fail to understand what the board wants them to do.
"There should be metrics in the performance criteria, deliverables that offer candidates specific information about the job," he says. "Clients don’t always provide that to the search firms and search firms don’t always demand it. But they do so at their own risk."
6. Form a relationship with the hospital board. "If it’s a CEO or other C-suite position being filled, that’s absolutely critical, especially if the search is part of the succession planning process," Mr. Self says. "Some search firms get called in and place candidates without any interaction with the board. That improves the likelihood of candidate failure. When hiring for succession planning, the board definitely needs to be involved. If a hospital is relying on a search firm and its board members haven’t even met the candidates, that’s a sin. They can’t get to know people only through video conference."
Mr. Self (jgself@johnmarch.com) is chairman and founding partner of JohnMarch Partners (www.johnmarch.com), a Dallas-based executive search firm specializing in placing hospital and healthcare executives. Mr. Self, who is also JohnMarch Partners’ senior client advisor, is a 32-year veteran of the executive recruitment industry and a past president of the North Texas Chapter of the American College of Healthcare Executives (ACHE). He is a former healthcare executive and newspaper investigative reporter and editor.
