Executive search and corporate spying

(The following article appeared in the September 2004 edition of The Fordyce Letter, a leading publication in the executive search industry.)

In early June my business partner and I were preparing for a presentation to a prestigious group of senior-level corporate recruiting officers. The subject was how CI, conducted ethically and professionally, could provide an advantage to the corporate HR and recruiting functions by unlocking the competitive intelligence in their workforce.

I took a break from the presentation and picked up the June issue of The Fordyce Letter. You can imagine how my interest was piqued when I read Paul Hawkinson’s “Publisher’s Corner” on page six:

I am both a headhunter and a CI professional. In fact, I just completed a three-year term on the board of directors of The Society of Competitive Intelligence Professionals (SCIP), headquartered in Alexandria, VA.

My unique and small niche is helping large corporations staff their CI functions with the most competent and ethical specialists available. It’s been an interesting life. I can use the skills I learned as a Russian-speaking Naval Intelligence Officer followed by 23 years in the business world to help companies avoid being blind sided by their competition.

So after I finished reading that short paragraph from the June TFL, I called Paul immediately. We had a very interesting discussion.

His first reaction was, “I guess I’ve always known there was someone like you out there, and now I’ve met him.”

The biggest point I wanted to clarify was that Paul was not referring to CI staffers at Fortune 500 companies, like the people I place. He confirmed this. What he was talking about were outsourced collection firms who are apparently hired by Fortune 500 companies to gather information from external sources in the marketplace. There are many varieties of these types of firms, but the common thread is they conduct third-party research on behalf of corporate clients. Some of them use the ruse of being executive recruiters, which indeed gives us all a bad name.

Let me state my personal opinion categorically.

First, this behavior, as described, is certainly unethical if not outright illegal. If any of these collection firms that are using the “executive recruiter ruse” happen to be members of SCIP, they are violating the Ethics Code of the professional society. The key problem is that there is no real position for which the recruiter is attempting to find candidates. Candidates are simply being milked for information, which absolutely sullies our reputation as recruiters.

Second, I believe the companies that hire such collection firms on an outsourced basis have an obligation to ask their vendors about their own ethics policies. How do they identify and represent themselves during interviews with sources? The SCIP Ethics Code for CI Professionals backs me up on this point.

The Ethics Code has the virtue of not being complicated and is spelled out below:

If third-party collection firms are using the “executive recruiter ruse” to gather intelligence on behalf of their corporate clients, they are clearly violating bullet point # 3 above.

If a company who hires these firms knows or even suspects that its vendor or vendors are using the “executive recruiter ruse,” or any other ruse for that matter, then that company is clearly violating bullet points # 1, possibly # 8, and certainly # 7 above. If the company is unwittingly ignorant of the fact that one of its third-party collection firms is rusing, then it is violating bullet point # 7 by not doing a thorough enough job of promoting these ethical standards with third party contractors.

Are any TFL readers aware of either third-party collection firms or client companies that may be violating the SCIP Ethics Code for CI Professionals? If so, in my opinion, they should be brought to the attention of the SCIP board of directors for its consideration and possible action. SCIP is an individual membership organization. One of the terms and conditions of membership is that individual members must agree that they will abide by the Ethics Code in order to remain a member in good standing.

Now that I have condemned the behavior that Paul discussed in the June issue and suggested a potential remedy, I would also like to state that I believe there is absolutely nothing wrong with CI per se. When done ethically by trained professionals, CI is a necessary corporate function that contributes enormously to the attaining and sustaining of competitive advantage.

Unlike many other specialties in the business world, executive search consultants seem to understand CI intuitively. It doesn’t need to be explained to us because we tend to be competitive by nature, we know the value of search research, and we often try to fill positions for our clients by seeking out talent from their competitors. In short, we know how to gather and analyze competitive information in order to be good at what we do.

But make no mistake, there is plenty of opportunity to do a better job of CI in the corporate world, especially on the recruiting side of HR. Want proof?

When my partner and I gave the presentation to which I referred earlier to that group of about 50 senior-level corporate recruiting officers, we did a survey to determine the CI savvy and practices exhibited by these recruiting officers.

Remember they are the same corporate recruiting officers who hire us to conduct searches for them. Therefore, TFL readers may be interested in the results, which strongly suggest room for improvement in terms of workforce CI.

I’ll close with these survey results, which speak for themselves:

Does your company have a formal process, an informal process or no process that routinely captures the marketplace knowledge that resides within your internal recruiting staff?

FORMAL PROCESS: 14 %

INFORMAL PROCESS: 10 %

Do you have a formal process in your company that identifies, contacts and interviews newly-hired employees who have come from critical positions at competitors?

Do you have a formal process in your company that maintains an up-to-date talent inventory of critical positions at your competitors?

Do you have a competitive intelligence (CI) unit at your firm?

Of those who said YES to the above question, have you ever worked with or coordinated with this CI unit in any way?

(NOTE: For a more complete discussion of this survey and its implications, see Corporate Recruiters Survey on this site.)

Competitive Intelligence Specialist or Corporate Spy?

The Case for Ethical Competitive Intelligence (CI)