Take charge of your search relationships: too many companies have let themselves lose control of the critical flow of human capital.

• Author: McCallister, Richard A.

The CEO oF A $3.5 billion consumer products company becomes enraged when he learns he has lost a valuable executive to a competitor and, worse yet, the departing executive was recruited away by an executive search firm to which the CEO's organization has given a considerable amount of business. Vowing to exact some revenge, the CEO asks his human resources head for a report on the number of searches given and fees paid to the search firm in question during the last fiscal year.

To his surprise, his HR head informs him that she doesn't have those figures because she is not in control of that relationship. The contract is overseen by the leader of the firm's marketing unit, just as the leaders of the firm's other individual business lines and functional areas have separate relationships with other search firms. His frustration mounting, the CEO orders an internal study on all of the company's relationships with executive recruiters. After a lengthy investigation, HR reports that the organization currently employs approximately two dozen executive search firms at various levels. The study also reveals that, like the original firm in question, several of these recruiters have been poaching on the company's talent base.

The CEO is beside himself. Don't any of these recruiters have any ethics? And how has his organization lost control of the critical flow of human capital?

The scenario described above is a true story and, unfortunately, far too common in Corporate America today.

The good news is that there are plenty of ethically sound search firms. However, in an information economy, where a business' most valuable assets are its people, too many companies have abdicated control of human capital to executive recruiters. To achieve peak efficiency in recruiting talent, management needs to form close relationships with these valued advisers.

The more search firms a company deals with, the greater the chance of confidentiality leaks and the more exposure they have to an organization's executive talent. Therefore, companies should attempt to reduce the number of firms they employ and develop fuller relationships with a few "preferred" search firms. With fewer firms involved, client companies can guarantee more fees to preferred providers who in turn agree to exclusive arrangements with the client. This is not a discount program. It requires an extensive investment of time and effort from a team of consultants to cover a wide variety of activities...